Write a summary, in your own words, of the following excerpt. Your text should not exceed 200 words.
[value: 15 marks]
Economists are sometimes criticized for concentrating too much on efficiency and too little onequity. There may be some ground for complaint here, but it must also be noted that inequality has received attention from economists throughout the history of this discipline. Adam Smith, who is often thought of as “the Father of Modern Economics”, was deeply concerned with the gulf between the rich and the poor. Some of the social scientists and philosophers who are responsible for making inequality such a central subject of public attention were, in terms of substantive involvement, devoted economists, no matter what else they might also have been. In recent years, economics of inequality as a subject has flourished. This is not to deny that the focus on efficiency to the exclusion of other considerations is very evident in some works in economics, but economists as a group cannot be accused of neglecting inequality as a subject.
If there is a reason to grumble, it rests more on the relative importance that is attached, in much of economics, to inequality in a very narrow domain, viz. income inequality. This narrowness has the effect of contributing to the neglect of other ways of seeing inequality and equity, which has far-reaching bearing on the making of economic policy. Policy debates have indeed been distorted by overemphasis on income poverty and income inequality, to the neglect of deprivations that relate to other variables, such as unemployment, ill health, lack of education, and social exclusion. Unfortunately, the identification of economic inequality with income inequality is fairly common in economics, and the two are often seen as effectively synonymous. If you tell someone that you are working on economic inequality, it is quite standardly assumed that you are studying income distribution.
The distinction, however, between income inequality and economic inequality is important. Many of the criticisms of economic egalitarianism as a value or a goal apply much more readily to the narrow concept of income inequality than they do to the broader notions of economic inequality. For example, giving a larger share of income to a person with more needs can be seen as militating against the principle of equalizing incomes, but it does not go against the broader precepts of economic equality.
Empirically, the relationship between income inequality and inequality in other relevant spaces can be rather distant and contingent because of various economic influences other than income that affect inequalities in individual advantages and substantive freedoms. For example, in the higher mortality rates of African Americans vis-à-vis the much poorer Chinese, or Indians in Kerala, we see the influence of factors that run in the opposite direction to income inequality, and that involve public policy issues with strong economic components: the financing of health care and insurance, provision of public education, arrangements for local security and so on.
Mortality differences can, in fact, serve as an indicator of very deep inequities that divide races, classes and genders. Statistics on mortality rates as well as other deprivations (such as undernourishment or illiteracy) can directly present a picture of inequality and poverty in some crucial dimensions. This information can also be used to relate the extent of relative deprivation of women to the existing inequalities in opportunities (in earning outside income, in being enrolled in schools and so on). Thus both descriptive and policy issues can be addressed through this broader perspective on inequality and poverty in terms of capability deprivation.
Despite the crucial role of incomes in the advantages enjoyed by different persons, the relationship between income (and other resources), on the one hand, and individual achievements and freedoms, on the other, is neither constant nor in any sense automatic and irresistible. Different types of contingencies lead to systematic variations in the “conversion” of incomes into the distinct “functionings” we can achieve, and that affects the lifestyles we can enjoy. I have tried to illustrate the different ways in which there can be systematic variations in the relationship between incomes earned and substantive freedoms (in the form of capability to lead lives that people have reason to value. The respective roles of personal heterogeneities, environmental diversities, variations in social climate, differences in relational perspectives and distributions within the family have to receive the serious attention they deserve for the making of public policy.
The argument is sometimes made that income is a homogeneous magnitude, whereas capabilities are diverse. This sharp contrast is not entirely correct, in the sense that any income evaluation hides internal diversities with some special — and often heroic — assumptions. Also, interpersonal comparisons of real income give us no basis for interpersonal comparisons even of utility. To get from the comparison of the means in the form of income differences to something that can be claimed to be valuable in itself (such as well-being or freedom), we have to take note of circumstantial variations that affect the conversion rates. The presumption that the approach of income comparison is a more “practical” way of getting at interpersonal differences in advantages is hard to sustain.
Furthermore, the need to discuss the valuation of diverse capabilities in terms of public priorities is an asset, forcing us to make clear what the value judgments are in a field where value judgments cannot be — and should not be — avoided. Indeed, public participation in these valuational debates is a crucial part of the exercise of democracy and responsible social choice. In matters of public judgment, there is no real escape from the evaluative need for public discussion. That evasion becomes transparent when we supplement income and commodity data with information of other types (including matters of life and death).
The issue of public discussion and social participation is thus central to the making of policy in a democratic framework. The use of democratic prerogatives — both political liberties and civil rights — is a crucial part of the exercise of economic policy making itself, in addition to other roles it may have. In a freedom-oriented approach, participatory freedoms cannot but be central to public policy analysis.
Adapted from Amartya Sen. Development as Freedom. New York: Anchor Books, 1999. p. 107-10.
