As the High Level Panel on post-2015 meets in London, our new report Born Equal shows that the effective income inequality per child is double that of households in general – and perhaps more worryingly, we find this inequality has grown by a third since the 1990s. Given this, and evidence of the damage that inequality does to child well-being (including permanent effects) and to development more broadly, we call for inequality to be at the heart of the post-2015 development framework.
The report includes a synthesis of eight country case studies (Brazil, Canada, China, Ghana, India, Indonesia, Nigeria and the UK) focusing on horizontal (group) inequality, as well as the broader income inequality analysis, and a set of broad recommendations for the post-2015 framework (including what I think is the first call by a major development organisation for global action against illicit financial flows to be included).
I won’t summarise any further (please read the report!). Instead, I want to summarise the case for focusing on inequality – rather than, say, just highlighting the extreme deprivation that can result. Dealing directly with inequality may be harder for some politically, but to ignore it is to condemn development efforts to fail. Here are three reasons to care…
First, research shows that inequality undermines children’s well-being, with permanent effects across their entire lifespan.
The authoritative analysis by a leading Oxford professor and DFID’s new chief economist summarises the evidence thus: children’s development
“is highly dependent on how they understand their relative social position, relative competence, and potential to access opportunities for personal, social, and economic advancement. Moreover, these are not for the most part individualised processes, but are experienced as part of a family group, peer group, and community”
Inequality, including that between social groups (e.g. caste groups in India), can thereby damage psychosocial and cognitive development, with long-term impacts for intellectual and career achievement (see also the discussion here). In addition, the simple mathematics mean that in countries with lower average incomes, a less ‘pro-poor’ distribution of income will result in more people living in extreme income poverty (e.g. below $1.25 or $2 a day). Such extreme deprivation is likely to increase the chances of worse development outcomes, from infant and maternal mortality, under-nutrition and stunting, to school enrolment and learning outcomes, and so on.
Second, we care about inequality because it is an obstacle to development in general – not least by reducing economic growth and fuelling conflict.
Inequality has great important as an instrument affecting development outcomes. Recent work by IMF researchers shows that high inequality prevents countries experiencing sustained periods of economic growth, while Oxford researchers funded by DFID (link is to a background paper for the World Bank’s World Development Report 2011) have built a wealth of evidence on the role of inequalities (between groups, especially) in fuelling conflict and instability.
Third, we care about inequality because it has grown so sharply that it may now be the major international development obstacle.
As Andy Sumner famously established in the New Bottom Billion, the majority of people living in extreme income poverty now do so in middle- rather than low-income countries. This means that while an important and deep element of poverty is still about ‘poor people living in poor countries’, a greater part reflects inequality in countries that are somewhat better off on average. Martin Ravallion, the World Bank’s leading expert on income poverty has just published research showing that reducing inequality is central to making further progress. If all developing countries grew at the speed of China, but without any of that country’s increase in inequality, extreme income poverty could be just 2% of the world’s population by 2022. This, however, is effectively “impossible”. Instead, the paper shows that plausible growth rates combined with reducing inequality only as far as 1990 levels, would allow that same target to be reached.
And I may have mentioned Save the Children’s new report - which compares the top and bottom 10% of households across 32 developing countries, finding that children face twice the income inequality of households in general, and that this has grown by a third since the 1990s.
Without challenging these deeply damaging trends in the post-2015 framework, there is little hope of making the scale of development progress that we are aiming for.