A dominance approach to the appraisal of the distribution of well-being across countries

This paper proposes a dominance approach to study inequality of well-being across countries. We consider a class of well-being indices based on the three attributes used in the HDI (Human Development Index). Indices are required to satisfy: preference for egalitarian marginal distributions of income, health and education, ALEP substitution of attributes and priority to poor countries in allocating funds to enhance health and education. We exhibit sufficient conditions for checking dominance over the defined class of well-being indices. We apply our method to country data from 2000 to 2005. The deterioration in health conditions in poor countries is why welfare improvements at the world level cannot be ascertained.

Research Highlights
► We propose a dominance approach to study inequality of well-being across countries.
► A class of welfare indicators defined on income education and health is studied.
► We obtain sufficient conditions for dominance.
► We apply our method to country HDI-data from 2000 to 2005.
► The deterioration of health in poor countries prevents welfare to be improving.