The cost of inequality Arief Anshory Yusuf. Source: CIA, World Fact Book, 2013, World Bank WDI, and author’s calculation Indonesia can be categorized

The cost of inequalityArief Anshory Yusuf

Source: CIA, World Fact Book, 2013, World Bank WDI, and author’s calculation

Indonesia can be categorized as a country of high inequality and low income, ..

Among developing countries, the increase in Indonesian inequality over the last decade is among the highest, while most others declined.

Source: World Bank Poverty & Inequality DatabaseNote: The inequality indicators are three-years average where data available.

Current status of Indonesian regional development (2012)Sumatra

Java

Bali NT

Kalimantan

Sulawesi

Maluku Papua

0

10

20Sumatera

Jawa

Bali NT

Kalimantan

Sulawesi

Maluku Papua

0

20

40

GDP Per Capita (Rp million) Poverty incidence (%)

60% of Indonesian GDP generated in Java Jakarta per capita income is 46 times of Maluku province Poverty incidence in Papua is 31%, Jakarta is 3.7%

Trend in inter-regional disparity (2007-2012)

0 5 10 15 20 25 30 35 40

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

-1.0

4.94.5

3.7

4.7 4.65.04.5

2.1

4.7

3.8

5.3

3.8

5.5

3.0

3.8

4.54.4

3.7

0.4

6.76.56.26.1

5.2

2.1

3.33.43.6

4.3

GDP per capita in 2007 (Million 2000 Rupiahs)

Ann

ual c

hane

200

7-20

08

0 5 10 15 20 25 30 35 40 45

-2.5

-2

-1.5

-1

-0.5

0

-1.438

-0.646-0.742

-0.596

-0.37

-1.074

-0.886

-1.202

-0.802

-0.638

-0.184

-0.692

-1.018

-0.588

-1.316

-0.644

-0.49

-1.272-1.326

-0.948

-0.574

-0.39

-0.872

-0.648

-1.404

-0.8

-1.524

-2.004

-1.158

-1.872

-0.7

-2.222

-1.934

f(x) = − 0.0519113574932318 x − 0.0833856600307693R² = 0.849981056729786

Initial poverty incidence 2007 (%)A

nnua

l cha

nge

in p

over

ty in

cide

nce

2007

-201

2 (%

)

Provincial GDP per capita remains highly unequal Poverty incidence converges

Social Dysfunction: why inequality matters

Richard Wilkinson Emeritus Professor of Social Epidemiology

Slides borrowed from:

http://www.northeastern.edu/policyschool/wp-content/uploads/Wilkinson.ppt

TED’s TALK: “How inequality harms society” http://www.ted.com/talks/richard_wilkinson?language=en

www.equalitytrust.org.ukWilkinson & Pickett, The Spirit Level

Neither health nor social problems are related to national income per head

Index of: • Life expectancy• Math & Literacy

• Infant mortality• Homicides• Imprisonment• Teenage births • Trust• Obesity• Mental illness

– incl. drug & alcohol addiction

• Social mobility

Ind

ex o

f h

ealt

h a

nd

so

cial

pro

ble

ms


Child well-being is better in more equal countries


The UNICEF Index of Child Wellbeing is not related to National Income per head

Wilkinson & Pickett, The Spirit Level www.equalitytrust.org.uk

People in more unequal countries trust each other less


People in more unequal states of the USA trust each other less


Mental illness is more common in more unequal societies

15

Infant Mortality Rates are Higher in More Unequal Countries

Source: Wilkinson & Pickett, The Spirit Level (2009) www.equalitytrust.org.uk

Male mortality (25-64 yrs) and income inequality in US

states and Canadian provinces.

Source: Ross NA, Wolfson MC, Dunn JR, Berthelot JM, Kaplan GA, Lynch JW. British Medical Journal 2000;320:898-902

http://www.bmj.com/content/vol320/issue7239/images/large/rosn4890.f1.jpeg



0

30

60

90

120

150

180

Income Inequality

Ho

mic

ide

s p

er

mill

ion

pe

op

le

Low High

Daly M, Wilson M, Vasdev S. Income inequality and homicide rates in Canada and the United States. Can J Crim 2001; 43: 219-36.

Homicide rates are higher in more unequal

US states and Canadian provinces USA states

Canadian provinces

18

Teenage Birth Rates are Higher in More Unequal Rich Countries



Imprisonment rates are higher in more unequal countries


More children drop out of High School in more unequal US states

Educational Scores are Higher in More Equal Rich Countries



Social mobility is lower in more unequal countries

Wilkinson & Pickett, The Spirit Level

Index of: • Life expectancy• Math & Literacy

• Infant mortality• Homicides• Imprisonment• Teenage births • Trust• Obesity• Mental illness

– incl. drug & alcohol addiction

• Social mobility

www.equalitytrust.org.uk

Health and social problems are worse in more unequal countries

Ind

ex o

f h

ealt

h a

nd

so

cial

pro

ble

ms

Inequality and growth

Summarized by: Jorge Alberto Charles-Coll (2013), The Debate Over the Relationship Between Income Inequality and Economic Growth: Does Iinequality Matter for Growth?

Equity for GrowthKeadilan untuk Pertumbuhan

PERTUMBUHAN EKONOMI TINGGI

KEADILAN/ PEMERATAAN

PRAKONDISI

PEMERATAAN KESEMPATAN

PENDIDIKAN

KESEHATAN

MODAL INSANI

PEMBANGUNAN MANUSIA

INOVASI

PRODUKTIVITAS/ DAYA SAING

NEGARA

LINGKUNGAN PENDUKUNG

http://studiumveritatis.org

Thank you, and congratulation to:

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The cost of inequality Arief Anshory Yusuf. Source: CIA, World Fact Book, 2013, World Bank WDI, and author’s calculation Indonesia can be categorized