Unequal Data

I see that question time was filled with references to the UNDP Human Development Report on Human Mobility and Development and a book called The Spirit Level. No Right Turn and FrogBlog are also terribly excited about the report, as if inequality is the only thing that matters. They probably get this idea from the book The Spirit Level which plots various criteria against an inequality index, elegantly demonstrating good correlation between inequality of income and worsening health and social statistics.

The book is well reviewed by David Runciman, who points out that the book may be merely demonstrating average improvement, rather than overall improvement (i.e. increasing equality may only improve the lot of the low-income group, improving the average). There is also the problem of comparing countries who may collect data in very different ways. The book does get over this problem somewhat by demonstrating a similar correlation amongst US states, although I note that the scatter in the US state graphs is much broader. I also noticed that some of the international graphs have fewer countries than others and I wonder if the data was limited to those countries or whether outlying data was removed (I have not read the book, only seen the graphs). There is also the common question as to whether this correlation represents causation (viz. does inequality cause social and health problems or does the social construction of a nation lead to inequality and social and health problems?)

We already know that inequality is not the only thing that matters when it comes to health parameters. There is a well-established link between wealth as measured by GDP per capita and longevity. Clearly, the wealth of a country matters far more than the equality of income. The people of Zimbabwe are almost universally poor and therefore have great equality of income. They are also dying of malnutrition and have a life expectancy of half that of New Zealanders. Equality of income only becomes meaningful when a nation is prosperous enough to be concerned about wellbeing as opposed to mere survival.

I have not read the book, so this is not meant to be a criticism of the material, simply a caveat on drawing overly enthusiastic conclusions from it. And on that note, I could extend the same caution to the UNDP report. Metiria Turei should have read the footnotes of the table she was eagerly using:

“Because the underlying household surveys differ in method and type of data collected, cross-country comparisons should be made with caution as the the distribution data are not strictly comparable across countries.”

So gleefully declaring that we are the sixth worse in income equality is essentially completely meaningless. Worse still, Turei is apparently using the Gini coefficient to get that figure and I don’t think she quite knows what it means. The Gini coefficient is a measure of distribution of inequality, rather than plain inequality, with 0 meaning a perfect, straight-line distribution and 100 meaning, essentially, rich and poor people only and no middle class. New Zealand’s score of 36.2 is actually quite reasonable and denotes a healthy middle class. It is also very far from the bottom of the table – it is only the sixth “worst” in the “Very High Human Development” section. It is also no accident that the countries with the lowest Gini scores are socialist havens with a large middle class.

Finally, the data used in the UNDP table is based on 2007 figures. This means that anything disagreeable on that table can be laid directly at the door of the previous Labour government. This may explain why the Greens are leading the charge on this one.

Related posts: