The ERF 20th Anniversary Conference threw its doors open this morning to vibrant discussions around issues of social justice. Widely considered to be one of the main factors fuelling the fires of recent popular unrest in the MENA region, social justice is actually a vaguely understood concept. So where better than Egypt in the year 2014 to throw open this topic to debate, and who better than ERF’s annual conference participants to discuss issues within it?
In opening both the plenary and the conference itself, Dr Ahmed Galal, Managing Director of ERF, talked about the importance of ideas ‘and the people who care about the value of ideas for society’. He quoted John Keynes who said: “The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist”.
A place for good economists to call home
He reflected on a similar gathering of economists more than 20 years ago in Cairo who first thought about setting up ‘a forum that good economists could call home’: that idea became the institution that is ERF. Two decades later, the institution finds itself to be in robust health and boasting an impressive track record. Sherine Ghoneim, who acted as Managing Director of ERF for much of 2013, spoke of the organisation’s vibrant research portfolio with 49 projects involving 125 researchers (not counting the 67 papers to be presented by 133 researchers during this year’s conference) and an intensive outreach programme that included convening nearly 500 people across two conferences and six workshops during the year. In addition, ERF published around 80 Working Papers, two issues of the Forum and five Policy Perspectives.
The opening plenary, chaired by Abdlatif Al-Hamad, Chair of the Board of Trustees of ERF, invited three speakers ‘at the frontier of these ideas’ to examine how understanding of social justice has evolved over time and to identify alternative ways of measuring and achieving social justice, including equality of opportunity.
Inequality: facts and caveats to the facts
The first speaker, François Bourguignon, Emeritus Chair of the Paris School of Economics, focused on the empirical and factual side of inequality in his presentation entitled ‘Inequality trends in the world: Common forces, idiosyncrasies and measurement errors’. He contrasted the patterns of inequality visible in the developed world with trends within three developing continents. While two thirds of developed nations show increasing inequality in the two decades between 1980 and 2000 including Sweden and the Netherlands, as do countries in Africa, Latin America in the same period shows increasing equality. It is only the MENA region which, surprisingly and counter to people’s perception of reality and the shocks of the last 30 years, ‘shows surprising stability’.[youtube https://www.youtube.com/watch?v=p6C-iuLQfpI]
Bourguignon issued a public data warning, explaining that there is no uniform definition of inequality, and that income distribution data is not always fully comparable across countries and even over time. He also pointed out that data in the developing world is less available and the quality is less reliable.
Bourguignon argued both that one of the causes of increasing inequality lies in the fact that the rich are getting richer, and that putting an exact figure on the incomes of a country’s wealthiest 1-5% is enormously difficult. In the discussions following the plenary, Ragui Assaad concurred with this in the case of Egypt, saying that the rich are very difficult to reach in household surveys and going as far as to propose that ‘the top 10% in the country are totally invisible’. This means that inequality is even worse than the current figures imply.
The speaker finished by asking the question: “Why do the common unequalising forces that seem to be present in developed countries not produce the same effect in most developing and emerging countries?” He proposed the answer lay in first, common globalisation forces playing out in different ways in each country; second, idiosyncratic factors specific to each country context, such as exogenous changes in the economic environments and policies affecting income, wealth and the markets; and third a combination of both.
He warned that we shouldn’t be lured into looking for answers, like a man looking for his lost keys in the light of the lampost, only in household survey data. But we should both look ‘in other places’ for the data to support our better understanding of inequality, such as in profits which go unreported in surveys, as well as complementing Gini data with other indicators. “It is not totally dark around the lampost!” he said.
Assessing social justice from a people’s perspective
Marc Fleurbaey examined different approaches to measuring justice in his presentation, entitled ‘Measuring justice and development: Providing opportunities or respecting preferences. He challenged the audience to reconsider the validity of using opportunity as the yardstick of social justice.
Instead, Fleurbaey proposed researchers drill down into the relationship between income levels and quality of life. He argued that focusing on the role of preferences would give more comprehensive data that overcome significant shortcomings in mainstream approaches to measuring justice in development. He critiqued how academics “fetishise” freedom as their main justification for focusing on opportunity. The alternative, he argued, lies in examining people’s goals in life, their values and wellbeing.
Recognising that this approach to evaluating social justice has many challenges, Fleurbaey’s presentation explored five approaches – the pragmatic approach, the genuine opportunities approach, the resource approach, the liberal approach, and the utilitarian approach – outlining the inherent problems, objections to, and limitations of each.
Challenges discussed included the very measurement of opportunity and the problem of identifying outcomes for those for whom opportunity has not been realised. This is a serious issue and one that stems from the fact that in measuring this phenomenon, it is not always possible to capture the issues that constrain people. To address this, Fleurbaey proposed a shift of focus towards the satisfaction of people’s preferences, rather than the opportunities available to them.
By shifting emphasis toward ‘quality of life’ and attempting to incorporate new dimensions, such as ‘preferences’ and ‘goals’ that are important to the people themselves, Fleurbaey argued that analysis would achieve a more comprehensive measurement of their situation than could be attained by focusing on opportunity alone. However, the issue of quality data being available was central to the success of this research approach and Fleurbaey’s analysis highlights the enduring importance of the Economic Research Forum’s pioneering initiatives in opening-up public access to microdata.
Fleurbaey’s research in this area is very much a work in progress. Current surveys are allowing estimates of preferences at the group level. Correcting income levels against dimensions of quality of life may give a more comprehensive picture of access to public goods such as healthcare and other infrastructure. But the search for a more comprehensive understanding of economic equality has to address many challenges. This includes extending the research to developing countries.
Few developing countries have been the subject of this analytical model. So far, most prototype studies have been limited to the OECD countries. The context of developing countries is particularly relevant to debates surrounding economic equality.
The third and final speaker of the session, John E. Roemer argued in his presentation ‘Social justice: Going beyond GDP per capita‘ that the way to measure economic development was not by looking at GDP per capita increases but instead at the degree to which a country has equalised opportunities for the acquisition of income among its citizens. He was later interviewed on video to expand on his ideas.