The Multiple Dimensions of Inequality – MULTINEQ

During the last twenty years, the world has changed in a profound way, largely associated with globalisation. We have witnessed the rapid expansion of Asian economies, the collapse of the Soviet Union, economic and social decline in sub-Saharan Africa, stagnation in many parts of the Pacific, and increased uncertainty in central and south American countries. While developed countries have achieved ever higher per capita incomes -- and higher well-being according to traditional measures -- they have also experienced dramatic internal change, causing widespread concerns regarding social exclusion,
human security, levels of personal satisfaction, and happiness. Everywhere we look seems to accord with the view of a global environment that is more dynamic and diverse, and, arguably, more volatile and uncertain.

For quite a long time GDP has been considered a reasonable proxy for a measure of a country's well-being. While there have been recurrent attacks from theoretical economists against GDP since the beginning of the sixties, there is no doubt that the changing economic environment mentioned above explains to a great extent the recent revival of interest from a large part of the population. Being a monetary aggregate, GDP pays little or no attention to distributional issues and to elements of human activity or well-being for which no direct or indirect market valuation is available. As a measure of productive flows, it also ignores the impact of productive activities on the stock of resources left for the future generations. As a snapshot picture it also says nothing about the prospects faced by the citizens concerning their future (e.g. retirement pensions) and uncertain events (e.g. unemployment and health). These reasons explain in part the growing scepticism about basing the comparisons of societies exclusively on their GDP per capita.

Taking these different dimensions into account suggests four distinct approaches in order to improve upon GDP for measuring society well-being. A first approach, initiated by Nordhaus and Tobin in the early seventies, consists in producing indexes of corrected GDP, purged of elements that do not contribute to well-being and complemented by monetary evaluations of welfare enhancing items not included. A second route aims at supplementing traditional economic indices of well-being with alternative indicators that capture non-economic or non-material dimensions of human life. At a more immediately practical level, the third and more recent approach consists in proposing multidimensional measures of well-being. Best known is the Human Development Index (HDI), introduced by the United Nations Development Programme that combines GDP per capita, life expectancy at birth, adult literacy, and the school enrolment ratio. Acknowledging the fact that individuals are the most interested in their own well-being, the fourth approach to measuring social conditions is based on measures of subjective well-being.

Thus, important efforts have been made for correcting the national figures in order to provide more accurate measures of a society's welfare. However, in our view most of the techniques used, either
(i) leave aside a number of dimensions of individual well-being, or
(ii) appear to be arbitrary and lack solid theoretical justification, or
(iii) necessitate restrictive assumptions which call into question the validity and scope of the normative conclusions one obtains, or
(iv) pay insufficient attention to distributional aspects.
Our project is precisely concerned with the question of the distribution of well-being paying particular attention to the different dimensions of inequality. Our view is that the concept of inequality is doubly multidimensional: not only are different attributes -- aside from income -- important for appraising a person's well-being but also individuals are unequal in the face of risky events and in the course of time.