XX Latin American and Caribbean Economic Association (LACEA) Annual

Meetings

XXIII Annual Meetings of the LACEA / IADB / WB/ UNDP Research

Network on Inequality and Poverty (NIP)

Inequality of Opportunity in Adult Health in Colombia

By Johanna Fajardo-Gonzalez, University of Minnesota

Discussant: Tito Armando Velasco, ARU Foundation

Santa Cruz de la Sierra

October 14, 2015

Discussion remarks

Introduction

Overview of the study

Empirical analysis: methodological approach, variable, sample,

measures

Usefulness of ex-ante approach for policy design

Introduction

Contribution to “flourishing empirical research field based on

advanced analysis of detailed data from individual households”

Significance of this type of research in development economics

recently highlighted by the Royal Swedish Academy of Sciences in

its recognition to the new Laureate in economics, Angus Deaton

(Sveriges Riksbank Prize)

Introduction

Contribution to the equality of opportunity literature in developing countries by

providing relevant evidence in health sector of Colombia that partitions inequalities

into inequalities in circumstances. They are supposed to be subject of policies

oriented to “equalize opportunities rather than outcomes”

These unjustifiable inequalities in the words of Ravi Kanbur are the very same

inequalities in circumstances discussed by the author (while justifiable inequalities

would be inequalities in efforts to which she refers)

Overview

Study clearly in line with the work of John Roemer (1998), Ricardo Paes de Barros

(2009) and other followers of the ex-ante approach adopted to identify given

circumstances beyond individual control that must be compensated by policies in

order to achieve equality of opportunity in specific outcomes

Main findings provide indication that early life circumstances, related to household

socioeconomic status and parental educational attainment (urban areas),

influence equality of opportunity in adult health status in Colombia

Overview

Scope of this cross-sectional study for 2010 is confined to estimate two measures of inequality of

opportunity (dissimilarity and a Gini-opportunity indexes) in adult health and the relative contribution of a

number of circumstances (in the variation in the dissimilarity index using Shapley value decomposition)

It uses a self-reported variable for health status reported in 2010 Colombian Living Standards and Social

Mobility Survey (LSSM)

Not a causal analysis that identifies determinants (early life circumstances) of adult health outcomes; but

rather a correlation study that stablishes the relationship (association) between early life circumstances

and adult health status, and identifies as well if the circumstances have direct or indirect effects on the

outcome of interest

Clear research question in that regard: “Which particular early life circumstances have a salient long-term

association with observed inequality of opportunity?”

Therefore, today’s discussion may be oriented on either:

Pertinence and robustness of the empirical methods applied on the data set, or

Usefulness of the embraced ex-ante approach for policy design purposes

Empirical analysis

Methodological approach

While author acknowledges some disadvantages of the stochastic dominance analysis (in

terms of “splitting the sample into many different groups, and the difficulty to implement a

test with multiple circumstances simultaneously”), its application on a cross section dataset

is risky in terms of confidence

Still, methodological approach presents more relevant disadvantages than the author

recognizes. E.g., the resulting measures depend on normative judgments that usually are

conflictive. They end up being very sensitive in inequality of opportunity. Nevertheless the

author uses state of the art techniques, such as non-parametric tests, in order to maximize

the confidence of results, but the doubt still persists

Empirical analysis

Self-reported variable for health status

Author points out the presence of psychological issues in the manner that individuals

perceive and report their health status

Psychological issues related not only to adjustment and adaptation in health perceptions but

possibly as well to memory, confidence and corruption. Obviously not available data about

these issues in the LSSM database, but maybe inequality of opportunities is correlated to

institutional crisis, corruption practices in services, etc.. In this regard, new experimental

economics and neuro economics tools may be useful to consider to strengthen this study

Empirical analysis

Survey sample

Dynamics of inequality tend to be different in urban and rural sub samples

Recent evidence shows that there is a lack of research around suburban zones

Estimates using urban sub samples may shed some more light on the issue of

inequality of opportunity, particularly in barrios periféricos of Colombia. If LSSM data

and sample allow, consider to try to come up with a criteria to formulate at least

indirect evidence about suburban zones

Empirical analysis

Direct measures of inequality of opportunity

Author sustains “the calculation of the dissimilarity index first requires the

estimation of a logistic regression model to obtain the predicted probability of

achieving a good or excellent health status”

However, paper doesn’t demonstrate why logistic regression is better than probit

regression model or other categorical type model. “Is it because the log of the

odds can be explained far more easily than probit? Or is it related to the purpose of

the model (e.g., predicting an outcome vs. estimating an effect)?”

Empirical analysis

Direct measures of inequality of opportunity

Dissimilarity and a Gini-opportunity indexes. Author suspects it is necessary more

evidence to support her research results

Consider micro simulations obtained from the sample data in order to find robust

results, particularly for the Gini-opportunity index. Explore how sensitive are

measures to a slight variations in the data. Moreover, explore how sensitive are them

to a different objective functions among rural and urban individuals

Usefulness of the ex ante approach for policy design

Recall the work of last year of Ravi Kanbur and Adam Wagstaff (2014), who raised critics

to the inequality of opportunity approach, particularly in education and health sectors.

Surprisingly, relevant critics were not addressed by the author. Four recall points for our

discussion:

“Implicit variable weighting leads to different measures of inequality of

opportunity”. It would be good to explicit and highlight the weighing method approach

“Adding more circumstance variables and categories within them will reveal a

different dissimilarity index”. If so, potential problem when comparing measures

over time and identifying adequate policies oriented to compensate unjustified

inequalities (inequalities in circumstances)

Usefulness of the ex ante approach for policy design

In many cases “normative measure of inequality of opportunity is determined by

casual properties of data availability”

Two fundamental issues of principle that questions the inequality of opportunity

approach:

“What happens when luck determines difference between opportunity and outcomes?”

“What happens when one person’s effort becomes another person’s circumstance?”)

Thank you