Non-income dimensions of welfare

EOP relies heavily on measures of aggregate consumption at the household level in assessing the extent of poverty and assessing policies. It argues that, with reasonable allowances for differences in household size and (possible) demographic composition and for differences in the prices faced, consumption provides a good measure of economic welfare–command over commodities. such as food, clothing, and housing.

However, EOP also recognizes that even a comprehensive consumption measure leaves things out, notably access to non-market goods and intra-household inequalities. So one also needs supplementary data on these things to obtain a more complete picture.

  • Chapter 5 of EOP discusses the attempts that have been made to form composite “mashup” indices that combine these various dimensions into a single dimension. It argues that this approach is often hard to defend and can misguide policy making.
  • Chapter 7 of EOP discusses the measurement and evidence on these non-income dimensions of welfare, and their relationship with measures of command over commodities.

Schooling and poverty

Across the globe, kids from poorer families tend to get less schooling. This has long been seen as an important reason why poverty can persist across generations. This graph illustrates the socioeconomic disparities in schooling completion rates. Amongst countries where 50% of those aged 15-19 had completed grade 6, the mean completion rate was 76% for the richest quintile of families but only 24% amongst the poorest.

Source: Estimates from Deon Filmer’s  “Educational Attainment and Enrollment Around the World.” The poorest 20% and richest 20% are identified using a composite “wealth index” based on the Demographic and Health Surveys.

Notice that the absolute gap in schooling tends to rise in the earl stages of a generalized expansion in schooling. This has implications for the evolution of earnings inequality, as discussed in EOP Chapter 8.

The quality of schooling is another issue. School enrollment does not imply attendance, and attendance does not imply learning. In India, for example, tests of school age children have found much less progress in knowledge than enrollments; see the ASER report on Trends over Time.

There are socioeconomic gradients in many other non-income dimensions of welfare, including mortality and morbidity, nutritional status, and exposure to violence. See EOP Chapter 7 for more.


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