DEVELOPMENT

More documents

Recommendations

Info

3.1 The concepts of welfare Kaie Kerem, Kaire Põder Welfare, as a concept, can be operationalized narrowly or more broadly. The narrower conceptualization is driven by personal perspectives, i.e. how we assess their situations (subjective well-being). This assessment depends on people’s circumstances and personality traits, as well as the bases of comparisons. The latter indicates that we tend to compare our situation with others, and perceive ourselves to be happy, when others are worse off, in comparison to us. The broader concept of welfare takes into account the state’s role as the mediator of a person’s welfare. In this case, the role of the state is measured based on its function as the provider of public services, especially as the creator of a sense of security, and as the guarantor of a minimal standard of living. Our aim is to introduce the theoretical backgrounds for both the narrower and broader approaches, and to reveal the interconnections between them. By applying individual welfare measure the problems start with underlying theoretical and empirical groundings Figure 3.1.1 Satisfaction and wealth (wealth index is based on PPP per capita GDP, (EU27=100, satisfaction index is measured as the % of respondents who are “very satisfied” or “rather satisfied” with their lives.) Satisfaction 100 90 80 70 60 50 40 30 ROU BUL LVA LTU POL EST HUN PRT CZE SLO MLT SVK CYP GRC BEL FRA ESP ITA GBR SWE NED DEN FIN 40 60 80 100 120 Wealth DEU IRL AUT Here and hereafter, the areas shown in blue indicate a 95% level of confidence. Sources: Eurostat (2011) and Eurobarometer 76 (2011), the authors’ calculations. Comment: Luxembourg was left out, since its income level is more than 50% higher than the EU average. of the concepts. In many sub-disciplines within social sciences historical and empirical evolution of the welfare measures don’t coincide, while mostly theoretical approach is prevalent in economics and mostly typology-building in political science. The increasing volume of national accounting time series, and the surveys based on micro-evidence of individual attitudes and behaviour, enable the modelling of individual welfare or running of comparative studies on social expenditures by states. One of the grounding functions of the contemporary state is the redistribution of goods (such as education or commonitures vel analysisow to measure?essed level of satisfaction.s by states.nu doktoritöö sissejuhatavast peatükistsocial protection) against the risks that are prevalent in market oriented systems. These redistributing states, which are focused on ensuring equal opportunities, are called welfare states. This chapter is structured as follows. First, we introduce the theoretical concepts behind welfare measurement. We operationalize the concept of welfare, and show the associations between individual satisfaction and statistical macro-indicators. In the second part, we introduce the recent welfare developments in Estonia concentrating on the period after the 2008 financial crisis, indicate the comparative perspective, and discuss future trends. In the third section, we examine the associations between the welfare regimes and individual self-assessed level of satisfaction. 3.1.1 Individual well-being and state level analysis: how to measure? Using consumption expenditures or income as welfare indicators is common, since historically poverty and low standards of living were the main challenges that were confronted. In mainstream economics, well-being is defined as the utility from consumption of certain bundles of goods, while later approaches also encompassed leisure. The concept of utility stresses the subjectivity of well-being, the utility functions depend on risk adverseness or inter-temporal preferences (patience) – for example, risk-averse and patient individuals are ready to shift consumption to the old age. However, others are more risk-loving, and prefer to consume today, rather than in the future. Therefore, it is imminent that under utility-based approaches people’s well-being measures cannot be aggregated into a uniform index, or indicator, which would adequately take account of the good characteristics of the individual utility functions. In addition, the critics who are against measuring subjective well-being (by surveys) indicate that the data can be trusted only if it depicts the information from 106 Estonian Human Development Report 2012/2013
choices made, not what people say they would do. Since the concept of subjective well-being or utility lacks an explicit definition, then the design of the surveys also differs. However, the measurement of well-being based on surveys is a popular method for assessing people’s feelings, satisfaction and emotional states. In psychology, well-being is understood to be a combination of good feelings and coping (see also sub-chapter 3.3). Sociology and economics define material and spiritual coping as a precondition for well-being, rather than as a component. This measure of well-being could be treated as being satisfied with one’s life. According to some assessments, (an overview is provided by Ferrer-i-Carbonell (2002)), the lack of a clear and unequivocal definition for subjective well-being does not prevent the measurement of the same. Figure 3.1.1 shows an association between the wealth of the state (GDP, per capita) and satisfaction with life – a unit increase in the wealth index is accompanied by a 3% increase in the satisfaction index. The wealthy Nordic countries – Finland, Sweden and Norway – are located above the regression line. The populations of these states are more satisfied than the average. Since this data dates from 2011, we see that the majority of the populations in the European states with economic difficulties (Greece, Italy and Portugal), as expected, are less satisfied, on average, than the wealth of the states would presuppose. Including these outliers, it shows that Estonia’s population, at its wealth level, is more satisfied than the average. In 1974, Richard Easterlin wrote an article, which attracted little attention at the time, indicating that in international comparisons, the average reported level of happiness did not vary much compared to national income per person. Wealth and happiness are related (rich people tend to be happier than the average), but in the long term, the sense of well-being does not increase along with income. This observation is called the Easterlin paradox. Recently, numerous attempts have been made, in happiness studies, to disprove this paradox (e.g. Stevenson and Wolfers 2008; Deaton 2008). Using individual-based data, Di Tella et al. (2001) show that, if other conditions are equal, rich, educated, married, students, self-employed, and retired have a greater sense of well-being, as do women, and those who are really young or quite old (in the age-related dimension, the well-being curve is U-shaped, where the bottom of the curve is reached when one is about 45 years old). Also the unemployed and divorced are unhappy, including those who live with teenagers. Therefore, there is a multiplicity of factors affecting happiness that are not related to material well-being. Figure 3.1.2 shows the association between unemployment and satisfaction: one percentage point increase in the unemployment rate decreases satisfaction with life by 2.3 percentage points. In the case of Estonia, relatively high unemployment has a negative impact on life-satisfaction. Di Tella et al. (2001) indicates that, in high-unemployment countries people are unhappier than average, even when they themselves are not unemployed – apparently, the feeling of happiness is affected by the fear of becoming unemployed. Figure 3.1.2 Unemployment rate and life-satisfaction (% of the population that is satisfied with life) Satisfaction 100 90 80 70 60 50 40 30 20 10 NED SWE DEN LUX FIN DEU GBR BEL SLO AUT CZE CYP FRA MLT POL EST ITA ROU Thus, both the proponents and opponents of the Easterlin paradox may be justified, i.e. the complexity of the concept of well-being that contains not only monetary measure; freedom, a stable job, good health, etc. are also important (Granham 2010). Unfortunately, the latter are endogenous, which means that the wealthier countries have means to affect non-monetary well-being. BUL SVK LTU HUN PRT IRL LVA GRC 0 5 10 15 20 Unemployment Sources: Eurostat 2011 and Eurobarometer 76 (2011), authors’ calculations Figure 3.1.3 The relationship between income distribution (Gini coefficient) and satisfaction with life (% of the population that is satisfied with life), 2011 Satisfaction 100 90 80 70 60 50 40 30 SLO SWE CZE NED FIN LUX BEL AUT MLT SVK HUN DEN CYP DEU ITA FRA POL GBR EST GRC IRL LTU ROU PRT ESP BUL 22,5 25 27,5 30 32,5 35 Gini Source: Eurostat 2011 and Eurobarometer 76 (2011), authors’ calculations ESP LVA Estonian Human Development Report 2012/2013 107
Page 1:
ESTONIAN HUMAN DEVELOPMENT REPORT 2
Page 4 and 5:
Table of Contents 1 Human Capital /
Page 6 and 7:
Dear Reader Since the moment when E
Page 9 and 10:
1Human Capital Estonian Human Devel
Page 11 and 12:
the HDI’s content has also been h
Page 13 and 14:
Figure 1.1.1 The human development
Page 15 and 16:
Figure 1.1.7 The income sub-index:
Page 17 and 18:
The results of the Princeton Projec
Page 19 and 20:
the hypothetical generation. The to
Page 21 and 22:
Figure 1.2.3 Life expectancy. Eston
Page 23 and 24:
Table 1.2.2 also presents the most
Page 25 and 26:
The new trends that are appearing i
Page 27 and 28:
Figure 1.2.8 Components of populati
Page 29 and 30:
New features were introduced into E
Page 31 and 32:
Initiation of Voluntary Birth Contr
Page 33 and 34:
Table 1.3.1 Best-known educational
Page 35 and 36:
(OECD 2012b). Therefore a certain r
Page 37 and 38:
The reciprocal dependence of the pr
Page 39 and 40:
Figure 1.3.8 Percentage of students
Page 41 and 42:
Table 1.3.4 The quality of educatio
Page 43 and 44:
1.4 Health Raul-Allan Kiivet Change
Page 45 and 46:
Table 1.4.1 Usage of prescription m
Page 47 and 48:
allude to the fact that approximate
Page 49 and 50:
promote healthy lifestyles among th
Page 51 and 52:
Figure 1.5.1 The World Values Surve
Page 53 and 54:
Table 1.5.2 Estonia’s participati
Page 55 and 56:
Figure 1.5.3 The percentage of the
Page 57 and 58: Figure 1.5.5 Percentage of the Esto
Page 59 and 60: The fact that Estonia’s position
Page 61 and 62: Summary Mati Heidmets The global vi
Page 63 and 64: 2People and Society Estonian Human
Page 65 and 66: Table 2.1.1 Structure of the Bertel
Page 67 and 68: tioning market economies (15 states
Page 69 and 70: 2.2 Freedom and democracy Martin M
Page 71 and 72: Table 2.2.1 Democracy indicators Po
Page 73 and 74: Figure 2.2.2 The distribution of th
Page 75 and 76: would be something that none of the
Page 77 and 78: political participation are general
Page 79 and 80: strongest, while a very small perce
Page 81 and 82: is concerned, Estonia is one of the
Page 83 and 84: Figure 2.4.2 Average circulation of
Page 85 and 86: 2.5 Corruption Jüri Saar In accord
Page 87 and 88: Lithuania, 61%; and in Russia, 69%.
Page 89 and 90: 2.6.2 Intentional homicides in Esto
Page 91 and 92: crime. And thirdly, there was a wis
Page 93 and 94: References 1. Ahven, A. & Tabur, L.
Page 95 and 96: states included in the EU Kids Onli
Page 97 and 98: 2.8 Public assessments of the state
Page 99 and 100: Figure 2.8.4 Changes releated to tr
Page 101 and 102: of the state’s development are en
Page 103 and 104: Table 2.9.1 The positions of Estoni
Page 105 and 106: 3. IEP (2011). Structures of Peace.
Page 107: 3Welfare and the Quality of Life Es
Page 111 and 112: Figure 3.1.5 Public social spending
Page 113 and 114: tion agreed upon the social contrac
Page 115 and 116: References 1. Aidukaite, J. (2006).
Page 117 and 118: hand, to the “inequality of acces
Page 119 and 120: and explanations of the extent of i
Page 121 and 122: 5- much more than I deserve. Some d
Page 123 and 124: people in Estonia consider the inco
Page 125 and 126: Table 3.3.1 Experienced Well-Being
Page 127 and 128: at about 70%. In Latvia and Lithuan
Page 129 and 130: sign. It seems that the usual view
Page 131 and 132: 3.4 Quality of life Anu Toots 3.4.1
Page 133 and 134: a uniform composite indicator has n
Page 135 and 136: 3.4.6 The components of life qualit
Page 137 and 138: Figure 3.4.4c Perceived quality of
Page 139 and 140: Figure 3.4.5 Changes in the depriva
Page 141 and 142: 3.5 Environment dimension of well-b
Page 143 and 144: Figure 3.5.1.b Estonia’s position
Page 145 and 146: 3.5.4 Energy intensity The energy i
Page 147 and 148: productivity, which is defined as t
Page 149 and 150: perceive themselves as worse off th
Page 151 and 152: 4The Economy Estonian Human Develop
Page 153 and 154: vide a valuable connection for maki
Page 155 and 156: Figure 4.1.3 Components of economic
Page 157 and 158: ule of law, the sub-indicators for
Page 159 and 160:
References 1. Acemoglu, D.; Robinso
Page 161 and 162:
Development Report employs generali
Page 163 and 164:
and pasture land, and this was capi
Page 165 and 166:
Basing the total and net savings re
Page 167 and 168:
4.3 Labour market Reelika Leetmaa,
Page 169 and 170:
The problems include the very limit
Page 171 and 172:
• Expenditures for active labour
Page 173 and 174:
who lose their jobs. These ensure i
Page 175 and 176:
4.4 Productivity and the economic s
Page 177 and 178:
labour costs at the company level r
Page 179 and 180:
Table 4.4.4 Comparison of the produ
Page 181 and 182:
Figure 4.4.1 Annual average increas
Page 183 and 184:
4.5 Innovation Erik Terk, Katrin M
Page 185 and 186:
Table 4.5.2 Comparison of innovatio
Page 187 and 188:
Table 4.5.4 Comparison of the indic
Page 189 and 190:
in order to make the R&D potential
Page 191 and 192:
It is characteristic of the South K
Page 193 and 194:
mechanisms for increasing their sta
Page 195 and 196:
Globalisation and Policy Patterns 5
Page 197 and 198:
When Estonia regained its independe
Page 199 and 200:
5.2 The impacts of globalisation an
Page 201 and 202:
Table 5.2.2 Support of the differen
Page 203 and 204:
5.3 Development policies Erik Terk,
Page 205 and 206:
• C -the “Estonia-centred” su
Page 207 and 208:
Figure 5.4.1 Support for the possib
Page 209:
Summary Erik Terk Estonia is part o
Page 212 and 213:
ehavioural patterns. Therefore, it
Page 214 and 215:
EDR 2012/2013 authors Clemens Buche
Page 216 and 217:
EDR 2012/2013 authors Alari Purju i
Page 218:
Editor-in-Chief: Mati Heidmets Prod
show all

DEVELOPMENT

Create successful ePaper yourself

Delete template?

Save as template?