What is welfare – and different understandings of welfare – including central aspects of the concept Lecture 1.

What is welfare – and different understandings of welfare – including central aspects of the concept

Lecture 1

At what level to analyse welfare?

• Macro or micro• Subjective or objective• Use of subjective as well as objective indicators as an

indication of that the utility of goods is not the same for all

• Furthermore, that we compare our own situation with others

• Can be difficult analytically to move between levels – however important as differences in the level can help in explaining different viewpoints and understanding of welfare

A few quotes to illustrate what welfare is

• “well in its still familiar sense and fare, primarily a journey or arrival but later also a supply of food” (Williams, 1976)

• “Welfare 1 well-being, happiness, health and prosperity (of person, community etc.) 2 (welfare) financial support from state” (Oxford Dictionary, 2001)

Aspects of welfare

• Happiness• Security• Preferences• Need• Rewards• Again important to look at the relative

comparison of individual’s or group of individuals

Example of indicators of welfare

  Monetary Non-monetary

Objective Income pr. inhabitant

Average life

expectancy

Subjective Feeling that

there is not

enough money

Level of

happiness

What constitutes happy countries Happier countries tend to be richer countries. But more important for happiness than income are social

factors like the strength of social support, the absence of corruption and the degree of personal freedom.

Over time as living standards have risen, happiness has increased in some countries, but not in others (like for example, the United States). On average, the world has become a little happier in the last 30 years (by 0.14 times the standard deviation of happiness around the world).

Unemployment causes as much unhappiness as bereavement or separation. At work, job security and good relationships do more for job satisfaction than high pay and convenient hours.

Behaving well makes people happier.

Mental health is the biggest single factor affecting happiness in any country. Yet only a quarter of mentally ill people get treatment for their condition in advanced countries and fewer in poorer countries.

A stable family life and enduring marriages are important for the happiness of parents and children.

In advanced countries, women are happier than men, while the position in poorer countries is mixed.

Happiness is lowest in middle age.

Economic understanding of welfare• Welfare as fulfilling the needs of the consumers (citizens?)• welfare is another word for utility– when measured it is often

related to income and wealth (gini, poverty)• welfare can in this understanding not be added across individuals

– and this makes the estimation of a societal welfare-function difficult if not impossible

• Well-being and distribution of consumption possibilities therefore in focus

• Sen’s capabilities – a set of functioning's including a positive concept of freedom

• GDP pr. inhabitant is therefore often seen as a good indicator of the level of welfare in a country

Welfare in a social policy understanding

• “all public provided and subsidized service, statutory, occupational and fiscal” (Titmuss, 1968)

Social indicator research point at a broader perspective:Satisfaction, quality of work, health, belongingness etc –

the ability to fulfil needs, but also social trust, literacy, life-expectancy

Absolute poverty defines goods necessary to live, including shelter and a basket of goods with sufficient nutrition, however the level will change over time. Therefore often a relative approach. This has, for example, influenced EU’s definition and understanding of relative poverty and in risk of living in poverty.

Welfare at micro and macro -level

• Macro : GDP pr. inhabitants and spending on welfare policies (an indicator of available resource for the public sector)

• Micro: Subjective feeling and level of happiness and number of people living in poverty

UNICEF’s 6 Dimensions of child well-being

• Material well-being• Health and safety• Educational well-being• Family and peer relationships• Behaviours and risks• Subjective well-being

OECD’s Social Indicators• Median equalized household income in USD PPPs

• Employment to population ratio for population aged 15-64

• Unemployment rate for the population aged 15-64

• PISA mean scores on the reading literacy scales

• Gini coefficient of income inequality

• Poverty rate

• Percentage finding it difficult or very difficult to manage on current income

• Percentage of average gross wage to reach a poverty threshold of 60% of median income for lone parents with two children

• Life expectancy at birth Infant mortality rat

• Rate of positive experience

• Percentage of persons satisfied with water quality

• Percentage of people expressing high level of trust in others

• Corruption index

• Pro-social behavior

• Voting rates

• Tolerance of diversity

Change in perception of what welfare is – and its influence on social policy

• When historical understanding of what welfare is – and what goods and services are necessary for a decent life – then this has implications for welfare policies, including what is public and private responsibility.

• New options and roles can also change perception of what social policy shall do

• Altruism might change – deserving/not-deserving perceptions can still, as historical, have an impact on social policy

• Church, market and family still have, in many countries, a central role as provider and in financing of welfare

A Definition of welfare

• the highest possible access to economic resources, a high level of well-being, including the happiness of the citizens, a guaranteed minimum income to avoid living in poverty, and, finally, having the capabilities to ensure the individual a good life

Types of benefits and their relation to principles of justice

Principles of justice Benefit types – Policy Orientation

Need Means-tested income maintenance and services (health, education, and housing); special needs provision; and universal human needs.

Merit Social insurance schemes; conditionality of welfare receipt; equal opportunity (meritocracy); and counseling and training

Equality Guaranteed unconditional basic income; universal public services; equalization of income; fair equal opportunity; and affirmative action

Loss of income

• The degree of loss depends on time on welfare benefit – and the level of public benefits. Often lowest at short run, but larger in the longer time perspective

• Their might be differences in relation to, for example, people with disabilities.

Universal or selective benefits

• Universal benefits connected to citizenship• Selective implies membership of typical a

social insurance fund• Universal benefits can be given based upon

age, need or a specific social contingency

Fixed or flexible benefits

• Flexible benefits makes it possible to look into the whole-life situation of a person/family

• Fixed benefits implies that the citizen know the seize of the benefit

• Legal fixed benefits might risk to imply lower benefits – flexible level of benefits risk that those best able to communicate with the street- level bureaucrat gets the highest benefit

Types of benefits

• In-cash• Services – free and/or with user charges• Vouchers

Organisation and steering in country xx

• Here space for information on and presentation of the specific approach to welfare in a given country

Effectiveness vs. Justice

• A simple system with few rules easiest to administer

• However, could imply benefits (child allowances often an example) also to those with high income

• Delimitation, calculation and number of rules need to be balanced against the ambition of a high level of justice

• ”the feeling of justice” – might influence the willingness to pay

Summing- up

• Welfare has many dimensions of economic and non-monetary elements

• Analytically often most simple by using objective indicators

• There is different principles for benefits and services and also the management and steering hereof