Publication: May Growth Lead to Higher Deprivation Despite Higher Satisfaction?
Loading...
Published
2009-04-01
ISSN
Date
2012-03-19
Author(s)
Yitzhaki, Shlomo
Editor(s)
Abstract
In a relative deprivation framework, unless inequality is reduced, growth is associated with both higher satisfaction and higher deprivation. This may help explain the discontent with growth despite its benefits. As is well known in the literature, knowledge of the population's mean income and Lorenz curve is all that is needed to analyze a distribution, so that this can also be used to assess the satisfaction and deprivation of each individual. Given the normalization used to derive the satisfaction and deprivation measures, satisfaction and deprivation add up to the mean income for the population as a whole as well as for each individual.
Link to Data Set
Citation
“Yitzhaki, Shlomo; Wodon, Quentin. 2009. May Growth Lead to Higher Deprivation Despite Higher Satisfaction?. Policy Research working paper ; no. WPS 4921. © World Bank. http://hdl.handle.net/10986/4111 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Publication Climate and Social Sustainability in Fragility, Conflict, and Violence Contexts(Washington, DC: World Bank, 2026-01-07)Climate change is widely recognized as a driver of violent conflict, but its broader social effects remain less understood. Ignoring these dimensions risks a vicious cycle where climate policies might undermine socially just adaptation. Evidence is still limited on how climate shocks influence political participation, trust, or migration. This paper helps fill that gap by examining links between climate change, conflict, and social sustainability, with a focus on inclusion, resilience, cohesion, and legitimacy. Using secondary data from 2019–24, the study applies simple correlation-based methods to test three hypotheses on the nature, severity, and composition of these associations. The analysis combines multiple climate impact measures, new conflict classifications, recent social sustainability frameworks, and controls for population and geography. The results reveal strong correlations—not causation—between climate events and contexts of fragility, conflict, and violence. Climate impacts are most pronounced in both national and subnational conflict settings. The study also finds robust links between fragility, conflict, and violence and low levels of social sustainability, reflecting its role as both a driver and consequence of conflict. Some dimensions—such as violent events and insecurity—appear weaker in areas most affected by climate shocks. Two of the hypotheses are supported, and one remains inconclusive.Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.Publication Institutional Capacity for Policy Implementation: An Analytical Framework(Washington, DC: World Bank, 2026-01-07)State capacity is an important prerequisite for policy implementation, yet at the country level it is difficult to measure, assess, and reform. This paper proposes a focus on institutional capacity: the ability of public institutions to implement the specific policy mandates for which they are responsible. Based on a review of existing literature, the paper defines the different dimensions that compose institutional capacity and groups them into two cross-cutting categories: organizational dimensions (personnel, financial resources, information systems, and management practices) and governance dimensions (transparency, independence, and accountability). The paper proposes measures for organizational and governance dimensions using existing data, shows intra-institutional variation of these measures within countries, and discusses how new data could be collected for better measurement of these concepts. Finally, the paper illustrates how the framework can be used to diagnose the sources of common problems related to weak policy implementation.Publication South Africa’s Fragmented Cities: The Unequal Burden of Labor Market Frictions(Washington, DC: World Bank, 2026-01-08)Using high-resolution administrative, census, and satellite data, this paper shows that South African cities are characterized by spatial mismatches between where people live and where jobs are located, relative to 20 global peers. Areas within 5 kilometers of commercial centers have 9,300 fewer residents per square kilometer than expected, which is 60 percent below the global median. Poor, dense neighborhoods are most affected. In Johannesburg, a 10-percentile increase in distance from the nearest business hub corresponds to a 3.7-percentile drop in asset wealth (a proxy of household wellbeing) and 4.9-percentile drop in employment. In Cape Town, the declines are 4.0 and 3.7 percentiles, respectively. Employment is 87 percent lower in the poorest decile than the richest in Johannesburg and 61 percent lower in Cape Town. These findings suggest that South Africa’s spatial organization of people and economic activity constrains agglomeration and reinforces inequality. This methodology provides a scalable and standardized data-driven framework to analyze spatial accessibility and agglomeration frictions in complex, data-constrained urban systems.Publication Investment in Emerging and Developing Economies(Washington, DC: World Bank, 2026-01-07)The world faces a pressing challenge to meet key development objectives amid slowing growth and rising macroeconomic and geopolitical risks. With the number of job seekers rising rapidly, infrastructure shortfalls continuing to be large, and climate costs mounting, the case for a significant investment push has never been stronger. Yet the capacity to respond in many emerging markets and developing economies has eroded. Since the global financial crisis, investment growth has slowed to about half its pace in the 2000s, with both public and private investment weakening. Foreign direct investment inflows—a critical source of capital, technology, and managerial know-how—have also fallen sharply and become increasingly concentrated, leaving low-income countries with only a marginal share. The risks of further retrenchment are significant, as trade tensions, policy uncertainty, and elevated debt levels continue to weigh on investment. Reigniting momentum will require ambitious domestic reforms to strengthen institutions, rebuild macro-fiscal stability, and deepen trade and investment integration—the foundations of a supportive business climate. At the same time, international cooperation is indispensable. A renewed commitment to a predictable system of cross-border trade and investment flows, combined with scaled-up financial support and sustained technical assistance, is essential to help emerging markets and developing economies—especially low-income countries and economies in fragile and conflict situations—bridge financing gaps and implement the domestic reforms needed to restore investment as an engine of growth, jobs, and development.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication The Relative Income and Relative Deprivation Hypotheses : A Review of the Empirical Literature(World Bank, Washington, DC, 2013-09)The paper provides a review of the empirical literature in economics that has attempted to test the relative income hypothesis as put forward by Duesemberry (1949) and the relative deprivation hypothesis as formalized by Runciman (1966). It is argued that these two hypotheses and the empirical models used to test them are essentially similar and make use of the same relative income concept. The review covers the main intellectual contributions that led to the formulation and tests of these hypotheses, the main formulations of the utility and econometric equations used in empirical studies, the main econometric issues that complicate tests of the hypotheses, and the empirical results found in the literature. The majority of studies uses absolute and relative income together as explanatory factors in utility models and finds absolute income to have a positive and significant effect on utility (happiness). The majority of studies also finds relative income to be a significant factor in explaining utility but the sign of this relation varies across studies. The source of this variation is complex to detect given that few results are directly comparable across studies because of differences in model specifications.Publication Why Don’t We See Poverty Convergence?(2009-06-01)We are not seeing faster progress against poverty amongst the poorest developing countries. Yet this is implied by widely accepted "stylized facts" about the development process. The paper tries to explain what is missing from those stylized facts. Consistently with models of economic growth incorporating borrowing constraints, the analysis of a new data set for 100 developing countries reveals an adverse effect on consumption growth of high initial poverty incidence at a given initial mean. A high incidence of poverty also entails a lower subsequent rate of progress against poverty at any given growth rate (and poor countries tend to experience less steep increases in poverty during recessions). Thus, for many poor countries, the growth advantage of starting out with a low mean ("conditional convergence") is lost due to their high poverty rates. The size of the middle class--measured by developing-country, not Western, standards--appears to be an important channel linking current poverty to subsequent growth and poverty reduction. However, high current inequality is only a handicap if it entails a high incidence of poverty relative to mean consumption.Publication Economy-wide and Distributional Impacts of an Oil Price Shock on the South African Economy(World Bank, Washington, DC, 2007-09)As crude oil prices reach new highs, there is renewed concern about how external shocks will affect growth and poverty in developing countries. This paper describes a macro-micro framework for examining the structural and distributional consequences of a significant external shock-an increase in the world price of oil-on the South African economy. The authors merge results from a highly disaggregative computable general equilibrium model and a micro-simulation analysis of earnings and occupational choice based on socio-demographic characteristics of the household. The model provides changes in employment, wages, and prices that are used in the micro-simulation. The analysis finds that a 125 percent increase in the price of crude oil and refined petroleum reduces employment and GDP by approximately 2 percent, and reduces household consumption by approximately 7 percent. The oil price shock tends to increase the disparity between rich and poor. The adverse impact of the oil price shock is felt by the poorer segment of the formal labor market in the form of declining wages and increased unemployment. Unemployment hits mostly low and medium-skilled workers in the services sector. High-skilled households, on average, gain from the oil price shock. Their income rises and their spending basket is less skewed toward food and other goods that are most affected by changes in oil prices.Publication Robustness of Shared Prosperity Estimates(World Bank, Washington, DC, 2016-03)This paper is the first to systematically test the robustness of shared prosperity estimates to different methodological choices using a sample of countries from all regions in the world. The tests that are conducted include grouped versus microdata, nominal welfare aggregate versus adjustment for spatial price variation, and different treatment of income with negative and zero values. The empirical results reveal an only minimal impact of the proposed tests on shared prosperity estimates. Nevertheless, there are important caveats. First, spatial adjustment can change the ranking of households, affecting the distribution of the population in the bottom 40 percent. Second, the negligible impact of spatial deflation holds only if price adjustments are carried out consistently over time. Finally, the treatment of negative and zero income numbers can potentially lead to substantial differences in shared prosperity, depending on the magnitude of negative income and the share of households with negative and zero numbers across years.Publication Growth, Inequality, and Social Welfare : Cross-Country Evidence(World Bank, Washington, DC, 2014-04)Social welfare functions that assign weights to individuals based on their income levels can be used to document the relative importance of growth and inequality changes for changes in social welfare. In a large panel of industrial and developing countries over the past 40 years, most of the cross-country and over-time variation in changes in social welfare is due to changes in average incomes. In contrast, the changes in inequality observed during this period are on average much smaller than changes in average incomes, are uncorrelated with changes in average incomes, and have contributed relatively little to changes in social welfare.
Users also downloaded
Showing related downloaded files
Publication Making Procurement Work Better – An Evaluation of the World Bank’s Procurement System(Washington, DC: World Bank, 2024-12-06)This evaluation assesses the results, successes, and challenges of the World Bank 2016 procurement reform. Procurements acquire the works, goods, and services necessary to achieve the World Bank’s project development outcomes. The World Bank’s procurement processes must ensure that clients get the best value for every development dollar. In 2016, the World Bank reformed its procurement system for Investment Project Financing and launched a new procurement framework aimed at enhancing the Bank’s development effectiveness through better procurement. The reform sought to reduce procurement bottlenecks impeding project performance and modernize procurement systems. It emphasized cutting edge international good practice principles and was intended to be accompanied by procurement capacity strengthening to help client countries. This evaluation offers three recommendations to scale up reform implementation and enhance portfolio and project performance: (i) Improve change management support for the reform’s implementation. (ii) Strategically strengthen country-level procurement capacity. (iii) Consistently manage the full spectrum of procurement risks to maximize project success.Publication The World Bank Group in Georgia, 2014-23(Washington, DC: World Bank, 2025-07-30)This Country Program Evaluation assesses the performance and effectiveness of the World Bank Group’s support to Georgia in achieving the country’s development objectives. In the decade leading up to the evaluation period, Georgia pursued economic reforms to attract critical investments for becoming a regional trade and transport hub. Ambitious economic reforms went hand in hand with efforts to improve human development and strengthening social protection systems. Growing geopolitical tensions and internal political polarization have challenged Georgia’s reform progress in recent years. The Bank Group’s strategy adapted well to Georgia’s development needs and was well coordinated with other development partners. It successfully employed a range of instruments to help increase competitiveness, growth, and job creation, and effectively contributed to improved infrastructure and increased trade by using programmatic and innovative approaches. The Bank Group’s regular investments in analytical work and the switch to results-based programmatic support helped improve the efficiency and effectiveness of education and health care systems. The IEG offers the following lessons based on the evidence and analysis in the Country Program Evaluation: (i) Prioritizing Bank Group support around the move towards deeper regional integration was an effective anchor for key economic reforms for economic convergence. (ii) Pursuing a selective and adaptive approach in a country with high implementation capacity and institutions, strong coordination among development partners, and access to a wide range of external resources can allow the Bank Group to exercise significant influence in areas of comparative advantage and global expertise. (iii) A stronger focus on outcome-based programmatic approaches helped to build local capacity and crowd-in partner financing.Publication FY 2025 China Country Opinion Survey Report(Washington, DC: World Bank, 2025-08-04)The Country Opinion Survey in China assists the World Bank Group (WBG) in better understanding how stakeholders in China perceive the WBG. It provides the WBG with systematic feedback from national and local governments, multilateral/bilateral agencies, media, academia, the private sector, and civil society in China on 1) their views regarding the general environment in China; 2) their overall attitudes toward the WBG in China; 3) overall impressions of the WBG’s effectiveness and results, knowledge work and activities, and communication and information sharing in China; and 4) their perceptions of the WBG’s future role in China.Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.Publication Equality of Opportunity for Sexual and Gender Minorities 2024(Washington, DC: World Bank, 2024-09-10)By assessing discrimination in laws, regulations, and policies, the Equality of Opportunity for Sexual and Gender Minorities (EQOSOGI) initiative examines institutionalized challenges encountered by sexual and gender minorities. This second edition of the EQOSOGI report expands its coverage from 16 to 64 countries representing different geographic areas, income levels, legal traditions, and inclusiveness of sexual and gender minorities, ensuring a diverse and holistic representation of the issues. EQOSOGI presents indicators to identify differences in the legal and policy environment for sexual and gender minorities in six areas: Decriminalization, Access to Education, Access to Labor Markets, Access to Services and Social Protection, Civil and Political Inclusion, and Protection from Hate Crimes. The indicators are also disaggregated into the three dimensions of sexual orientation, gender identity and expression, and sex characteristics. Building a global knowledge base on laws and policies affecting sexual and gender minorities is at the foundation of advocacy and policy change, especially because sexual and gender minorities are largely excluded from development efforts. By collecting and sharing data on national frameworks, the EQOSOGI study aims to promote a dialogue on equality of opportunity and to encourage law and policy reforms that enable sexual and gender minorities to fully participate in the economy and share in the benefits of development. It also aims to promote a deeper understanding of the legal hurdles hindering inclusive job creation and private sector development and, ultimately, to encourage reforms that are conducive to poverty reduction and shared prosperity on a liveable planet. The report also offers a deep dive into discriminatory legal practices in these areas and how they relate to socioeconomic outcomes for sexual and gender minorities. It provides areas of policy engagement to prevent discrimination based on sexual orientation, gender identity and expression, and sex characteristics, and to promote increased social and economic inclusion.