Visualize Inequality
Overview
Imagine a country where your future did not depend on
where you come from, how much your family earns, or
whether you are male or female.
Now imagine a statistical tool that can help
governments make that a reality.
That tool is
The Human Opportunity Index
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Motivation
• Consider two nations A and B.
• Both have 100 children between ages 6 and 10.
• In both nations 50% of these children live in rural and
50% in urban areas.
• A statement that is very often quoted is that 60% of
children in a country are enrolled in school.
However, beneath this statement can be two different
realities.
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Motivation
• Country A: 40 of the 50 children in urban areas are
enrolled and only 20 of the 50 children in rural areas
are enrolled.
• Country B: 35 of the 50 urban children are enrolled
and 25 of the rural children are enrolled .
Country A Country B
(100 children) (100 children)
Urban (50) 40 35
Rural (50) 20 25
Total 60 60
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Motivation
Where a child is born is not his/her decision.
Children with diverse backgrounds should have equal
access to schools.
Inequality of opportunity principle
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What is an Opportunity?
Access to a good or service, which society accepts
should be universal.
• In the earlier example, school enrollment
measures the opportunity: Access to education
of children aged 6-10.
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AND MORE…
Not being Live out of
underweight poverty
Be fully Access to clean
Opportunities water
immunized
Access to good Access to
quality electricity
education Access to
primary
education
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What is a Circumstance?
• Individual, household, geographic characteristics
outside individual’s control, for example: gender,
parental education, wealth, geographic location.
• Circumstances should not determine an
individual’s access to opportunities.
The area of residence where a child is born is an
example of a circumstance.
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What is a Circumstance Group?
• A circumstance group is a set of individual
with the same set of circumstances. For
example:
– All those males, with non-educated parents and
living in urban areas.
or
– All those women, with educated parents and living
in rural areas.
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Human Opportunity
Methodology
What is the Human Opportunity
Index (HOI)?
• The HOI is a measure of the coverage rate of an
opportunity, discounted by inequality in its
distribution across circumstances groups.
HOI (1 D) C Overall
Coverage
Effect of inequality
on coverage
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Coverage (C)
• Its is the percentage of individuals that have access
to the opportunity.
Number of children of age 6-
10 years enrolled in school
Country A Country B
(100 children) (100 children)
Urban (50) 40/50=80% 35/50=70%
Rural (50) 20/50=40% 25/50=50%
Total 60/100=60% 60/100=60%
Coverage
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Inequality in access: The inequality
index (or D-Index)
Number of
circumstances groups Coverage
1 m
D
2C k 1
k C Ck
Coverage of the
Share of group k in circumstance
Coverage group k
total population
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Hypothetical example
Country A Country B
(100 children) (100 children)
Urban (50) 40 35
Rural (50) 20 25
Total 60 60
1 40 20
DA 0.5 0.6 0.5 0.6 0.167
2 0.6 50 50
1 35 25
DB 0.5 0.6 0.5 0.6 0.083
2 0.6 50 50
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Hypothetical example
Country A Country B
(100 children) (100 children)
Urban (50) 40 35
Rural (50) 20 25
Total 60 60
HOI A 0.6 1 0.167 0.50
HOIB 0.6 1 0.083 0.55
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Inequality contributors:
Shapley decomposition
Shapley Decomposition
• The dissimilarity index (and therefore HOI) is a
function of the set of circumstances.
• Therefore the D-index is sensitive to inequalities.
• Then D=D(s), where s is a set of circumstances, is a
an inequality index computed using the set s.
What is the marginal contribution of each circumstance
to inequality of opportunities?
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Shapley Decomposition
• Using Shorrocks (1999):
– The change in the measure obtained by “adding” a
circumstance depends on the initial set or subset of
circumstances to which it is added.
– The unique impact of a circumstance is the average value
of all the changes that occur when the circumstance of
interest is added to all possible subsets of pre-existing
circumstances.
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Shapley Decomposition
• The impact of adding a circumstance A is given by
N is the set of all circumstances, which includes n circumstances
in total. S is a subset of N that does not contain the particular
circumstance A. D(S) is the dissimilarity index estimated with the
set of circumstances S. D(SU{A}) is the dissimilarity index
calculated with set of circumstances S and the circumstance A.
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Shapley Decomposition
• We can define the contribution of circumstance A to
the dissimilarity index as
Where
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Changes over time
Changes in HOI
• Broadly the HOI can change for two reasons:
– Composition effect : A redistribution of the
population itself, where the size of the
circumstance groups changes, or
– Coverage effect : An improvement in the coverage
due to
• Scale effect : A change in the overall coverage for the
entire population without any changes in inequality.
• Equalization effect: A change in the equality of access
to the opportunity between the circumstance groups.
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Changes in HOI
• Data for two periods, 1 and 2, then
HOI 2 HOI1 C2 (1 D2 ) C1 (1 D1 ))
• Adding and subtracting
C2 (1 D2 ) C1 (1 D1 ) C2 (1 Dmix ) C2 (1 Dmix )
Cmix (1 Dmix ) Cmix (1 Dmix )
Where 𝐶𝑚𝑖𝑥 = 𝐸(𝐶2 |𝑋1 ) and 𝐷𝑚𝑖𝑥 = 𝐸(𝐷2 |𝑋1 ).
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Changes in HOI
• We can group the expressions and obtain the
following expression:
Cmix (1 Dmix ) C1 (1 D1 ) Composition effect
(Changes for all)
C2 (1 D2 ) C2 (1 Dmix ) Equalization effect
(Changes for vulnerable group)
C2 (1 Dmix ) Cmix (1 Dmix ) Scale effect
(residual change)
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