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  • Inequality of opportunity: an emerging body of literature

    7
    Dec
    2011

    By

    By: Lucas Figal Garone

    Inequality of opportunity:

    Academia, general public and governments seem to understand inequality differently.

    While many in academia and in the public sector focus on the measurement of the distribution of certain outcomes – e.g. income or total consumption –, in the real world, people seem to care about opportunity: that all individuals have the same opportunities to attain these outcomes. In this sense, most of the popular public programs are aimed at reducing inequality of opportunities in education, basic health, housing, and access to the labor market or basic services.

    But equality of opportunity does not imply equality in outcomes. For example, two students facing the same constraints may take different decisions and exert different efforts at school.

    They may obtain different scores and reach different achievements. But this inequality may not be considered unfair.

    Thus, a key argument in the attitude to inequality is whether inequalities are caused by factors that the individual cannot change – i.e. factors that lie beyond the individual´s responsibility – or by factors that depend on the individual choices – i.e. factors for which the individual can be held morally accountable –.

    In this context, Roemer (1998) first introduced a formalization of the definition of equal opportunities. For this, he divides the factors that determine an outcome into factors that the individual does not choose (“circumstances”) and factors that the individual choose (“effort”).

    Defining a “type” as a set of persons with the same circumstances, Roemer suggests equalizing what he calls “advantages” – i.e. important outcomes such as earnings, household consumption or educational performance – for each centile of the effort distribution across “types” but not within “types”.

    However, Roemer was not the first economist to think and argue that equality of opportunities should be of primary social concern and the ethical space to focus on. Other economists such as Rawls (1971), Dworkin (1981), Arneson (1989), Cohen (1989), Barry (1991), Le Grand (1991) and even Sen (1985) had made similar arguments.

    Recently, some progress on the measurement of inequality of opportunity has been made. Bourguignon et al. (2003, 2007) first propose an inequality decomposition based on a parametric approach and apply it to the distributions of male and female earnings in Brazil.

    They find that observed circumstances account for around a quarter of the value of the Theil index and that parental education is by far the most important circumstance affecting earnings.

    From this work new methodologies began to be proposed trying to explain the influence of inequality of opportunity in total observed inequality. More recently, Checchi and Peragine (2010) in a good contribution provide a new methodology to measure inequality of opportunity based on a non-parametric decomposition and apply it to income distributions of Italy.

    According to their results, inequality of opportunity accounts for about 20% of overall income inequality in Italy.

    Most of the studies have quantified inequality of opportunities in income distributions. However, the need for empirical work on the measurement of inequality of opportunity in education has been repeatedly stressed. In this direction, this month I am finishing a study titled “Inequality of Opportunity: The case of Education in Argentina”.

    In this paper I assess for the first time inequality of opportunity in Education using a parametric approach and the student’s performance as outcome variable.

    In a next post, I will review some of its results.

    Lucas is a consultant at the Office of Strategic Planning and Development Effectiveness at the IDB. He is originally from Buenos Aires, Argentina.  He graduated in 2009 with a degree in Economics from Universidad de Buenos Aires. He obtained a fellowship from Universidad de San Andrés for his Masters in Economics and graduated in 2010.  He taught Statistics I and II at Universidad de Buenos Aires, and Economics I at Universidad de San Andrés. He has been an active member in several charity initiatives in Argentina. His research interests are Development Economics, Distribution Economics and Applied Econometrics.

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