Equity and Wealth

Key to understanding the utility of the EquityTool is appreciating why the concept of equity has become so important in international development.

What is Equity?

Equity refers to social justice or fairness, and is one of the central pillars of many health, education and livelihood programs.

An important paper by Margaret Whitehead (1992) discusses health inequities as differences which are unnecessary, avoidable, unfair and unjust.  This is one of the early definitions of equity as related to international development.

The World Health Organization describes equity as “the absence of avoidable or remediable differences among people, whether those groups are defined socially, economically, demographically or geographically.”

Equity vs. Equality

To understand equity, it is important to distinguish it from equality. Equality implies that each individual or unit should receive the same. In health, this would translate to all individuals paying the same amount for the same health service, or receiving the same amount of information. However, some groups within a society may have greater need than others.  Equity focuses on eliminating differences between groups, when those differences can be addressed. In health, this would translate to sliding payment scales for the same health service, or differing amounts of information based upon prior knowledge and access to information.

 

Types of Inequities

As noted in the WHO definition, inequities may be rooted in social, economic, demographic or geographic differences.  Social differences are differences due to caste or tribe; economic differences are based in wealth; demographic differences may be due to age, gender or race, while geographic differences could be between countries, regions, or urban and rural areas.

The Millenium Development Goals addressed the inequalities between nations, and committed the global community to action to address those inequalities on eight fronts.  

However, within a few short years, data demonstrated that progress was not being made equally, resulting in widening inequities within countries.  The 2005 Human Development Report and 2006 World Development Report outline the position of international organizations on these issues, and further galvanized the international development community to measure and address inequity.

A summary report published in 2007 makes clear that within country differences are large, varied, and of concern across nearly all indicators measured in the Demographic and Health Survey reports.  This summary relied upon the DHS wealth index as one assessment of inequity – economic inequity. Inequity between urban and rural dwellers, between men and women, or across age groups are also present. Each of these dimensions of inequity may have different causes.

 

Economic Inequity and Wealth Status

Often those who are least able to access services are the poorest members of society. This is both because they cannot afford them and because they are more likely to be marginalized in other ways, lacking, for example, political power or education. Though what constitutes equity is dependent on the local situation and involves more than simply income level or wealth, reaching the poor within a society is often an important factor in achieving equity.

Absolute Poverty vs. Relative Poverty

The challenge then becomes how to define and identify the poor.  Two theoretical approaches to defining poverty are absolute poverty, and relative poverty.  Absolute poverty is defined by a fixed measure, such as persons living below $2/day, or below the national poverty line. Assessing absolute poverty is often done through measuring income, or assessing consumption. Both of these methods have strong proponents, as well as significant detractors.

Relative poverty is defined in relation to others.  While one can imagine a community with no people who live below the poverty line, in that same community, it is still possible to identify those who are poorer than others. Relative poverty may be defined qualitatively or quantitatively. The quantitative measures used by the EquityTool are measures of relative poverty. These measures, which have also been used by the World Bank in its measures of inequity, are quintiles based upon a wealth index or asset index.  This method uses statistical comparisons to determine which households are more or less poor, based upon items that they own, and characteristics of their residence. The population is then divided into five equally sized groups, ranked in order of their wealth index score. If someone is in the bottom wealth quintile, they are among the poorest people in the country. If they are in the top quintile, they are among the wealthiest.

The Wealth Index

The wealth index gives each person in the population a score that represents how wealthy he or she is based on the characteristics of his or her household. The score is generated through a method known as principal components analysis.  After ordering respondents based on their score, they can be divided into groups. Traditionally, they have been divided into quintiles, or five groups of 20% each, although other divisions are also possible. Countries which have had a national survey such as the DHS or similar surveys usually have the data categorized by wealth quintile.  The measure is relative, because every country has 20% of the people who are the poorest, however the poorest people in Brazil are different from the poorest people in Benin.

To apply this method to a new population, it is possible to ask the same questions, and apply the same scoring used by the benchmark survey (the DHS, for example). It is then possible to determine the wealth distribution of the newly surveyed population.  See our guide on interpreting wealth quintiles for more information.