Exercise 4: Measuring Welfare in South Africa IRCO 412: Globalization Winter 2013 The economic and political forces discussed in Globalization affect the well-being of individuals and households in complex ways. One measure of average well-being in a country is GDP per capita. But we also noted limitations on simple income measures and the need to look at physical-quality-of-life and other measures as well. One useful source for assessing progress in improving welfare is the Human Development Report (HDR) published by the United Nations Development Program (UNDP). The HDR reports data on income (Gross National Income [GNI] per capita at purchasing power parity, approximately equal to GDP per capita), but also provides information on a variety of other indicators with respect to health, education, gender and sustainability. UNDP also compiles several indicators into an overall indicator of well-being called the Human Development Index (HDI). In this exercise, you will consider a number of these measures and construct your own index of well-being. Use South Africa as your country and you will be asked to benchmark your case as well. Assignment:
- Work A: We are asking you to compare the relative performance of South Africa and
five
other reference countries of your choosing; think about what will make useful or interesting comparisons (by region, level of development, etc.). Create a new spreadsheet and enter all six countries: South Africa and the five comparators. In the first two columns, report the countries’ GNI per capita and their rank on that measure. In the next two columns, report the scores and rank of each of these same countries on the HDI. Describe some of the discrepancies you see: cases in which the ranking on GDP per capita is significantly higher or lower than their ranking on the HDI. What might this be telling us about these cases?
- Work B: Your final task is to construct TWO of your own indices. Go back to the main section of the webpage entitled Data Tools and Visualization and click on “DIY: HDI Build Your Own Index.” This gives you access to a large number of different indicators, in seven large categories (health, education, income, inequality, poverty, gender, sustainability. The raw data is accessed by clicking on as many of these broad categories as you choose, opening that category, and then clicking on the small blue circle with “i” inside.) You can then select as many indicators as you like, assign a weight to that indicator and and the site will automatically compute the rank of all countries with available information. [Be aware: the site is not flawless; check the information and watch for potential errors, such as the index counting missing data as a “zero.”] Construct two
different
indexes that show your country in a somewhat different position compared to its five comparison countries.
Requirement:
Page Limit:
2 pages (no more).
On one page, take about two-three paragraphs to describe and discuss your indicators. Why did you choose the indicators that you did? What do they show? On the second page, print out the section from your spreadsheet where you show the scores and/or ranks of the six countries on the different indicators: GNI per capita; HDI; and your two indices. This will be a Table. Refer to this table in your written discussion.
Where to get a reference:
To get an evaluation that includes recent developments go tohttp://hdr.undp.org/en/statistics/ and familiarize yourself briefly with the website. Click on the Human Development Index button on the left-hand side and familiarize yourself with the components of the index. Then go to the main section of the webpage entitled Data Tools and Visualization and click on Human Development Index Trends (http://hdr.undp.org/en/data/trends/ ). Look at trends for South Africa.
Also comparing South Africa to another with respect to two indicators: Gross National Income per capita (in PPP terms) and the HDI. An interesting introduction to this comparison is provided by a section of the website called GDP vs. HDI Country Contrasts (http://hdr.undp.org/en/statistics/gni/). This section automatically selects pairs of countries to show how countries with similar HDIs may have very different GNI per capita, and vice versa. Check out South Africa, and notice the contrasting country it is paired with.
Have fun. The purpose of this assignment is not simply to display a large number of statistics, but rather to reflect thoughtfully on the relationship between GDP per capita and other measures of well-being and to explain your choices.