Global inequality is down all the more if we count lifespan

by on July 20, 2014 at 1:51 pm in Data Source, History, Medicine, Science, Uncategorized | Permalink

From Becker, Philipson, and Soares (pdf):

GDP per capita is usually used to proxy for the quality of life of individuals living in different countries. Welfare is also affected by quantity of life, however, as represented by longevity. This paper incorporates longevity into an overall assessment of the evolution of cross-country inequality and shows that it is quantitatively important. The absence of reduction in cross-country inequality up to the 1990s documented in previous work is in stark contrast to the reduction in inequality after incorporating gains in longevity. Throughout the post–World War II period, health contributed to reduce significantly welfare inequality across countries. This paper derives valuation formulas for infra-marginal changes in longevity and computes a “full” growth rate that incorporates the gains in health experienced by 96 countries for the period between 1960 and 2000. Incorporating longevity gains changes traditional results; countries starting with lower income tended to grow faster than countries starting with higher income. We estimate an average yearly growth in “full income” of 4.1 percent for the poorest 50 percent of countries in 1960, of which 1.7 percentage points are due to health, as opposed to a growth of 2.6 percent for the richest 50 percent of countries, of which only 0.4 percentage points are due to health. Additionally, we decompose changes in life expectancy into changes attributable to 13 broad groups of causes of death and three age groups. We show that mortality from infectious, respiratory, and digestive diseases, congenital, perinatal, and “ill-defined” conditions, mostly concentrated before age 20 and between ages 20 and 50, is responsible for most of the reduction in life expectancy inequality. At the same time, the recent effect of AIDS, together with reductions in mortality after age 50—due to nervous system, senses organs, heart and circulatory diseases—contributed to increase health inequality across countries.

That reminder is from Aaron Schwartz.  And of course that is the Becker, yet another contribution from Gary Becker.

Do note, by the way, that medical progress is usually egalitarian per se.  A common metric is something like “health outcomes of the poor” vs. “health outcomes of the rich,” and that may or may not be moving in an egalitarian direction.  But very often the more incisive metric is “health outcomes of the sick” vs. “health outcomes of the healthy,” and of course most medical treatments are going to the sick.  The more desperate is the lot of the sick, the more likely that medical progress is egalitarian per se.

1 Nathan W July 20, 2014 at 3:09 pm

Many measures of inequality fail to account for the fact that people usually have less money when they are younger. People who work on inequality rarely acknowledge this up front.

But, you can focus on inequality within age groups to get around that. Under 15, 15-24/29, 24/29-retirement, old fogies.

If you’re going to talk about inequality including lifespan, why not track inequality in HDI, which includes longevity, education and … whatever that third one was that someone probably pulled randomly out of the air.

What’s the goal?

UNICEF has a bunch of modules for multidimensional poverty and inequality measures, such as the MODA modules which can be applied and targeted to many circumstances.

If you can target the minimal acceptable capacities and functionings, a la Sen, then presumably people are less concerned about inequality when they can sleep at night knowing that everyone can get a drink of clean water when they wake up in the morning, will not have to walk a half a mile in the morning to shit in a heap by the train tracks, will have eaten a meal by the time they get to school, will have access to sports activities through school as a child, will be able to afford to take the bus to work, can access diverse forms of training if they want/need to change careers or vocation/business, and can have their voice heard on issues which are relevant to them in the communities they belong to.

What I don’t get is why we don’t hear much from Sen on this. I think he prefers to focus on the abstract, and wants to remain well removed from a technical endeavour which is probably finds somewhat distasteful to to its strictly numerical nature in the first place.

Human experience cannot be condensed into a single number. Well, you can, but you know what I mean. There are many ways to construct an objective. In a democratic society, establishing targets can be even more complicated. Sometimes those single numbers will help to provide highly accessible snapshots, but if goals are not well defined, or if activities not well linked to goals, then it is not very likely that we will achieve them.

We’re rich. What now? Get richer?

2 dirk July 20, 2014 at 4:03 pm

I don’t understand the Aaron Schwartz reference.

3 Bill July 20, 2014 at 5:18 pm

Yeah, life expectancy will be up.

Too bad you’ll be too poor to enjoy it.

4 TMC July 21, 2014 at 1:58 pm

Death panels are always good to you it seems.

5 Brandon July 21, 2014 at 9:39 pm

There’s a pretty big life expectancy split based on class anyway

6 Steve Sailer July 20, 2014 at 5:21 pm

With Central America much in the news at the moment, it’s worth noting that life expectancy in all Central American republics is now over three score and ten, with Costa Rica even ahead of the United State.

7 Floccina July 21, 2014 at 10:15 pm

life expectancy in all Central American republics is now over three score and ten, with Costa Rica even ahead of the United State.

And that without all the expensive health care. Evidence for Robin Hanson’s hypothesis.

8 Floccina July 22, 2014 at 10:02 am

Wow this could cause reassessment of a lot of economics ideas concerning SES wealth and health!:

Poorest Costa Ricans live longest.

9 econer July 20, 2014 at 5:57 pm

twitter link broken.

10 anon July 20, 2014 at 6:26 pm
11 rayward July 20, 2014 at 7:25 pm

Of course, the problem with Cowen’s Upshot piece and this one is that it runs up against the Groucho Marx dilemma: who you gonna believe, Cowen, Becker, et al. or your lying eyes. I’m not sure why Cowen chose to go there: he’s smart enough to stay with the theoretical criticism of Piketty.

12 Chip July 20, 2014 at 7:52 pm

Maybe this was discussed but do these inequality studies capture the narrowing gaps in access to tech, travel and entertainment?

For example, the poor today have access to smartphones, the Internet, cheap flights, television, books etc to a degree not much different from the rich.

A stock market investor in a time of money printing may have more cash, but his access to information isn’t much different from a factory worker.

13 Ricardo July 21, 2014 at 3:31 am

In other words, things have never been better for low-to-medium-income, childless nerds. Which is fine but it’s not clear this is only population we should be considering when thinking about income inequality. What if we look at quality differences in K-12 schooling, housing, or health care? And that factory worker who can download Plants v. Zombies on his smartphone today will probably start experiencing some pretty unpleasant chronic health conditions once he hits age 50. How do his disability benefits, medical coverage, and pension compare to those of the hypothetical investor?

14 Bill July 20, 2014 at 10:53 pm

Here’s a critique of Tyler’s NYT article from Economists View:

15 Steve July 21, 2014 at 6:06 am

Inequality is way down in the US when you factor in.heslth but it’s all within SES group reductions. The between variance is up within the US and that is all they really care about. So when you factor in health inequality rose even more.

16 Stephen July 21, 2014 at 10:49 am

This fits with the latter work of Robert Fogel, cf. “The Escape from Hunger and Premature Death, 1700–2100: Europe, America, and the Third World.”

17 Indur Goklany July 21, 2014 at 8:00 pm

Inequalities have been declining globally not just in terms of life expectancy but in terms of other critical indicators of human well-being, e.g., freedom from hunger, mortality rates, child labor, education, access to safe water. This was documented in Goklany (2002), The Globalization of Human Well-Being, Policy Analysis No. 447, Cato Institute. Executive Summary follows:

Controversy over globalization has focused mainly on whether it exacerbates income inequality between the rich and the poor. But, as opponents of globalization frequently note, human well-being is not synonymous with wealth. The central issue, therefore, is not whether income gaps are growing but whether globalization advances well-being and, if inequalities in well-being have expanded, whether that is because the rich have advanced at the expense of the poor.

More direct measures of human well-being than per capita income include freedom from hunger, mortality rates, child labor, education, access to safe water, and life expectancy. Those indicators generally advance with wealth, because wealth helps create and provide the means to improve them. In turn, those improvements can stimulate economic growth by creating conditions conducive to technological change and increasing productivity. Thus, wealth, technological change, and well-being reinforce each other in a virtuous cycle of progress.

During the last half century, as wealth and technological change advanced worldwide, so did the well-being of the vast majority of the world’s population. Today’s average person lives longer and is healthier, more educated, less hungry, and less likely to have children in the work-force. Moreover, gaps in these critical measures of well-being between the rich countries and the middle- or low-income groups have generally shrunk dramatically since the mid-1900s irrespective of trends in income inequality. However, where those gaps have shrunk the least or even expanded recently, the problem is not too much globalization but too little.

The rich are not better off because they have taken something away from the poor; rather, the poor are better off because they benefit from the technologies developed by the rich, and their situation would have improved further had they been better able to capture the benefits of globalization. A certain level of global inequality may even benefit the poor as rich countries develop and invest in more expensive medicines and technologies that then become affordable to the poor.

Comments on this entry are closed.

Previous post:

Next post: