Stephen Dowrick

Social indicators and comparisons of living standards

Abstract Construction of an international index of standards of living, incorporating social indicators and economic output, typically involves scaling and weighting procedures that lack welfare-economic foundations. Revealed preference axioms can be used to make quality-of-life comparisons if we can estimate the representative households production technology for the social indicators. This method is applied to comparisons of gross domestic product (GDP) and life expectancy for 58 countries. Neither GDP rankings, nor the rankings of the Human Development Index (HDI), are consistent with the partial ordering of revealed preference. A method of constructing a utility-consistent index incorporating both consumption and life expectancy is suggested.

Measuring Global Poverty: Why PPP Methods Matter

We present theory and evidence to suggest that, in the context of analyzing global poverty, the EKS approach to estimating purchasing power parities yields more appropriate international comparison of real incomes than the Geary-Khamis approach. Our analysis of the 1996 and 2005 International Comparison Project data confirms that the Geary-Khamis approach substantially overstates the relative incomes of the worlds poorest nations, and this leads to misleading comparisons of poverty across regions and over time. The EKS index of real income is much closer to being a true index of economic welfare and is therefore preferred for assessment of global poverty.

Institutions and Trade: Competitors or Complements in Economic Development?

This article contributes to the debate over the empirical relationship between trade openness and economic development. Unlike previous studies which treat trade openness and institutions as competitors in economic development, we find evidence that they are in fact complements. We also find that in order for a country to benefit from trade, its institutional quality has to be above a certain threshold level. These results are suggestive of an important complementary role for trade openness and institutions in economic development.

What Entices the Stork? Fertility, Education and Family Payments

Developed economies, experiencing concomitant declining fertility and rising educational attainment, have introduced policies to boost fertility. We model substitution of bought-in services for parental time in the rearing and education of children in an economy where technological progress leads households to choose fewer, but better educated, children. We analyse the effects on fertility and education of a baby bonus, paid maternity leave and child-care subsidies. We establish conditions under which either maternity or child-care benefits are more efficacious in raising fertility, and we establish that a lump sum baby bonus will increase fertility only if the bonus increases faster than income per capita. Policies that stimulate fertility also raise parental investment in education per child.