Social welfare functions that assign weights to individuals based on their income levels can be used to document the relative importance of growth and inequality changes for changes in social welfare. This method is applied in a new working paper by David Dollar, Tatjana Kleineberg, and Aart Kraay. They find that, in a large panel of industrial and developing countries over the past 40 years, most of the cross-country and over-time variation in changes in social welfare is due to changes in average incomes. In contrast, the changes in inequality observed during this period are on average much smaller than changes in average incomes, are uncorrelated with changes in average incomes, and have contributed relatively little to changes in social welfare.
In April 2013, the Social Progress Imperative launched a research product, the Social Progress Index, during a forum at the University of Oxford. Now it's year two and they've grabbed headlines with the results of the 2014 index, finding New Zealand is on top and Chad at the bottom of the overall rankings. What also jumps out are big differences in social progress for countries with similar incomes.
According to Index, economic success alone doesn't explain social progress. The USA (16th), for example, ranks lower than New Zealand, even though the Kiwi nation's GDP is lower. The same pattern is seen for countries at all levels: Ghana (96th) has a similar GDP per capita as Nigeria (123rd), but scores a lot higher on social progress.
- Social Development
Much confusion has arisen in policy debates in India about whether or not growth has helped the poor; if yes, how much and over which time period; and whether growth is leaving certain social and religious groups behind. There remains deep skepticism on the part of NGOs and journalists that growth has been good for groups that were disadvantaged over long periods of time in the past.
Arvind Panagariya and I decided to investigate these claims – see here and here. We ask simple questions relating to the evolution of poverty in the post-reform era in India. How have poverty levels changed over the last few decades? We scrutinize changes across 6 different dimensions: (1) over time, (2) across states, (3) across rural and urban regions, (4) across social groups, (5) across religious groups, and (6) using different poverty lines. We find no basis whatsoever for claims that growth in India has left disadvantaged communities behind.