How should inequality feature in a post-2015 agreement?

18 April 2013 12:30 - 14:00 GMT+01 (BST)
Public event
Streamed live online

Speakers:
Alex Cobham
– Research Fellow, Center for Global Development (CGD) 
Marion Steff
– Policy Advisor for Social Inclusion, Sightsavers
Kevin Watkins
– Senior Fellow, Centre for Universal Education, Brookings Institution

Discussants:

Ricardo Fuentes-Nieva
– Head of Research, Oxfam GB
Naila Kabeer
– Professor of Development Studies, School of Oriental and African Studies (SOAS)

Chair:

Claire Melamed 
– Head of Programme, Growth, Poverty and Inequality, ODI

Description

A widely-acknowledged limitation of the Millennium Development Goals is a neglect of inequality – it is argued that the targets encouraged a focus on ‘low hanging fruit’, those people that were easiest to reach. In the run-up to 2015, a great deal of debate has highlighted this neglect and considered the many ways in which inequality might feature in a new global agreement. At this meeting, which takes place shortly after the UN-facilitated Global Consultation on Addressing Inequalities and precedes a meeting of its Advisory Group, we invite panelists and discussants to give their own insights and suggest proposals. The presentations will address three aspects of this debate:

  • Putting the Gini back in the Bottle - 'The Palma' as a new inequality measure
    New research proposes the 'Palma' measure (a ratio of the incomes of the top 10 per cent to the bottom 40 per cent) as more intuitive and policy-relevant than the commonly used Gini coefficient for tracking inequality, and argues for its inclusion in a post-2015 framework.
  • Incorporating inequalities associated with disability, mental health & older age
    Work being undertaken by the ‘Voices of the Marginalized’ NGO consortium (ADD International, HelpAge International, Sightsavers) with Institute of Development Studies is eliciting the inputs of people affected by these issues through participatory action research in Bangladesh. Gender disparities were a focus of the MDGs but other sources of inequality were largely overlooked. How can a new agreement reflect the needs of a broader range of disadvantaged groups?
  • Prospects for a post-2015 agreement to tackle universal inequalities
    Bringing about more equity is one of the greatest development challenges of our age but complexity should not be a pretext for inertia. Bold ambition and political commitment is needed. Goals should be universal and wide-ranging and consider concrete targets such as limiting income differences among rich and poor, and eliminating wealth and gender gaps in areas such as child survival, antenatal care and school participation.

A light lunch will be served from noon.

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Claire Melamed introduced the event, pointing out that we are still talking about inequality at this stage of the post-2015 process, which in itself is a marker of the substantial progress that has been made in the debate. She highlighted three main conversations underway in considerations of inequality and post-2015 goals:  

1. Income inequality – this focuses on the different ways to measure inequality both within and between societies (considering who should be compared with whom).

2. Horizontal inequality – the social, cultural, and demographic barriers to poverty reduction for specific groups (those with disabilities, monitories, and other groups that are over-represented among the poorest).

3. Broader considerations – of the consequences of inequality to all of us across all societies. This reflects the aspirations for a broader approach to poverty than during the MDGs, and to widespread interest in a universal future framework (applying to all countries).

Kevin Watkins discussed how the rise of inequalities between and across countries continues, and that focusing on inequality is a question of social justice. It cuts across all goal areas, and is a crucial tool to turn the spotlight on the transformations that truly matter for development. Yet reaching people at the margins poses different types of policy challenges, and requires departing from what we’ve been doing so far. Inequality has become one of the defining political mobilisation causes of our time, and we need to tap into the extensive social movements around it if we are to make the post-MDG project meaningful. Yet the debate often dissolves into technocratic discussions. Some of the main challenges that emerge as common undercurrents: 1. Consensus that inequality is important, but much divergence on what types of inequality matter. The idea of equality of opportunity, e.g. in health and education, vs. consumption and expenditure; 2. Group based vs. individual disparities; 3. Should we focus on wealth based disparities or the distribution of outcomes on the goals themselves – i.e. wealth distribution, vs. education and health outcomes distribution?

There is a debate to contend with among Stephan Klasen, Ravallion and others, based on the premise that: If you set an absolute goal then why do disparities matter? Or, if we have a framework that focuses on the ‘absolutes’, do we really need to look at the ‘relatives’? While the World Bank focus on the bottom 40% has nothing to do with inequality, it has permeated the post-MDGs debate; in contrast groups like Oxfam have adopted a redistributive focus. On data and measurement, we need to be more upfront about how little we actually know. DHS surveys every 5 years are not adequate, and we have no nimble tools to help us get the real time picture.

Why put inequality on the post-2015 agenda?

·         It’s indisputable that income and other disparities are demonstrably slowing progress across the MDGs, e.g. we know progress in education has stalled since 2005 due to governments failing to target the most marginalised children; there is a similar picture in health.

·         The MDGs were about sending a basic signal to governments, and post-2015 needs to turn the spotlight on the fact that if you want to accelerate progress you need to think a lot more about how to deliver at the lower end of the distribution spectrum.

·         World poverty trends reflect that inequality matters for poverty reduction and growth gains have been captured by the richest quintiles. Poverty reduction and growth are thus delinked, so if we ignore distribution we won’t achieve goals on poverty. This is why we cannot afford to rely on absolute goals, as policy on distribution will be essential to poverty reduction.

Marion Steff presented findings from a participatory research project in Bangladesh, on Inequalities and the Voices of the Marginalised. She highlights that inequality is a persistent global challenge, and questions why it was an important aspect of the Millennium Declaration but then did not make it into the MDG. This should not happen again in a post-2015 agreement. Steff provided and overview of how marginalised populations are not adequately reached by the MDGs, and the vast scale of the problem for ageing people and those with disabilities. Therefore in order to make sure the next development framework addresses their needs it is important to understand the nature of the challenge that these marginalised groups face. The data challenge holds us back from effectively addressing marginalised groups, as data remain limited, highly aggregated and there is no systematic gathering of data on disabled people, older people or on mental health. This needs to be addressed. 

Based on the findings of the research project in Bangladesh Steff outlines key asks of a post-2015 framework: 1. It is rights based, with equality and non-discrimination as priority themes; 2. It includes a cross-cutting theme on equality and non-discrimination in all development goals; 3. The full and equal participation of people with disabilities and older people in the development of the framework.

Alex Cobham then presentedhis proposal with Andy Sumner on a Palma ratio to be used alongside or to replace the Gini as a measure of income inequality post-2015. He levelled a critique of the Gini on the basis that it 1. Does not adequately support accountability; 2. Hides normative assumptions on what types of inequality we should care about, as it is over-sensitive to the middle income distribution, and insufficiently sensitive to inequality between the top and bottom ends of the income spectrum.

The Palma ratio relies on the top 10% and bottom 40% ratio. This means that when reading it you can immediately deduce, for example, that the top 10% group is earning two or four times the lowest 40% income group, as a share of national income. This ratio therefore succinctly reflects and captures the reality of national income distribution. The middle income earning group tends to be statistically stable across contexts and over time, and therefore the Gin which is more sensitive to the middle tells us less about shifts in top and bottom distribution while the Palma tell us more about fluctuations in distribution.

The Palma should be viewed as one more group based measure (capturing the top decile vs. bottom 4 deciles). It admittedly does not reflect much about group-based inequalities, which is a limitation to the measure and which is why it could be applies alongside other measures sensitive to these.

Ricardo Fuentes discussed what inequality will mean in the context of post-2015 goals. Inequality is damaging societies, not only the poorest people, so we need to make sure it stays on the post-2015 agenda. The trend we are observing in most countries and in terms of distribution globally is a massive concentration of incomes. In data on tax returns (which gives us some info on incomes) we can see the share of total incomes among the top 1% is increasing dramatically, and a paper by Branko Milanovic shows the same trend at the global level. This information offers clear justification for a strong focus to address inequality.

Yet it also begs the question of why inequality was not on the agenda a few years ago; it used to be seen as the result of merit, but we now know there are two sources of inequality: individual choices and merit etc. is one, and the other is about inequality on the basis of privilege (access to power, voice etc. of certain groups). It is important to disentangle merit vs. privilege based inequality. WE also now know that inequality or addressing it is a political choice, and evidence reveals that 1. higher inequality is closely associated with low social mobility and lower equality of opportunities; 2. concentration of income is closely associated with elite-capture, a distortion of the political process and regulatory weakness; 3. concentration of income in the US is correlated with number of right-leaning congressmen.

Naila Kabeer discussed how post-2015 goals would need to look at new measures and find ways of combining horizontal and vertical inequalities. This will require multiple measures including beyond incomes. The debate begs the question - what are ‘acceptable’ levels of inequality? This is related to how much of inequality is a product of circumstances in control of governments and other actors, and it is relevant that policies and institutions have evolved in ways that keep their own status quo intact.

There is a risk that post-2015 goals rely on the ‘low hanging fruit’ with too little ambition, but we can’t afford to go on with business as usual and any future development framework will require an above average effort from all involved. Gender inequality remains one of the most pervasive challenges, and this is not a different kind of inequality but rather an intersecting inequality. It is foundational to enabling or compromising all outcomes, and cannot just be ‘glossed over’ – so we need to put forward a stand-alone goal on inequality. Inequality casts light on haves and the have-nots while a poverty focus alone cannot.

The Part 1 Q&A encompassed discussion of: Whether to focus on income vs. groups in future policies and measures of inequality; Is the post-2015 inequality agenda new or is it an extension of the chronic poverty agenda?; Social protection has had demonstrable impact on inequalities - e.g. in Brazil; so why is SP not getting the recognition it deserves in the post-2015 debates?; If Palma is more useful that Gini to reflect income disparity, could it also be better to capture non-income measures, and what scope is there for this?

Richard Morgan then provided an update from New York on the global post-2015 inequality consultation. Post-2015 should focus on both income and groups, and the UN is looking at options, with Palma as an interesting option on income. We could envisage and work towards constructing a proposal combining a headline goal on human rights linked to inequality – featuring prominently the different groups affected by inequality, including income-based, livelihood and related measures of the dimensions of inequality at the level of targets and indicators. This reflects the urgent need for much more disaggregation, and post-2015 work is now coalescing around a powerful multidimensional proposal on inequality that will encompass issues of disability, gender, locality, minority and ethnic status.

But more work is needed now to move towards a consolidated proposal that could achieve consensus on the ideas that exist. E.g. should the headline goal be on gender and women’s empowerment or encompass it? The debate on inequality and gender as headline or sub-goal objectives poses some risk to both agendas.

There are many variations of proposed zero-based goals – our feeling is that in addition to zero based targets it would be essential to have an approach addressing structural factors alongside this in order to capture the range of discrimination and stigma, violence, fear of violence, that act as barrier to inclusion. There is a possibility of using social protection tools to address some of these, particularly in early life years.

On the politics: at the Open Working Group’s first substantive discussion at the UN there was a lot of recognition of the issue of inequality. Many of the regional blocs and the g77 made reference to it. However there is a risk of assumptions that a focus on eradicating extreme poverty will take of inequality, but evidence points to the reverse being the case. This is a difficult case to make politically, and most of the discussions at the UN have been quite sector based, without much recognition of the need to address exclusion and structural inequalities.

Part 2 Q&A encompassed discussion of the importance of gender as a distinct issue (gender is not a ‘group-based’ inequality as it affects over half of the world’s population). There was concern that losing a gender goal will signal to powerful groups that it is okay to back-track on existing gender commitments. There was also discussion of how the Gini and the Palma would compare in reflecting inequalities in rich countries if a new agreement is universal, and concerns over how to ensure the actual decision-makers take inequality seriously in a new framework. Some economists argue inequalities are necessary as a phase of countries’ development.

Speakers pointed out the need to avoid over-loading future goals, but equally the need to avoid under-ambition. While most people understand principle of equal opportunities, many governments would be loath to commit to such an agenda or the broader inequality agenda. We therefore need equity stepping stones, such as $2.25 a day income measure; or a 2020 target for halving the mortality gap between the richest and the poorest; or a focus in the new goals on the best and worst performing parts of the country. These would help us focus attentions on key aspects of inequality. As a research community we urgently need to develop the tools to monitor inequality, giving government ministries an idea of the implications. Progressive taxes and accountabilities on taxation approaches would make a strong contribution.

Overall the top priorities of panellists for a post-2015 agenda that addresses inequality are: Better and more disaggregated data to help make inequalities visible; A human rights focus linked to accountability; Serious global and national level discussions of taxation structures; A focus on the early childhood link to persistent inequalities; A goal on gender; Strongly linking the post-2015 agenda with participation at the local, national and international level, and defining the means to achieve any new goals.