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Current challenges in well-being analysis. How to measure inequality when the information is limited?

20th National Competition for Economic Research Grants (2021)

Economic analysis

Senior Researcher : Vanesa Jordá Gil

Research Centre or Institution : Universidad de Cantabria. Santander.

Abstract

The fight against inequalities is at the forefront of economic and policy debates. The reduction of disparities is one of the fundamental pillars of the United Nations 2030 Agenda and its commitment to the Sustainable Development Goals. To track the progress towards this goal, it is essential to rely on methodological tools to quantify inequality levels and their evolution.

The main contribution of this project is to develop new models to measure inequality from a multidimensional perspective by jointly considering economic dimensions and non-monetary outcomes, such as health and education. This aim would be relatively straightforward if individual data on different well-being dimensions were available in a single survey. However, the data is often provided in aggregated form, such as life expectancy, literacy rates or per capita income. Due to this data limitation, prior research on well-being inequality focuses on differences in quality of life across countries. Their findings would be, therefore, biased because citizens of the same country are characterised by different levels of earnings, educational attainment and health status.

In this project, we estimate national, regional and global inequality in well-being, considering both differences between and within counties. The estimation relies on parametric models to construct the distribution of income, health and education from limited information. We also deploy multivariate copulas to study the dependence between dimensions and their impact on multidimensional inequality. We propose to use a battery of inequality measures, including relative and absolute indices.

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