Measuring Inequalities

Dialogue on Inequalities, 21-22 January 2015Istanbul, Turkey

Mihail Peleah, UNDP IRH Programme Specialist, Green Economy and Employmentmihail.peleah@undp.org

Frost Report”Social Class” https://www.youtube.com/watch?v=SfiFTEaz_0U

Measuring Inequalities

• Inequality of what? What inequality(ies)?• Income inequalities: Gini, Palma, S20/S80,

Bottom 40%• Human inequalities Inequality-adjusted human development index (IHDI) Human Opportunities Index (HOI), Bottom 40%

• Overlapping inequalities Social exclusion index (SEI)

• Gender Inequalities Gender Development Index (GDI)

Gini

Palma~50%

Bottom 40%

0%

5%

10%

15%

20%

25%

30%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Gini vs Palma

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0% 20% 40% 60% 80% 100%

Country A

Country B

Country C

Perfect equality

A B C

Gini 0.360 0.360 0.360

Palma 1.647 1.917 4.000

Bottom40%

17% 24% 4%

Inequality-adjusted human development index

What it captures?• Human Development Index discounted for inequality in each dimension:

Health, Education, and Living Standards– HDI: index of average achievements in human development dimensions– IHDI: (real) level of human development when the distribution of

achievements across people in a society is accounted for

Why this is important?• Social inequalities closer correlate with development, than income

inequality• Could be adjusted to country requirements (in fact based on Mexico work)

What it doesn’t capture?• Intersecting and overlapping inequalities: e.g. sick and low-educated, and

low income

Human Opportunities Index (HOI)

What it captures?• Coverage by basic services for children discounted by inequality in access

for different circumstances– Basic services: education, water, electricity, sanitation, no overcrowding, …– Circumstances: gender, relatives, household head education, wealth, area of

residence , …

• Simplified: access to basic service for bottom 40% and top 20%

Why this is important?• Leveling playing field— your future do not depend on where you come

from, how much your family earns, or whether you are male or female.

What it doesn’t capture?• Outcomes—access to basic services doesn’t automatically translate to

equal outcomes

Human Opportunity Index: Education and Access to water

Social Exclusion Index (SEI)

What it captures?• Objective and multidimensional measure of social exclusion• Exclusion as overlapping inequalities—threshold is 9 out of 24 possible

deprivations • Three areas of exclusion, 24 indicators

– Economic exclusion– Exclusion from social services– Exclusion from civic and political participation

Why this is important?• Accumulation of inequalities could lead to social exclusion• Social exclusion status vs Social Exclusion Drivers, Personal Characteristics, Local

Conditions Policy actions• Could be adjusted to country requirements

Limitations and drawbacks?• Data voracious, requires separate survey or module in regular survey

Drivers of social exclusionSpecific local conditions

Social exclusion status

Individual characteristics

interact

with

in context of

…and result in

Structures and institutions; values and behavior patterns; policiesDrivers are external factors, influenced by legacies, that either speed up or slow down the process of individual vulnerabilities turning into social exclusion

(social exclusion risk factors), like poor education, disability, minority status

Predominant industry, single or multiple employment opportunities, local infrastructures, history of violent conflict or environmental disaster

of the individual in three dimensions—exclusion from economic life, social services, and civic and social participation

Social Exclusion Chain

Different combinations of individual risks, drivers and local context produce different levels of social exclusion

If you are young person, with low education, living in village, with single company—you face

high risk of exclusion

…and secondary education doesn’t help much in these conditions…

…while vibrant business environment makes a lot of difference

…economic centers offer more opportunities (even with low education)

…and much more if you are educated

+

+

+

+ + +Source: RHDR “Beyond Transition: Toward Inclusive Societies”, 2011

Gender Development Index (GDI)

What it captures?• Gender gap in human development achievements in three basic

dimensions – HDI: index of average achievements in human development

dimensions– GDI: (real) level of human development when the distribution of

achievements between genders is accounted for

Why this is important?• Gender gap means denied participation in development

What it doesn’t capture?• Intersecting and overlapping inequalities• Average gains in one area and loses in another don’t tell full story

Central Asia: declining participation of women