Global Inequality in Well‐​Being Has Decreased across Many Dimensions

By Chelsea Follett and Vincent Geloso. Excerpts:

"The world has seen dramatic, global human progress across a broad range of indicators in recent decades, but have those gains been widely shared? The Inequality of Human Progress Index (IHPI) measures relative gaps in global development. It surveys international inequality across a greater number of dimensions than any prior index. By analyzing inequality in a multidimensional way, the IHPI takes inequality more seriously than those indexes that focus on income inequality alone. The IHPI considers material well‐​being and seven additional metrics: lifespan, infant mortality, adequate nutrition, environmental safety, access to opportunity (as measured by education), access to information (as measured by internet access), and political freedom. Across all but two of those dimensions, the world has become more equal since 1990. Globalization and market liberalization over the past few decades have not only raised absolute living standards but also reduced overall inequality."

"looking at income levels and distributions understates the improvements in living standards levels and distributions. Simply put, income is not the best way to capture overall differences in well‐​being. Living standards (or well‐​being or human welfare) encompass more. According to economist and philosopher Amartya Sen, a higher standard of living is achieved when the set of possibilities open to us increases.⁸ An extra dollar of income, by opening up more consumption choices for an individual, increases the choice set available to that individual. However, an individual in poor health will not gain as much from an extra dollar in terms of choice as a healthy person. Someone crippled by a debilitating disease will not be able to enjoy those choices as fully. Similarly, someone who is illiterate is less able to discover or unveil consumption possibilities opened up by an extra dollar of income. These relationships between different dimensions of choice possibilities explain why economists eschew the temptation to state that income fully speaks to living standards and why they emphasize a richer conception of living standards."

"The Inequality of Human Progress Index (IHPI) . . . considers inequality across eight distinct dimensions: longevity, health, nutrition, environmental quality, education, internet access, income, and political freedom. By surveying inequality across a greater number of dimensions than any prior index"

"The components are as follows:²⁹

1. Lifespan: life expectancy at birth, years
2. Childhood survival: infant mortality rate, per 1,000 live births
3. Adequate nutrition: food supply, per person, per day
4. Safe environment: outdoor air pollution death rates
5. Access to opportunity: mean years of schooling, number
6. Access to information: internet users, per 100 people
7. Material well‐​being: GDP per person
8. Political freedom: democracy versus autocracy over time, scale 0 to 40 (rescaled from source)"

"We use two measures of inequality: the mean log deviation (MLD) and the Gini coefficient.³⁴ Both measure inequality among the values in a distribution, and both represent a situation of perfect equality as a value of zero; the Gini coefficient represents maximal inequality as a value of one while the MLD takes on larger positive values as incomes become more unequal."

"Figure 2 shows the average global HPI from 1990 to 2018. Regardless of the specification used, important improvements are evident. Indeed, reweighting the average for the population of the different countries does not alter the conclusion that significant progress has been made."

 

"Calculating for inequality in the HPI results in the IHPI. Figure 3 shows the evolution of the Gini coefficients for all specifications of the HPI."

 "there was momentous progress at the bottom. The nonlinear index form we used for the nonincome components of the HPI tends to award greater importance to improvement near the top (see Figure A.1 in the appendix) whereas identical improvements at the bottom are awarded a lower value on the index. If the improvements depicted in Figure A.1 were driven by already highly developed countries, inequality should have increased. If every country received the same improvements (e.g., same extra number of years), here again inequality should have increased. Given the form of the index, a drop in inequality can only occur if poorer nations enjoyed substantially larger gains than richer nations."

"the Gini coefficients all fell: life expectancy (29.2 percent), school years (29.0 percent), democracy (41.1 percent), food supply (30.0 percent), and internet access (70.4 percent)." 

"Moreover, inequality in income rises initially before falling since the mid‐​2000s." 

"The tendency to underestimate improvements in global well‐​being is widespread. Perhaps even more widespread is the tendency to underestimate how widely shared these improvements are. The IHPI aims to tackle those tendencies directly.

Indeed, the index comprises a larger number of dimensions than the United Nations’ HDI and Leandro Prados de la Escosura’s Augmented HDI and uses an innovative methodology to properly capture improvements. This richer measure of well-being—or human progress—allows us to see that improvements have been greater than is commonly appreciated.

Moreover, we believe that inequality in human progress is far more meaningful than inequality of income. Individuals in rich societies have far more paths to happiness and satisfaction than just income maximization, and examining higher incomes alone does not capture those nonmonetary aspects of well‐​being.

Because of its greater multidimensionality, the IHPI provides a more meaningful understanding of well‐​being and progress, as well as their distribution. Our index makes clear not only that the world is better off than many people appreciate, but that the world is also far more equal."