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2018 | OriginalPaper | Chapter

7. Inequality and Well-Being

Author : Vani Kant Borooah

Published in: Health and Well-Being in India

Publisher: Springer International Publishing

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Abstract

This chapter investigates a neglected area in the study of human development relating differences in human development between social groups in a country. Failure to take account of such inter-group inequalities might lead one to exaggerate a country’s developmental achievements. Conversely, one would get a more accurate picture of a country’s achievements with respect to human development only after one had taken cognisance of the fact that the fruits of development were unequally distributed between its various communities. There is a further issue. Not only are developmental fruits unequally distributed between groups, but these fruits may be unequally distributed within the groups. This chapter uses the methodology of “equity-adjusted achievement” to compute human development indices and “extended” human development indices for a number of social groups in India.

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previous chapter Deaths in the Family

next chapter Summary and Conclusions

The rankings of the various countries in terms of their per capita GDP and their HDI can often be very different. If one defines X as the difference between a country’s GDP rank and its HDI rank, then as UNDP (2000) shows, X is significantly nonzero for several countries. For example, X = 13 for the UK (implying that the UK’s HDI ranking was 13 places higher than its GDP ranking) while X = −16 for Luxembourg (implying that Luxembourg’s HDI ranking was 16 places lower than its GDP ranking).

Anand and Sen (1997) compared Honduras (with an average literacy rate of 75%, distributed between men and women as 78 and 73%) with China (with an average literacy rate of 80%, distributed between men and women as 92 and 68%) and asked which country should be regarded as having the “better” achievement with regard to literacy: China with a higher overall rate or Honduras with greater gender equality?

These “members” could be households or persons.

Desai et al. (2015).

In the language of economics, the two situations would yield the same level of social welfare, i.e. be “welfare equivalent”.

An indifference curve shows the different combinations of W_R, W_S which yield the same level of welfare. It is obtained by holding Q constant in Eq. (7.1) and solving for the different W_R, W_S which yield this value of Q.

Because of concavity, an egalitarian transfer from R to S will increase welfare: the gain in utility to S will exceed the loss to R. Welfare will be maximised when no further net gain is possible, that is when W_R = W_S.

Since, by welfare equivalence of \(X^{\text{e}} \,{\text{and}}\,\bar{X}\)\({\text{NF}}\left( {X^{\text{e}} } \right)\)\(= \sum\nolimits_{k = 1}^{K} {N_{k} F(X_{k} ) \Rightarrow \left( {X^{\text{e}} } \right)^{1 - \varepsilon } - 1}\)\(= \sum\nolimits_{k = 1}^{K} {n_{k} \left( {X_{k}^{1 - \varepsilon } - 1} \right) \Rightarrow \left( {X^{\text{e}} } \right)^{1 - \varepsilon } }\)\(= \sum\nolimits_{k = 1}^{K} {n_{k} X_{k}^{1 - \varepsilon } }\). Dividing both sides by \(\bar{X}^{1 - \varepsilon }\), \(\left( {\frac{{X^{\text{e}} }}{{\bar{X}}}} \right)^{1 - \varepsilon } = \sum\limits_{k = 1}^{K} {n_{k} \left( {\frac{{X_{k} }}{{\bar{X}}}} \right)^{1 - \varepsilon } \Rightarrow 1 - \left( {\frac{{X^{\text{e}} }}{{\bar{X}}}} \right) = 1 - \left[ {\sum\limits_{k = 1}^{K} {n_{k} \left( {\frac{{X_{k} }}{{\bar{X}}}} \right)}^{1 - \varepsilon } } \right]}^{1/1 - \varepsilon }\)

That is, \({\text{Index}}_{\text{income}} \, = \,\frac{{{\text{Observed}}\,{\text{Income}} - {\text{Minimum}}\,{\text{Income}}}}{{{\text{Maximum}}\,{\text{Income}} - {\text{Minimum}}\,{\text{Income}}}}\)

Unless explicitly stated otherwise, the average will always be taken to be the arithmetic mean.

As earlier, we use the technique of “1–ε averaging” as set out in Eq. (2.16).

All figures reported in this chapter were obtained after grossing up the sample using the household weights provided in IHDS-2011.

Defined as: 0 (none), 1, 2, 3, 4, 5 (5th standard), 6, 7, 8, 9, 10 (Matric), 11, 12 (Higher Secondary), 13, 14, 15, 16 (Graduate or above).

The roof and floor could be: “kutcha” (grass, mud, thatch, wood, tile, slate for the roof; mud or wood for the floor); or “pucca” (asbestos, metal, brick, stone, concrete for the roof; brick, stone, cement, tiles for the floor).

Indeed, in the words of a well-known Hindi song (also used to sell Heineken beer): jaan-pehchaan hai, jeena asaan hai (living is easy because I know people).

The term “creamy layer” is used here loosely to apply to SC/ST/and Muslims. Strictly speaking, in the Indian legal context, it applies only to the OBC.

The regions were defined as: north (comprising the states of Jammu & Kashmir, Delhi, Haryana, Himachal Pradesh, Punjab [including Chandigarh] and Uttarakhand); the centre (Bihar, Chhattisgarh, Madhya Pradesh, Jharkhand, Rajasthan and Uttar Pradesh); the east (Assam, Orissa, West Bengal and the north-eastern states); the west (Gujarat and Maharashtra); and the south (Andhra Pradesh, Karnataka, Kerala and Tamil Nadu).

The principal sources of income were: Cultivation & Allied Agriculture; Agricultural Wage Labour; Non-agricultural Wage Labour; Artisan/Petty Shopkeeper; Organised Business/Salaried/Profession; Pension/Rent/Others.

In operational terms, STATA’s margin command will perform these calculations taking into account all interaction effects.

For example, (i) X: all households are SC; Y: all households are Muslim; (ii) X: all households live in the north; Y: all households live in the east.

See note 16. The term creamy layer as used here is applied to SC/ST/and Muslims. Strictly speaking, in the Indian legal context, it applies only to the OBC.

Anand, S., & Sen, A. K. (1994). Human Development Index: Methodology and Measurement (Human Development Report Office Occasional Paper 12). New York: UNDP.

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Title: Inequality and Well-Being
Author: Vani Kant Borooah
Publisher: Springer International Publishing
Book: Health and Well-Being in India
Print ISBN: 978-3-319-78327-7

Electronic ISBN: 978-3-319-78328-4

Copyright Year: 2018
DOI: https://doi.org/10.1007/978-3-319-78328-4_7