2014年-世界发展银行全球_Economic_Development_as_Opportunity_Equalization_21页_392kb

Summary of "Economic Development as Opportunity Equalization"

Core Content

The document presents a novel approach to measuring economic development, shifting the focus from traditional utilitarian metrics like GDP per capita to a two-dimensional framework based on opportunity equalization. This framework aims to capture both the level of development and the degree of opportunity equality, emphasizing the ethical concern of fairness in the distribution of economic resources.

Main Views

1. Conceptualization of Economic Development

• Economic development is redefined as the extent to which a society has achieved an efficient and just distribution of economic resources.
• Traditional measures like GDP per capita reflect a utilitarian conception of justice, where social welfare is the average of individual utilities (typically defined as income).
• An alternative and more attractive conception is opportunity equalization, which evaluates the fairness of outcomes based on circumstances (uncontrollable factors) and effort (controllable factors).

2. Two-Dimensional Measure of Development

• The author proposes a two-dimensional measure of development:
  • Level of development ($\hat{W}^{EO}$): The average income of the most disadvantaged type, defined by circumstances.
  • Degree of opportunity equality ($\eta$): A measure of how much of total income inequality is due to differential effort rather than differential circumstances.
• This measure is non-consequentialist, as it considers the source of inequality (circumstances vs. effort) rather than just the outcome.

3. Equal Opportunity Policy

• The goal of policy is to maximize the average value of the objective (e.g., income) in the most disadvantaged type, under the assumption that this type is unambiguously the most disadvantaged.

• The formula for the equal opportunity policy is:

  $$
  \max_{\varphi \in \Phi} \int_0^1 \min_t v^t(\pi, \varphi) d\pi
  $$

• This contrasts with utilitarianism, which maximizes the average value of the objective across the entire population, and Rawlsian difference principle, which maximizes the minimum value of the objective in the population.

Key Information

4. Circumstances and Effort

• Circumstances are the aspects of an individual's environment that society does not hold them responsible for (e.g., parental education, ethnicity, gender).
• Effort refers to the choices and actions individuals make, which are considered within their control.
• The rank in effort distribution is used to determine if individuals have expended comparable effort, regardless of their actual income levels.

5. Empirical Application

• The analysis is based on data from 22 European countries using the EU-SILC 2005 dataset.
• Individuals are categorized into three types based on the maximum educational level of their parents:
  • Type 1: Parent with at most lower secondary education.
  • Type 2: Parent with upper secondary but no tertiary education.
  • Type 3: Parent with at least some tertiary education.
• The net income of individuals is measured after taxes and transfers, including the value of public goods.

6. Inequality Decomposition

• The coefficient of variation squared ($C^2$) is used to measure inequality.

• The inequality can be decomposed into two components:

  • Inequality due to circumstances ($C(\Phi^T)$).
  • Inequality due to effort ($\sum f^t (\rho^t)^2 C(H^t)$).

• The degree of opportunity equality is defined as:

  $$
  \eta = 1 - \frac{C(\Phi^T)}{C(H)}
  $$

• This index represents the fraction of inequality that is due to effort, and thus reflects the degree of opportunity equalization.

7. Country Comparisons

• For France, the level of development ($\hat{W}^{EO}$) is 21,684 Euros, and the degree of opportunity equality ($\eta$) is 0.970.
• The degree of inequality due to circumstances is about 3% in France, which is typical for advanced European countries.
• In Latin American countries, this proportion is significantly higher, with some countries (e.g., Guatemala) showing over 50% of inequality due to circumstances.
• Eastern European countries (e.g., Lithuania, Estonia, Hungary) are the worst off in terms of the $\hat{W}^{EO}$ index, but they show a relatively high degree of opportunity equality ($\eta$) ranging from 92% to 99.5%.
• Denmark, Iceland, Germany, the UK, and the Netherlands are undominated in the partial order, meaning they are not clearly superior in both dimensions of development.

Conclusion

• The proposed two-dimensional measure of development provides a more ethical and nuanced understanding of economic progress.
• It emphasizes fairness by distinguishing between inequalities due to circumstances and those due to effort, and encourages policies that equalize opportunities rather than just maximize average welfare.
• This approach is not new, but it is presented here as a more refined and politically salient way of conceptualizing economic development.