1

Prosperity

Growth in mean income and

consumption (not only GDP/National

Accounts but also look to

Household Surveys data).

Sustainability

Ability to maintain the standards of

living achieved. Stocks of human,

environmental,

physical , cultural and social assets.

Equity

Looking at the distribution among

individuals and social groups of income

flows, stocks of assets and rights.

Sensibility

The last dimension is subjective, based on

people’s perception about the country,

the public services and life quality.

Inclusive Sustainable Development?*8Comparing Trends in Brazil, US and China

Different countries and income classes in global income distribution in 2008

From calcu08.dta

USA

India

Brazil

China

Russia

1p

erc

en

tile

of w

orld

in

co

me

dis

trib

utio

n10

20

30

40

50

60

70

80

90

100

1 20 80 10040 60country percentile

Branko Milanovic

2

Nota: Renda deflacionada com INPC; PIB com deflator implícito do PIB.

Fonte: Renda, Pesquisa Nacional por Amostra de Domicílios (PNAD/IBGE); PIB, Sistema de Contas Nacionais (SCN/IBGE).

80

85

90

95

100

105

110

115

120

125

130

135

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Labor Productivity

Labor Productivity and Labor

Compensation

Cre

scim

ento

acu

mula

do d

esde

2001

18 p.p.

Income vs Productivity

Is there a gap?

Labor

Compensation

EUAPNAD real income grew 2

percentage points above GDP.

In China was the opposite

Brazil has been falling behind in terms of

Productivity

3

180

160

140

120

2004 2005 2007 20122003

200

1002006 2008 2009 2010 2011 2013

Real Per Capita 2003 = 100

Mediana

Brasil

195.3

Median PC Income PNAD

2014

* Contas NacionaisFonte: CPS/FGV a partir dos microdados da PNAD/IBGE e Contas Nacionais/IBGE

How much it grows?

Median Income

2. Brazil vs China: Labor Shares in Income

National Accounts

Fonte: Penn World Table.

40%

42%

44%

46%

48%

50%

52%

54%

56%

58%

60%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Par cipaçãodarendadotrabalhonarendanacional

Brasil

China

6

EUA46%

2001

EUA42%

2011

4

BrasilTop 1% of Income

Personal Income Tax

(PIT)

Brazil vs China vs US:

Inequality per capita income

0.25

0.30

0.35

0.40

0.45

0.50

0.55

0.60

0.65

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Coefic

i

entedeGini

Desigualdade:BrasileChinaemdireçõesopostas

Fonte: 1976-2009 Instituto de Pesquisa Econômica Aplicada (IPEA), médias para anos de 1980,1991,2000; 2011 PNAD de 2011 China 1981-2001 Ravalion and Chen (2007), 2002-2011 (Sicular, The Challenge of High Inequality in China, The World Bank, Ago/2013)

China

Brasil

8

EUA 0,46

2001->EUA 0,40

1981->

EUA0,48

2011->

5

0

10

20

60

1000 100000

Gin

iof d

isp

osa

ble

per

cap

ita

inco

me

10000

GDP per capita (in 1990 international dollars;Maddison)

Kuznets relationship for the United States, 1774-2013

1860

50

1929

2013

40

1947

1979

30

1774

1933

0

10

30

0 1000 2000 6000 7000 8000

Gin

i

3000 4000 5000

GDP per capita (in 1990 international dollars)

Branko Milanovic

The Kuznets relationship for Brazil, 1839-201370

1991

1972

60

50

2013

40

1930

20

1885

6

Current Happiness

Overall Life Satisfaction 2006 to 2013 (scale 0 to 10)

Source: Gallup World Poll

2013 2012 2011 2010 2009 2008 2007 20062010-13 / 2006-09 Total Mean

Portugal 5,2 68 4,99 82 5,22 75 4,87 80 5,32 59 5,72 37 5,41 51 -7,54% 5,25

Italy 6,0 39 5,84 49 6,06 41 6,35 31 6,33 25 6,78 21 6,57 18 6,85 19 -8,59% 6,35

Ireland 6,8 20 6,96 15 7,01 17 7,26 12 7,05 9 7,57 4 7,14 13 -3,39% 7,11

Greece 4,7 94 5,10 75 5,37 68 5,84 47 6,04 33 6,65 16 6,01 36 -15,74% 5,67

Spain 6,2 35 6,29 31 6,52 33 6,19 36 6,20 29 7,29 8 6,99 11 7,15 12 -8,79% 6,60

US 7,4 7,02 7,11 7,16 7,16 7,28 7,51 7,18 7,21

Brasil 7,1 14 6,93 18 7,04 16 6,84 20 7,00 11 6,69 23 6,32 24 6,64 21 4,73% 6,82

Russia 5,5 61 5,62 56 5,39 66 5,38 64 5,16 69 5,62 40 5,22 51 4,96 73 4,44% 5,36

India 4,6 100 4,60 99 4,63 112 4,99 77 4,52 90 5,15 61 5,03 59 5,35 55 -6,13% 4,86

China 5,2 68 5,09 76 5,04 79 4,65 92 4,45 93 4,85 76 4,86 66 4,56 95 6,73% 4,84

South Africa 5,13 73 4,93 90 4,65 93 5,22 64 5,35 53 5,20 54 5,08 70 -11,70% 4,91

Chile 6,7 21 6,60 24 6,53 32 6,64 26 6,49 20 5,79 35 5,70 34 6,06 34 10,11% 6,31

Colombia 6,6 25 6,37 28 6,46 35 6,41 29 6,27 28 6,17 30 6,14 27 6,02 35 5,04% 6,31

Mexico 7,4 5 7,32 7 6,91 20 6,80 22 6,96 12 6,83 19 6,53 19 6,58 23 5,69% 6,92

Peru 5,8 50 5,82 50 5,89 44 5,61 54 5,52 47 5,13 63 5,21 53 4,81 77 11,85% 5,47

y = 1E-04x + 4,4338

R2 = 0,6499

Real GDP per capita

2

3

4

5

6

7

8

9

0 5000 10000 15000 20000 25000 30000 35000

www.fgv.br/cps

Source: Gallup World Poll – IADB project

BrazilDenmarkItaly

Togo

Does Money bring Happiness?

Present Satisfaction x Real GDP per capita

Life Satisfaction X

GDP Per Capita PPP

Pre

sen

tS

atis

fact

ion

7

53. Japan(5.921)52. Belize(5.956)

51. Ecuador(5.976)50. Italy(5.977)

49. Uzbekistan(5.987)48. Nicaragua(5.992)

47. Malaysia(6.005)46. El Salvador(6.068)

45. Slovakia(6.078)44. Venezuela(6.084)

43. Trinidad and Tobago(6.168)42. Bahrain(6.218)41. Kuwait(6.239)

40. Suriname(6.269)39. Guatemala(6.324)

38. Algeria(6.355)37. Spain(6.361)36. Qatar(6.375)

35. Saudi Arabia(6.379)34. Taiwan(6.379)

33. Thailand(6.474)32. France(6.478)

31. Colombia(6.481)30. Malta(6.488)

29. Uruguay(6.545)28. United Arab Emirates(6.573)

27. Czech Republic(6.596)26. Argentina(6.650)

25. Panama(6.701)24. Chile(6.705)

23. United Kingdom(6.725)22. Singapore(6.739)

21. Mexico(6.778)20. Luxembourg(6.871)

19. Ireland(6.907)18. Belgium(6.929)

17. Brazil(6.952)16. Germany(6.994)

15. Puerto Rico(7.039)14. Costa Rica(7.087)

13. United States(7.104)12. Austria(7.119)

11. Israel(7.267)10. Sweden(7.291)9. Australia(7.313)

8. New Zealand(7.334)7. Netherlands(7.339)

6. Canada(7.404)5. Finland(7.413)4. Norway(7.498)3. Iceland(7.501)

2. Switzerland(7.509)1. Denmark(7.526)

0 1 2 3 4 5 6 7 8

Explained by: GDP per capita Explained by: social support

Explained by: healthy life expectancy Explained by: freedom to make life choices

Explained by: generosity Explained by: perceptions of corruption

Dystopia (2.33) + residual 95% confidence interval

157. Burundi(2.905)156. Syria(3.069)155. Togo(3.303)

154. Afghanistan(3.360)153. Benin(3.484)

152. Rwanda(3.515)151. Guinea(3.607)150. Liberia(3.622)

149. Tanzania(3.666)148. Madagascar(3.695)

147. Yemen(3.724)146. Burkina Faso(3.739)

145. Uganda(3.739)144. Chad(3.763)

143. South Sudan(3.832)142. Niger(3.856)

141. Angola(3.866)140. Cambodia(3.907)

139. Ivory Coast(3.916)138. Comoros(3.956)

137. Botswana(3.974)136. Haiti(4.028)135. Mali(4.073)

134. Gabon(4.121)133. Sudan(4.139)132. Malawi(4.156)

131. Zimbabwe(4.193)130. Mauritania(4.201)

129. Bulgaria(4.217)128. Senegal(4.219)

127. Congo (Brazzaville)(4.236)126. Georgia(4.252)

125. Congo (Kinshasa)(4.272)124. Ghana(4.276)

123. Ukraine(4.324)122. Kenya(4.356)

121. Armenia(4.360)120. Egypt(4.362)

119. Myanmar(4.395)118. India(4.404)

117. Sri Lanka(4.415)116. South Africa(4.459)

115. Ethiopia(4.508)114. Cameroon(4.513)

113. Namibia(4.574)112. Iraq(4.575)

111. Sierra Leone(4.635)110. Bangladesh(4.643)

109. Albania(4.655)108. Palestinian Territories(4.754)

107. Nepal(4.793)

0 1 2 3 4 5 6 7 8

Explained by: GDP per capita Explained by: social support

Explained by: healthy life expectancy Explained by: freedom to make life choices

Explained by: generosity Explained by: perceptions of corruption

Dystopia (2.33) + residual 95% confidence interval

Happiness Ranking Levels 2013-2015 Top Bottom

42. Bosnia and Herzegovina(0.263)41. Haiti(0.274)

40. Indonesia(0.295)39. South Korea(0.295)

38. Kosovo(0.298)37. Mongolia(0.298)36. Romania(0.310)

35. Palestinian Territories(0.321)34. Kazakhstan(0.322)

33. Bolivia(0.322)32. Trinidad and Tobago(0.336)

31. Bulgaria(0.373)30. Zambia(0.381)

29. Colombia(0.399)28. Cameroon(0.413)27. Philippines(0.425)

26. Serbia(0.426)25. Puerto Rico(0.446)

24. Argentina(0.457)23. Tajikistan(0.474)

22. Brazil(0.474)21. Germany(0.486)

20. Kyrgyzstan(0.515)19. China(0.525)

18. Paraguay(0.536)17. Georgia(0.561)

16. El Salvador(0.572)15. Macedonia(0.627)

14. Thailand(0.631)13. Zimbabwe(0.639)12. Azerbaijan(0.642)

11. Peru(0.730)10. Russia(0.738)

9. Uzbekistan(0.755)8. Uruguay(0.804)7. Slovakia(0.814)

6. Chile(0.826)5. Latvia(0.872)

4. Moldova(0.959)3. Ecuador(0.966)

2. Sierra Leone(1.028)1. Nicaragua(1.285)

-2 -1.5 -1 -.5 0 .5 1 1.5 2

Changes from 2005-2007 to 2013-2015 95% confidence interval

126. Greece(-1.294)

125. Egypt(-0.996)

124. Saudi Arabia(-0.794)

123. Botswana(-0.765)

122. Venezuela(-0.762)

121. Yemen(-0.754)

120. India(-0.750)

119. Italy(-0.735)

118. Spain(-0.711)

117. Ukraine(-0.701)

116. Rwanda(-0.700)

115. Jamaica(-0.698)

114. Cyprus(-0.692)

113. South Africa(-0.686)

112. Jordan(-0.638)

111. Ghana(-0.600)

110. Iran(-0.507)

109. Belize(-0.495)

108. Tanzania(-0.460)

107. Japan(-0.446)

106. Denmark(-0.401)

105. Honduras(-0.375)

104. Pakistan(-0.374)

103. Uganda(-0.356)

102. Laos(-0.344)

101. France(-0.336)

100. Croatia(-0.333)

99. Senegal(-0.328)

98. Namibia(-0.312)

97. Belgium(-0.311)

96. Vietnam(-0.299)

95. Madagascar(-0.285)

94. Portugal(-0.282)

93. United States(-0.261)

92. Finland(-0.259)

91. Ireland(-0.238)

90. Armenia(-0.226)

89. Malawi(-0.205)

88. Costa Rica(-0.171)

87. Burkina Faso(-0.170)

-2 -1.5 -1 -.5 0 .5 1 1.5 2

Changes from 2005-2007 to 2013-2015 95% confidence interval

Changes in Happiness from 2005-2007 to 2013-2015 Top Bottom

8

OVERVIEW (My Take on the Expert Commission directions)

A good guide can be found in the 2010 book Mis-Measuring Our Lives

by two Nobel prize winners in Economics, Joseph Stiglitz and Amartya

Sen. The book discusses the conclusions from an international

committee of experts on how to measure social progress, and they can

be summarized in four recommendations:

Growth in household surveys – The work calls attention to the need

to improve the current economic development measures centered on the

GDP. In particular, also to emphasize the growth prospects of the

average income and expenditure of families interviewed in household

surveys, to measure the improvement in mean living standards.

Equality – Measurements of income, consumption and wealth must be

accompanied by indicators that reflect their distribution among people

and social groups. This means we must keep an eye on the vertical and

horizontal inequality of income flows and asset stocks.

• Sustainability – To consider asset stocks such as, for

example, environmental attributes to incorporate the

sustainability of performance indicators as time goes by, in

other words whether current welfare levels can continue for

future generations. The different assets inventories collected

by the surveys and, especially, education and housing to

analyze the stability of labor earnings and living standards.

• Perceptions – Lastly, the conjugation of objective and

subjective well-being measurements by using questions raised

in opinion polls relating to the assessment of their lives is

designed to obtain a more realistic view of the quality of life

in different countries. In other words, it is not enough to

objectively improve our lives, but it is also necessary for

people to recognize this development. Here, we use as a

benchmark of subjective indicators, measurements of

happiness or life satisfaction that has become more prominent

in the recent economic literature.

9

Expert Commission – Stiglitz, Sen,

Fitoussi ((Mis)Measuring Our Lives)Also Arrow, Atkinson, Deaton, Heckman, Kanehman, Piketty…

Recommendations#1: When evaluating material well-being, look at income

and consumption rather than production

2: Emphasise the household perspective

3: Consider income and consumption jointly with wealth

4: Give more prominence to the distribution of income,

consumption and wealth

5: Broaden income measures to non-market activities

#Focus on Pages 11-18 Executive Summary

Expert Commission (cont)6: Quality of life depends on people’s objective conditions

and capabilities (health, education, etc) measures of social

connections, political voice, and insecurity

7: Quality-of-life indicators should assess inequalities

8: Surveys should be designed to assess the links between

various qualityof-life domains

9: Statistical offices should provide information on

quality-of-life dimensions

10: Measures of both objective and subjective well-being

provide key information about people’s quality of life.

Statistical offices should incorporate questions to capture

people’s life evaluations, hedonic experiences and

priorities in their own survey.

11 & 12 – Environmental Considerations

10

Global Social Indicators• HDI (Human Development Index )

• IHDI (Inequality Adjusted HDI)

• PHDI (Perceived HDI - Subjective)

• MPI (Multidimensional Poverty Index )

• MDGs (8 Millenium Development Goals)

• SDGs (17 Sustainable Development Goals)

– International Poverty Lines (1,9 U$S a day PPP), Shared

Prosperity (Bottom 40%), My World (Subjective Priorities)

• Happiness and Well-Being (Gallup World Poll)

– Beyond GDP (OECD)

• Expert Commission ((Mis)Measuring Our Lives)