De Muro, Pasquale; Bechini, Tommaso (2017). 'A multidimensional analysis of well-being inequality in Italy, before and after the Great Recession' Paper presented at the annual conference of the HDCA, Cape Town 2017.
In Italy, in recent years there has been a significant attention both at scientific and political level– to the multidimensional nature of well-being and its measurement, as alternative or complement to GDP and personal income. Notwithstanding, analyses of poverty and inequality in Italy, like in most countries, remains firmly focused on traditional monetary variables, with few exceptions mostly concerning horizontal inequalities. On the contrary, theoretical (especially Sen 1980, 1992, 1997) and methodological developments suggest that not only well-being but also inequality –both vertical and horizontal– should be analyzed and assessed with a multidimensional approach, as inequality is not just about “slicing the pie” (De Muro, 2016). This paper presents an analysis of well-being inequality in Italy before and after the Great Recession, utilizing multidimensional measures that are an extension of the Atkinson index (Aaberge and Brandolini, 2015), as well as gender and regional decompositions, and a comparison with traditional unidimensional monetary measures. In the selection of well-being dimensions and indicators to be included, we adopted, under the constraint of available data (the household survey IT-SILC), both the capability approach – i.e. we chose dimensions that represent various “achieved functionings” which constitute persons’ well-being (Sen, 1985) – and the “constitutional approach” recently proposed by Burchi, De Muro and Kollar (2014), that allows to select dimensions which enjoy broad and enduring political consensus in the country. As a result, we selected six non-monetary dimensions –including subjective well-being– plus income. Some relevant dimensions suggested by the constitutional approach, such as political and civic participation, unfortunately could not be included because of data limitations. Also, concerning included dimensions, available indicators often are not ideal from a theoretical perspective (Burchi and De Muro, 2016) and do not cover adequately each dimension. After normalization, for the aggregation of indicators within and between dimensions we adopted a non-compensatory CES-type function. The main empirical results are: 1) between 2005 and 2014 overall multidimensional inequality declined in Italy if we take lower values of the Atkinson parameter (higher aversion to inequality), while it remains substantially unchanged if the parameter is higher (lower aversion to inequality); 2) interestingly, income inequality is always lower than inequality in any non-monetary dimension, for any value of the parameter; consequently, multidimensional inequality is higher when we exclude income; 3) Southern Italy has both lower levels of well-being and much higher levels of inequality for any value of the parameter, thus confirming the historical Italian regional divide as well as the absence of convergence; 4) inequality between females in 2005 was much higher that between males, while in 2014 the two are similar; also, in 2005 the contribution of between males inequality to overall inequality is more than double of between females inequality, while the contribution of the latter prevails in 2014. We think that these results, especially point 2, are important for the current debate about tackling inequality in Italy –and in Europe more in general–, as they confirm that the prevailing focus on monetary dimensions is inadequate and could misguide social and economic policy.