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The Quality of Life in Latin American Cities
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The Quality of Life in Latin American Citiesin Latin American Cities
Javier Santiso
Director and Chief EconomistOECD Development CentreOECD Development Centre
26 September 2008 – Paris, France
I Why do we study Quality of Life in LAC now?I Why do we study Quality of Life in LAC now?
II Measuring Happiness and policy issuesII Measuring Happiness and policy issues
III Some thoughts for future researchIII Some thoughts for future research
Why do we study Quality of Life in LAC now?y do e study Qua ty o e C o
The region has done well in terms of growth since 2003
Source: OECD Development Centre, 2008, based on IMF, WEO 2008
Why do we study Quality of Life in LAC now?y do e study Qua ty o e C o
Entrenchment of macroeconomic stability
Source: OECD Development Centre, 2008 based on IMF, WEO 2008 and CEPALSTAT, 2008
Why do we study Quality of Life in LAC now?y do e study Qua ty o e C oPoverty has been falling in most countries in the region
Source: OECD Development Centre, 2008 based on CEPALSTAT, 2008
Why do we study Quality of Life in LAC now?y do e study Qua ty o e C oDespite improvements in many countries, inequality remains high
Source: OECD Development Centre, 2008, based on CEPALSTAT.
Why do we study Quality of Life in LAC now?y do e study Qua ty o e C o
… and there is little redistribution through taxes and transfers
Inequality before and after taxes and transfers The effects of taxes and transfers
cien
t
ini c
hang
e
n in
equa
lity)
Gin
i coe
ffic
Poi
nts
of G
i
(% c
hang
e in
(
Source: OECD Development Centre, 2007. Based on data by Goñi, López, and Servén (2006)
Why do we study Quality of Life in LAC now?y do e study Qua ty o e C o
Perceptions also point towards limited opportunities
Why do we study Quality of Life in LAC now?y do e study Qua ty o e C o
• Macroeconomic instability, insufficient growth and poverty havebeen dominating the development agenda for the region.
• The current bonanza might be behind the shift in the focus ofgattention to other issues, such as the quality of life and happiness.
• Lack of opportunities and inequality (perceptions and reality) might• Lack of opportunities and inequality (perceptions and reality) mightbe related to quality of life, limiting development also in this aspect.
I Why do we study Quality of Life in LAC now?I Why do we study Quality of Life in LAC now?
II Measuring happiness and policy issuesII Measuring happiness and policy issues
III Some thoughts for future researchIII Some thoughts for future research
Quality of Life in LAC citiesQua ty o e C c t es
• The case studies compiled in this book make a relevant contributionto the literature and policy debate on:
– Measurement of quality of life
– Valuation of public services: interesting combination of hedonic pricingd lf d fand self-reported satisfaction
– Nice illustration of how self-reported satisfaction surveys couldpotentially be used to shape and monitor public policies
• “Stylized” facts on cities in Latin America:– Insecurity and crime is a major concern
i i li f b lif ( bli d d i )– Segregation in quality of urban life (access to public goods and services)is a concern. It could exacerbate inequality beyond income.
Security and CrimeyOther sources of information confirm concerns in terms of
perceptions and self-reported victimization
ArgentinaVenezuela50
2 m
onth
s
g
BrazilChile
ColombiaCosta Rica
Ecuador
Guatemala
Honduras
MexicoParaguay
Peru
Uruguay
40ve
) vic
tim in
last
12
Costa Rica
Dominican RepublicNicaragua
2030
en (o
r clo
se re
lativ
Panama
10%
that
has
bee
60 70 80 90Concerned about being victim of crime (%)g ( )
Source: OECD Development Centre, 2008 based on Latinobarometro, 2007.
Crime and HappinessppCountries with high crime rates are less happy on average
AustriaAustraliaCanada
ColombiaDenmark
FinlandIrelandIceland
LuxemburgMalta MexicoNetherlandsNorway
PuertoRico
SwedenUnited States
85
Argentina
BelgiumBrazilChile
ChinaCzech Republic
Gernamy-WGermanyDominican RepublicSpain
France
United Kingdom
Greece
Croatia
IsraelItaly
Japan KyrgyzstanKorea, Republic of
New Zealand
Philippines
PolandPortugal
SingaporeSlovenia
El SalvadorUnited States
Uruguay Venezuela
67
x 19
95 -
2005
Albania
Azerbaijan
B l i
EstoniaEgypt
Hungaryo ea, epub c o
LithuaniaLatviaMacedonia
o a d
Romania
Russian Federation
Slovak Republic
5pp
ines
s In
dex
Armenia
BulgariaBelarusGeorgia
Moldova, Republic ofUkraine
34Hap
Source: OECD Development Centre, 2008 based World Database on Happiness , State of Nations, 2008.
-1 0 1 2 3 4Homicide Rate 1997 (in logs)
Security and CrimeSecu ty a d C e
• In terms of policy issues the case studies clearly point towards• In terms of policy issues, the case studies clearly point towardsreducing crime and insecurity as a priority versus other public goods
• Di Tella et al (2008) show that perceptions on increased crime are• Di Tella et al (2008) show that perceptions on increased crime arecorrelated to perceptions of unfairness of markets, reducing thesupport for reform
• However, it is not straightforward to define the best policy:
– The roots of the problem might lie elsewhere. High inequality combinedwith lack of social mobility might create a sense of “futurelessness”.
– Should policies aim at reduction of crime or reduce perceptions? Thismight create ethical concerns and room for manipulationmight create ethical concerns and room for manipulation.
Exclusion, Inequality and Happinessc us o , equa ty a d app ess
• Segregation in the access to291
Social expenditure by quintile in Latin Americag gpublic goods and servicesseems to be a consequence ofexclusion rather than due to
16820.7
29.1
25
00)
s
Education Health Social Security
differences in tastes
• This result is in line with the2.5 3.4 5.0
7.5
16.8
16.0 16.317.9
15
20
pend
ing
(=1
perc
enta
ges
evidence that often publicpolicies are poorly targetedand end up having a 8.2 7.9 7.8 8.0 8.0
5.2 5.0 5.1 5.2 4.3
5
10To
tal s
and
regressive impact on incomedistribution.
0Poorest
Quintile (Q1)Q2 Q3 Q4 Richest
Quintile (Q5)
Source: OECD Development Centre, 2007 based on ECLAC, 2005
Exclusion Inequality and HappinessExclusion, Inequality and Happiness
• Inequality can be a signal ofincome mobility, but socialmobility in the region is low
Th l ti b t t l• The correlation between parentaland child educational attainmentis much higher in Latin Americathan in the US
• Graham and Felton (2005) showthat inequality (objectivemeasures as well as self-reportedperceptions) in Latin Americahas a large impact on self-reported wellbeing in particular
Source: Gaviria, 2008
reported wellbeing, in particulardue to lack of social mobility
Inequality and Satisfaction with Democracy
100
High correlation between inequality and insatisfaction with the functioning of democracy
Luxemburg
Sweden
Denmark
Finland801
crac
y (%
)
AustriaNetherlands
FranceGermany
Sweden
BelgiumSpainGreece
UK
Ireland
60w
ith D
emoc
ChileArgentinaMexico BrazilColombia
Germany
ItalyPortugal
40Sa
tisfa
ctio
n
Peru20S
20 30 40 50 60Gini Index (after taxes and transfers)
Source: OECD Development Centre, 2008, based on Latinobarometro, 2008 Eurobarometro, 2008 and OECD Development Centre, 2007
I Why do we study Quality of Life in LAC now?I Why do we study Quality of Life in LAC now?
II Measuring happiness and policy issuesII Measuring happiness and policy issues
III Some thoughts for future researchIII Some thoughts for future research
Democracy and Happinesse oc acy a d app ess
Is there a link?
AustraliaAustria
BelgiumCanada
Colombia Denmark
El Salvador G
IrelandMexico NetherlandsN Z l d
NorwaySweden
Switzerland
United States
805
)AustraliaAustria
BelgiumCanada
Colombia Denmark
El Salvador GIrelandMexico NetherlandsN Z l dNorwaySweden
Switzerland
United States
805
)
Argentina
Belgium
BrazilChile
Czech RepublicDominican Rep
El Salvador
France
Germany
Greece
Hungary
Italy
Japan
New Zealand
PeruPoland Portugal
SpainUnited Kingdom
UruguayVenezuela
67
dex
(199
5 - 2
00
Argentina
BelgiumBrazil ChileCzech RepublicDominican Rep
El Salvador
France
Germany
Greece
Hungary
Italy
JapanKorea
New Zealand
Peru PolandPortugal
Slovak Republic
SpainUnited KingdomUruguayVenezuela
67
dex
(199
5 - 2
00
Turkey
45
Hap
pine
ss In
dSlovak RepublicTurkey
45
Hap
pine
ss In
d
3
20 40 60 80 100Vote Turnout (%) 1945 - 1998
3
0 2 4 6 8 10Institutionalized Democracy (Polity IV) 2007
Source: OECD Development Centre, 2008, based on Polity IV, 2007; IDEA Database on Vote Turnout, 2008, and World Database on Happiness , State of Nations, 2008.
Tax Morale, Democracy and Happinessa o a e, e oc acy a d app ess
• A problem in the region is thatl d h h ipeople do not trust that their taxes
are spend in the right way.
There is also evidence that a better• There is also evidence that a betterfunctioning of democracy increasesthe tax morale of citizens (e.g.Torgler, 2002; Feld and Frey, 2002)g y
• Thus, the challenge is to createsynergies of tax and governmentspending reforms with politicalreforms, such that programs havesupport and funding.
ConclusionsCo c us o s
• Development implies deep transformations of the economy as well asthe society.
• In this sense, the new focus on quality of life is a welcomed effort to, q yinclude issues that often are left aside by development economists dueto their complexity. Development economics might finally “crossboundaries” (Hirschman, 1998).
• This volume shows an innovative way of using traditional tools and thenovel approach of happiness economics to shape public policy needed topp pp p p p yimprove the quality of life of people in Latin America.
The Quality of Life in Latin American Citiesin Latin American Cities
Javier Santiso
Director and Chief EconomistOECD Development CentreOECD Development Centre
26 September 2008 – Paris, France