inequality perceptions in vietnam

PERCEPTIONS OF INEQUALITY IN VIETNAM

Findings from a study released in 2014

Reena Badiani-Magnusson

Sr Poverty Economist

Poverty and Equity Global Practice

World Bank

OVERVIEW

Framework for perceptions of inequality analysis

Study structure and approach

Results

Conclusions

FRAMEWORK: FACTS AND PERCEPTIONS:COMPLEMENTARY APPROACHES TO LEARNING ABOUTINEQUALITY AND INEQUITY IN VIETNAM

“Facts” from data - capture objective differences in living standards. Do not capture top-incomes/expenditures adequately.

Perceptions - differ from reality, measured inequality. They depend on: Objective differences in living standards;

An individual’s own living standard, in the past, present and future;

Information about others – what and who they see;

Beliefs in what drives differences (e.g. hard work versus nepotism);

Expectations for the future;

Values, including dislike of inequality;

This will feed into a person’s perception of inequality and aversion to inequality. These influence the demand for redistribution and government programs, political and social

trust, welfare and aspirations.

HOW DO PERCEPTIONS OF INCOME DISTRIBUTIONS AFFECT OUTCOMES OF INTEREST, INCLUDING BEHAVIORS AND PREFERENCES, AND HOW DO WE MEASURE THESE?

1. What do we mean by perceptions of inequality and inequity? Slightly different concepts in each of the above.

2. How do we capture these empirically? Multiple aspects: (i) views of income distribution; (ii) how views vary by person (reference groups, information); (iii) what it means for inequality to increase –absolute or relative concepts; (iv) whether levels of perceived inequality are problematic.

3. Processes generating inequality are likely to affect aversion to inequality, the perception of inequality, the demand for redistribution etc.

Political Economy -Demand for

Redistribution

Aspirations, Motivation and Long-Term Goals

Civil disobedience, conflict over property

rights, protest

Welfare – through inequity aversion

OVERVIEW



Results

Conclusions

STRUCTURE OF STUDY

Is there concern about

inequality?

Why do views differ across the population? Examining the factors that feed into perceptions.

Why do perceptions of inequality matter

for development outcomes? Focus on

aspirations, trust and preference for

redistribution.

12

3

Data collected: 1700 households in 4 provinces: Long An, Ha Tay and Quang Nam (rural), and Ho Chi

Minh City. Overlapping with a panel household survey collecting extensive income data. Linked

qualitative survey by Oxfam in the same communities that touched in greater depth on certain topics.

APPROACH: HOW DO WE CAPTURE A PERSON’S VIEW OF THE INCOME DISTRIBUTION?

Self-

Past

Self-

Future

Self-

Today

Richer-

Today

Poorer

-

Today

Self

- Age

- Income level and occupation

- Information (travel, groups

around you, media)

- Values (inequality aversion)

Source: Verme (2010)

Ego system

Alter system

SURVEY CONTENTS AND METHOD

“Our current society has both rich and poor. Let's divide the population in the society into 11 groups with different living standards. Living standards include such aspects as income, spending, housing, savings, as well as properties like vehicles and durables. These groups are illustrated on an eleven-step ladder. At the top (step 10) of the ladder is the group of people in society who is the best off group. At the bottom (step 0) is the poorest group.”

Let’s think about someone at the top of the ladder at step number 10, so the wealthiest or richest person that you can think of. Can you think of anyone like that? What to they do? Where do they live (locally, nationally?) How much do you think they earn? Are they neighbors/friends/relatives or people you see around but don’t know?

1. Start with self -present

2. Ask about others - first focusing on concepts and then shifting to groups

3. Move to self –past and future,

including aspirations

4. Is inequality problematic, using reference group

and other aggregations.

5. Move conversation to

redistribution, trust, personality type.

10

9

8

7

6

5

4

3

2

1

0

SOME LESSONS ON CAPTURING PERCEPTIONS OF INEQUALITY

Extensive survey piloting: three pilots, pilots for quantitative and qualitative approaches were aligned. Minor panic.

Opinions questions are hard to ask. We started with some questions from Asia Barometer, the World Value Surveys and Gallup that we thought were interesting. We found that these were really hard to ask in rural areas and among less literature populations.

“Inequality” is too abstract and didn’t translate well into Vietnamese.

“Don’t know” is highly informative: We separated “don’t know” into: (i) don’t understand; (ii) I understand, but I don’t think about or have an opinion on this.

OVERVIEW



Results

Conclusions

IS THERE CONCERN ABOUT INEQUALITY?1What happened empirically?

Perceptions: Do you think there are disparities in income,

education, health, land, connections? If yes, do these disparities

worry you?

What type of inequality do you think is the most worrying?

What do people see?- Does everyone see a range in living standards?

- What does it mean to be rich or poor?

- How do perceptions of income inequality compare to

actual statistics?

What drives differences between the rich and

poor?- How do the rich get rich?

- Why are the poor living in poverty?

- How do these opinions influence a person’s tolerance

for inequality and whether or how to help them out

of poverty?

What are their expectations for their lives?- Does everyone expect to see improvements in their

living standards?

- Do people who have previously seen improvements

worry less about inequality?

- Do people who think that differences are due to

“illegitimate” reasons anticipate less improvements?

THE GINI COEFFICIENT OF INCOME INEQUALITY DECLINED VERY SLIGHTLY BETWEEN 2004 AND 2012. LOWER THAN IN MANY OTHER EAST AND SE ASIAN COUNTRIES

0

10

20

30

40

50

60

2000 2010 2000 2009 2000 2009 2004 2012 2002 2012 2000 2010 2000 2012 2004 2012

Thailand China Philippines Vietnam Malaysia Thailand Indonesia Vietnam

Income Expenditure

Nominal Income or Expenditure Gini Coefficients

PLENTY HAPPENING UNDER THE SURFACE… TOP 10% PULLING AWAY FROM THE BOTTOM 10, BUT PATTERNS CHANGED IN 2012.

10,680

14,107

20,883

31,897

39,669

1,906 2,543 3,3724,838

6,882

5

5.2

5.4

5.6

5.8

6

6.2

6.4

6.6

6.8

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

2004 2006 2008 2010 2012

Rat

io o

f In

com

e at

th

e 9

0th

to

10

th P

erce

nti

le

10

00

VN

D (

20

10

Pri

ces)

Ratio p90/p10

p90

p10

Source: World Bank Staff Estimates from various rounds of the Vietnam Household Living Standards Survey.

INEQUALITIES IN EDUCATION ENROLLMENT, ALTHOUGH PRONOUNCED, HAVE NARROWED SUBSTANTIALLY OVER TIME. QUALITY CONCERNS HAVE SHIFTED INTO FOCUS.

Noteworthy increases in net enrollment at primary, lower-secondary and upper-secondary levels for children from all backgrounds

0.79

0.94 0.920.95

0.32

0.87

0.71

0.94

0.04

0.54

0.36

0.83

Bottom

20%

Top 2

0%

Bottom

20%

Top 2

0%

Bottom

20%

Top 2

0%

Bottom

20%

Top 2

0%

Bottom

20%

Top 2

0%

Bottom

20%

Top 2

0%

1998 2012 1998 2012 1998 2012

Primary Lower-Secondary Upper-Secondary

Total Net Enrollment at Primary, Lower- and Upper-Secondary School

Although there are inequalities in Vietnam, the education system does appear to impart a minimum quality level of education for all

0

.00

1.0

02

.00

3.0

04

.00

5

Den

sity

200 400 600 800 1000PISA Maths Score

Urban Vietnam

Rural Vietnam

Japan

World Bank Staff Estimates Using PISA data

Urban students in Vietnam have similarMaths Scores to students in Japan

HOWEVER, VIEW THAT INEQUALITY MAY BE A (GROWING) PROBLEM

In this quote inequality is quite linked to social and economic mobility, opportunities.

“[The rich and poor] are increasingly getting distant from each other. I have the feeling that the poor have been marginalized. With money, they can invest in the best possible schooling for their children while our children lag behind forever as a (Vietnamese) saying goes that a son of the king will end up a king, a child of a lay woman who takes care of a Buddhist temple will end up sweeping the fallen banyan tree leaves.” –low-income person , Ho Chi Minh City

IN THE SURVEY CONDUCTED, THE MAJORITY OF RESPONDENTS VIEWED INEQUALITY IN VIETNAM AS PROBLEMATIC.

Disparities at a Vietnam wide level are a problem

30% of rural respondents simply didn’t think about this question

0

0.2

0.4

0.6

0.8

1

Rural Mid-rural Urbanizing Urban

Don't think about disparities in Vietnam

Not concerned, but think about disparities in Vietnam

Concerned about disparities

53%

61%64%

76%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Rural Mid-rural Urbanizing Urban

Views differ across rural and urban areas. The biggest explanation for this is

whether people thought about this at all -> pointing to the need to consider what

drives this knowledge and interest.

YOUNGER PEOPLE MORE LIKELY TO EXPRESS CONCERN ABOUT INEQUALITY.

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

Commune Province Country Own Reference Group

Frac

tio

n

15-31

32-47

48+

Fraction concerned by disparities in living standards

WHAT TYPES OF INEQUALITY ARE SEEN, AND ARE SEEN TO BE PROBLEMATIC? INCOME INEQUALITY REPORTED AS THE MOST WORRYING DISPARITY FOR THE MAJORITY OF SURVEY RESPONDENTS

0.38

0.22

0.21

0.14

0.04

0% 10% 20% 30% 40%

Income

Health

Education (Qualityor Access)

Connections

Land

Most worrying disparity

0%10%20%30%40%50%60%70%80%90%

100%See inequality and see it as a problem

Source: Perceptions of Inequality Survey. Respondents were asked if they saw disparities of various sorts between the rich and the poor, and whether they viewed them as a source of concern.

INEQUALITY OF OPPORTUNITIES ARE SEEN AS MOST WORRYING OVERALL, IN PARTICULAR AMONG OLDER RESPONDENTS AND IN RURAL AREAS

48%43% 38% 48%

37%

48% 48% 47% 38% 45%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Ha Tay QuangNam

Ho ChiMinhCity

LongAn

15-32 32-48 48+ Rural Urban

Area Age Urban All

Process

Opportunities

Outcomes

Source: Perceptions of Inequality Survey. Opportunities include inequalities in education access and quality, health access and quality and land. Outcome inequality refers to differences in living standards.

WHY DO VIEWS ABOUT INEQUALITY DIFFER ACROSS THE POPULATION?2



worry you?


What do people see?- Does everyone think about inequality?

- Does everyone see a range in living standards?

- Do people see different “top” and bottom ends?


actual statistics?

What drives differences between better

and worse off? How does this influence

policy preferences?- What explains why someone is better or worse off?


for inequality and whether to support policies that

reduce poverty and redistribute?

What are their expectations for their lives?- Does everyone expect to see improvements in their

living standards?




“illegitimate” reasons anticipate less improvements?

LOCAL INEQUALITIES ARE OF GREATER FOCUS THAN NATIONAL. VIEWS ON INEQUALITY DEPEND ON HOW YOUR REFERENCE IS FRAMED.

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

Commune Province Countrywide Referencegroup

Understand question

Think about disparity athis leveland has an opinion on whether itis a problemThink about disparity andconsiders it to be a problem

“Local” inequalities – subnational or

individually defined reference

groups - seem to be of greater focus

than national. Greatest concern

when using the individual’s own

reference group.

Are we under-estimating concerns

about inequality when we’re not

allowing individuals to answer on

their own terms?

CONSENSUS ON WHAT IT MEANS TO BE POOR, BUT DISPERSION IN WHAT ISCONSIDERED TO BE “RICH

0

5

10

15

20

25

30

35

40

45

Highly Rural Mid-Rural Urbanizing Rural Urban

Mill

ion

s o

f V

ND

Type of Area Where Respondent Lives

"How much do you think the poor, the rich, and people in the middle earn?": Median responses by location of respondent

Rich

Middle

Poor

Consensus about what it means

to be poor in Vietnam – but

views on what it means to be

rich and “average” vary quite

substantially. This leads to

large differences across the

population in perceptions on

the income distribution

Urban people are more likely

to consider people they don’t

know and to speculate on the

super rich.

THE SIZE AND SCOPE OF YOUR REFERENCE GROUP CAN HELP TO EXPLAIN DIFFERENCES IN CONCERN ABOUT INEQUALITY

11%

22%24%

Travelled onlywithin district

Travelled onlywithin province

Travelled to adifferentprovince

Concern about inequality in Vietnam, relative to those who haven't

travelled outside their commune

59%57%

53%48%

27%

46%

62%67%

No Travel Within Dist WithinProvince

Diff Province

Disparities at a commune or Vietnam wide level are a problem

Commune

CountrySource: The figure shows the percentage increase in concern about inequality relative to those who haven’t travelled outside their commune. The results reported are estimates from an OLS regression in which the dependent variable is whether the individual is concerned about province or country level inequality. The regression controls for age, sex, education, log per capita monthly income, urban/rural status, information sources and perceived incomes of the rich, poor and average households

POVERTY LARGELY LINKED TO CIRCUMSTANCES OUTSIDE OF A PERSON’S CONTROL, A MORE DIVERSE SET OF REASONS FOR THE RICH BEING BETTEROFF

83%

42%

16%

5%

62%

48%

38%

13%

Talent/Hard work

Family Background

Connections

IllegitimateReasons

Poor health

Family Background

No Ability

Lazy

Ric

hPoor

% Reporting People are Rich/Poor for Each Reason

Reasons People Believe Others Are Rich Or Poor

Many people believe the rich are better off because of hard work and talent, but family position, connections and illegitimate reasons also play important roles.

Poverty is perceived to be due to circumstances that are often out of the person’s control, including poor health.

WHY DO PERCEPTIONS OF THE DISTRIBUTION OF INCOMES MATTER?3



worry you?


At what level do you think inequality is worrying?

What do people see?- Does everyone see a range in living standards?

- What does it mean to be rich or poor?


actual statistics?

What drives differences between the rich and

poor?- How do the rich get rich?

- Why are the poor living in poverty?


for inequality and whether or how to help them out

of poverty?

What are expectations for their lives and

how are they affected by perceptions of

the income distribution? (preliminary)- Does everyone expect to see improvements in their

living standards?




“illegitimate” reasons anticipate less improvements in

their lives?

PEOPLE ARE MORE LIKELY TO BE WORRIED ABOUT INEQUALITY IF THEY THINK THE RICH ARE BETTER OFF DUE TO ILLEGITIMATE REASONS OR FACTORS OUTSIDE OF THEIR CONTROL, SUCH AS BEING BORN INTO A WEALTH FAMILY

0.10

0.16

0.02

0.09

0.070.08

Rich due to beingborn into anadvantagedfamily (***)

Rich due toillegitimate

practices (**)

Rich due toconnections

Poor due to beingborn into a

disadvantagedfamily (***)

Poor due to badluck

Poor due to poorhealth (***)

…compared to due to talent/hard work …compared to due to lack of talent/no hard work

Estimated effect of perceived source of wealth/poverty on whether a person thinks inequality in Vietnam is a problem

PERCEPTIONS OF THE INCOME DISTRIBUTION MAY DEMOTIVATE: PEOPLE WH O THINK THE RICH ARE BETTER OFF DUE TO FACTORS OUTSIDE OF ONE’S CO NTROL ARE LESS LIKELY TO THINK THAT TRYING REALLY HARD CAN IMPROVE THE IR POSITION IN LIFE

-0.05

0

0.05

0.1

0.15

0.2

0.25

Rich due to beingborn into anadvantagedfamily (***)

Rich due toillegitimate

practices

Rich due toconnections

(***)

Poor due tobeing born into a

disadvantagedfamily

Poor due to badluck (**)

Poor due to poorhealth

…compared to due to talent/hard work …compared to due to lack of talent/no hard work

Estimated effect of source of wealth/poverty on whether a person thinks that they are unable to improve their life even if they try really hard

RURAL YOUTH ARE MORE LIKELY TO THINK THAT THE RICH WORK IN AGRICULTURE.

From linked qualitative studies, we see how these reference groups influence education and career choices:

“Our secondary school teachers gave no career advice to us. We did not know what to do after graduating from this school.” (Migrant worker, Kim Chung, Hanoi – Oxfam Skills Survey for VDR)

0.34

0.67

0.21

0.82

0.10

0.81

0.03

0.93

0 0.2 0.4 0.6 0.8 1

Agricultural

Professional

Fraction

What type of work do the best-off people do?

Urban

Urbanizing

Mid-Rural

Rural

OVERVIEW



Results

Conclusions

CONCLUSIONS

• Measurement: Some new approaches for measuring perceptions of inequality, in particular paying attention to reference groups and considering the relevance of absolute and relative views.

• Two factors may feed into a rising focus on inequality:

• Urbanization, which influences exposure and information channels; in this data, these populations place a greater focus on inequality of outcomes and illegitimate practices.

• Population demographic shifts. Youth have different views about inequality compared to older generations, in part due to greater access to information and mobility. The rise of the younger generations may place a greater emphasis on social and economic inequalities.

• Clear that inequality of opportunities is a concern. that it’s useful to track inequalities driven by circumstances – where poverty begets poverty, wealth begets wealth. These are associated with a greater concern about inequality, and potentially influence social trust – and are more likely t be

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inequality perceptions in vietnam

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