Lecture 3 - Equity and Equality

Question 1

What are the 4 concepts of equity and equality? Explain them including their policy focus

Answer 1

1. Libertarianism; respect to life, liberty and possessions. Policy focus - free market
2. Utilitarianism; greatest good for the greatest number. Policy focus - efficiency
3. Justice as fairness (Rawlsianism): tolerance inequality only if it benefits the least well-off. Policy focus - social exclusion. Maxi-min principle
4. Egalitarianism (Marxism): to each according to their need, from each according to their ability to pay. Policy focus - distribution

Question 2

Does inequality always mean inequity?

Answer 2

No

e.g. under egalitarianism, high income are giving more money than low income (unequal), but it is equitable

Question 3

What is horizontal equity?

Answer 3

Equal treatment of equals. People with the same healthcare needs receive the same amount of care.

Question 4

What is vertical equity?

Answer 4

Unequal treatment of unequals. People in greater need should receive more care.

Question 5

What is the social welfare function for utilitarianism?

Answer 5

Add up the utility of each individual

W_U = ∑^N _i=1 z_i

Question 6

What is the social welfare function for justice as fairness/Rawlsianism?

Answer 6

Look at who has the lowest utility and maximise the value of that minimum value (maxi-min principle)

W_R = [min(z_i)]

Question 7

What is the social welfare function for egalitarianism?

Answer 7

Sum the utility of every individual, taking into account ‘e’ - the maximum amount of inequality you are willing to tolerance to maximise utility

Finding e is very difficult

Question 8

What is the Gini index? What do 0 and 1 mean?

Answer 8

Measure of income distribution within a group

G=0 is perfect equality (everyone has the same income)
G=1 is maximum inequality

Question 9

What is a Lorenz curve?

Answer 9

Proportion of total income earned by the bottom x% of the population

y axis - cumulative share of income, 0 to 100%
x axis - percentage of households, 0 to 100%

See notes for graph

Question 10

How do you calculate the Gini coefficient?

Answer 10

= A/(A+B)

A - area between the line of equality and the Lorenz curve
B - area between the x axis and the Lorenz curve

See notes for graph

Question 11

What is the Kakwani index? What do positive and negative values mean?

Answer 11

Measure of progressivity of a social intervention

K > 0 is progressive
K < 0 is regressive

Question 12

How do you calculate the Kakwani index?

Answer 12

Gini coefficient pre-intervention - Gini coefficient post-intervention

Question 13

What is some country evidence in Asia regarding the progressivity/regressivity of SHI?

Answer 13

• In Asia the better-off tend to pay more for healthcare
• Japan, South Korea and Taiwan have SHI and are slightly regressive
• Hong Kong and Thailand health financing is drawn more from taxation (progressive)

Question 14

What does the concentration curve plot?

Answer 14

Plots the cumulative % of ill health variable (y-axis, 0 to -1, -1 is least sick) against the cumulative % of population ranked by socioeconomic status (x-axis, 0 to 1, 1 is richest)

See notes for graph

Question 15

What does it mean if the concentration curve is above the line of equity? What does it mean if the concentration curve is below the line of equity?

Answer 15

Above - ill health concentrated in the poor

Below - ill health concentrated in the rich

See notes for graph

Question 16

What is a concentration index?

Answer 16

Measures the degree of social-economic inequality in a health variable

Question 17

How do you calculate the concentration index?

Answer 17

Twice the area between the concentration curve and the line of equity

Question 18

What is the value of the concentration index when the concentration curve is above the line of equity? Below?

Answer 18

Above - CI < 0, use/need is concentrated in the poor
Below - CI > 0, use/need concentrated in the rich

Can use CI to measure either need or use

Question 19

How can you use the concentration curve and concentration index to calculate healthcare use?

Answer 19

Switch the y axis to cumulative proportion of healthcare use instead of ill health

Question 20

What does it mean if the concentration index of need is less than the concentration index of use?

Answer 20

Low income groups use less care than their share of need

Question 21

How do you calculate horizontal inequity? What do positive values mean? Negative?

Answer 21

HI = CI_U - CI_N

HI < 0: inequity favours the worse off (worse off use relatively more than they need

HI > 0: inequity favours the better off (worse off use relatively less than they need)

Question 22

Van Doorslaer et al (2000)

Answer 22

In Europe and the US
- healthcare use is greater in lower income groups
- after controlling for need there is little general evidence of inequity
- general lack of horizontal inequity suggests that health care utilisation is generally related to need not income

Question 23

O’Donnell et al (2000)

Answer 23

In Asia
- the better off tend to pay more for healthcare
- the better off also tend to receive more healthcare (pro-rich bias)

Question 24

What is the Libertarian argument for state correction of distributional differences?

Answer 24

• ill health and healthcare need are the result of our free choices (diet, lifestyle, effort at work/school and hence income, how much we spend on healthcare products) or misfortune
• why should we care about others bad luck?

Question 25

What is the Rawlsian argument for state correction of distributional differences?

Answer 25

• health is influenced by generic and biological factors we can’t control
• state should intervene to ensure the most disadvantaged are as well-off as they can be
• might mean taxing people who work to support those with lower incomes

Question 26

What is the Egalitarian argument for state correction of distributional differences?

Answer 26

• environments, education, work and income influence health, it is not just our free choices
• we have little control over our social conditions
• social determinents of health provide motivation for greater state involvement