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Inequality and Welfare in Quality of Life Among OECD Countries: Non-parametric Treatment of Ordinal Data

  • Martyna Kobus
  • Olga Półchłopek
  • Gaston Yalonetzky
Article
  • 42 Downloads

Abstract

The last few years have witnessed an increasing emphasis on going beyond GDP per capita when measuring a nation’s quality of life. Countries (e.g. UK, France, Canada, Germany, Italy, Japan, Korea, Spain) and international organizations (e.g. OECD) have been developing methods suitable for non-income indicators. However, this involves serious measurement challenges due to: (a) multidimensionality, and (b) ordinality (i.e. unlike income these indicators do not have a natural scale). This paper is the first summary of the methods developed in the last decade in the field of inequality and welfare measurement to address these challenges. Next, we utilize the presented methodology and provide evidence on the ranking of OECD countries in terms of welfare and inequality in education and happiness. We find that when dimensions are analysed separately, welfare dominance is frequent (42% of all comparisons in education and 31% in life satisfaction). The number drops to only 4.4% for bivariate dominance, which highlights the empirical relevance of multidimensional analysis. Greece, Portugal and Hungary feature the lowest joint welfare. Northern European countries are most often dominating and Southern European countries are most often dominated in both inequality and welfare analyses.

Keywords

Ordinal data Quality of life Inequality and welfare Partial order Majorization Education-happiness gradient 

JEL Classification

I31 D63 

Notes

Acknowledgements

The study was funded by Narodowe Centrum Nauki (Grant No. 2016/23/G/HS4/04350) and Ministerstwo Nauki i Szkolnictwa Wyższego (Grant No. MNiD).

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Copyright information

© Springer Nature B.V. 2018

Authors and Affiliations

  1. 1.Institute of EconomicsPolish Academy of SciencesWarsawPoland
  2. 2.Vistula UniversityWarsawPoland
  3. 3.University of Leeds Business SchoolLeedsUK

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