Beyond Facts by Jairo Rodriguez

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Understanding Quality of Life

B E YOND S T C FA

Eduardo Lora Coordinator

Inter-American Development Bank

development in the americas

Co-published by David Rockefeller Center for Latin American Studies Harvard University 1730 Cambridge Street Cambridge, MA 02138 Distributed by Harvard University Press Cambridge, Massachusetts Phone: U.S.A. and Canada, 1-800-405-1619; all others, 1-401-531-2800 E-mail: orders@triliteral.org

London, England Phone: +44(0) 1243-779777; Fax: +44(0) 1243-843303 E-mail: cs-books@wiley.co.uk

The views and opinions expressed in this publication are those of the authors and do not necessarily reflect the official position of the Inter-American Development Bank. Cataloging-in-Publication data provided by the Inter-American Development Bank Felipe Herrera Library Beyond facts : understanding quality of life. p. cm. [Development in the Americas ; 2008] “This special volume [is] the first edition of the IDB’s new Development in the Americas series, which replaces its annual Report on Economic and Social Progress as the Bank’s flagship publication”—Preface. “The principal authors … are … Eduardo Lora … [et al.]—Acknowledgments. Includes bibliographical references and index. ISBN: 978-1-59782-084-4 1. Quality of life—Latin America. 2. Cost and standard of living—Latin America. 3. Public goods—Latin America. I. Lora, Eduardo. II. Inter-American Development Bank. III. Series. HN110.5.A8 B45 2008 306.098 B45--dc22

LCCN: 2008939413

The IDB’s Office of External Relations was responsible for the design and production of this report. Publisher Production Editor Assistant Editor Graphic Design Editorial Assistant Translators Indexer Additional Typography

Rafael Cruz Michael Harrup Sarah Schineller Dolores Subiza Cathy Conkling-Shaker Larry Hanlon Sarah Schineller Richard Torrington Breffni Whelan Word Express, Inc.

Quality of Life Viewed through Another Lens

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Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii

PART I SETTING THE STAGE Chapter 1 Quality of Life Viewed through Another Lens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Chapter 2 The Personality of Quality of Life Perceptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Chapter 3 The Conflictive Relationship between Income and Satisfaction. . . . . . . . . . . . . . . . . . . 41 Chapter 4 Satisfaction beyond Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

PART II FACTS AND PERCEPTIONS IN ACTION Chapter 5 Getting a Pulse on Health Quality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Chapter 6 Learning about Education Quality and Perceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 Chapter 7 Rethinking Conventional Wisdom on Job Quality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 Chapter 8 Urban Quality of Life: More Than Bricks and Mortar . . . . . . . . . . . . . . . . . . . . . . . . . . . 177

Contents

PART III THE CURTAIN CALL Chapter 9 The People’s Choice? The Role of Opinions in the Policymaking Process . . . . . . . . . . . 217 References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235 Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261

The Inter-American Development Bank observes its fiftieth anniversary at a critical time for Latin America and the Caribbean. The financial crisis in the developed countries has put years of the region’s economic and social progress at risk. The latest test to which this region is being subjected should not, however, cause its inhabitants to lose sight of the achievements of the last half century. Judging from traditional indicators, the region has made some impressive gains. Per capita income (at 2000 prices) has more than doubled, from approximately US$2,000 in 1960 to more than US$4,500 today. The average Latin American can expect to live almost 73 years, compared to just 56 in 1960. The literacy rate has increased from 63 percent in 1960 to 86 percent in 2000. Today, children in the region attend school an average of seven years, compared to only three-and-a-half years in 1960. In terms of employment growth, Latin American countries have outperformed most other developing nations, creating an average of 12 jobs per year for every thousand people of working age between 1990 and 2004. In addition, although Latin Americans have poured into cities with unprecedented speed, the region has managed to democratize urban home ownership and provide basic services to the vast majority of urban dwellers. Two out of three families own their homes, even among the poor. Nearly 95 percent of the urban population has access to electricity, and over 85 percent has access to running water and telephone service (the latter thanks to the recent expansion of mobile telephones). Of course, not all the news is positive. International test scores show that Latin American students lag behind their counterparts not only in OECD member states, but in other developing nations as well. Poor education is taking a real toll on the region’s competitiveness, reflected in the low productivity growth that has been acting as a brake on higher wages and economic growth throughout Latin America and the Caribbean. Furthermore, while cities have burgeoned around the region, their infrastructure has not always kept pace with the demand and needs of the population, while attendant crime and pollution often go unchecked. The data from afar paint a heartening picture of a population whose standard of living has improved dramatically, but in too many ways the real quality of people’s lives is not measurably better. So how do Latin Americans themselves feel about their lives against the backdrop of the past half century? What do they think of their lives, societies, cities, health, education, and jobs? Are their perceptions in tune with the facts as measured by traditional economic and social indicators? Does it matter for policy? On the occasion of its fiftieth anniversary, the IDB took on the challenge of consulting its most important constituency—the people of the region—about the quality

Preface

of their lives. Using data from the Gallup World Poll and other public opinion surveys, the Bank uncovered some fascinating results. Overall, Latin Americans are satisfied with their lives, but interestingly, people in some of the poorest countries are the most optimistic while citizens of some of the most-developed countries are the most pessimistic. Not surprisingly, people with higher incomes are more satisfied with their lives than those with lower incomes, but economic growth actually breeds discontent rather than greater happiness, at least in the short run. Despite the proliferation of low-skill jobs and informal employment, most Latin Americans are pleased with their work. Perhaps even more startling is the generalized preference to work in the informal economy over the formal, salaried sector because of the flexibility, autonomy, and opportunity for personal growth that informality seems to offer. In terms of social services, the majority of Latin Americans are satisfied with their education systems because they value discipline, safety, and the physical infrastructure of their schools more than the scores their children achieve on academic tests. And even in countries with poor health profiles, people are largely satisfied with their own health and the health care services they receive. These results have great significance for the Bank’s program of activities and for public policy in countries throughout the region. Clearly, there are political costs to growth policies that are likely to increase, rather than decrease, public dissatisfaction. If at-risk countries and social groups are tolerant of their health problems, prevention policies and efforts to improve health services will likely bypass them. And how can the region hope to have human resources capable of competing in the world economy if the majority of its people are blind to the failings of their education systems? With this volume, the Bank hopes to spark a healthy discussion of these issues, since it has learned that policies must enjoy public support to be effective. Public opinion matters; it matters for politics and it matters for policy. Taking the pulse of the opinion enriches public discourse and enhances the political viability of public policy. In the final analysis, the IDB is at the service of the citizens of Latin America and the Caribbean. It is fitting that it should mark its first half century of operation by asking them how they have fared after five momentous decades of economic and social changes. It is also fitting that this special volume on such a special occasion should be the first edition of the IDB’s new Development in the Americas series, which replaces its annual Report on Economic and Social Progress as the Bank’s flagship publication. I am pleased to present this volume to the policymakers of the region, to our partners in academia and in the nongovernmental advocacy world, and, most of all, to the people of Latin America and the Caribbean, our inspiration.

Luis Alberto Moreno President Inter-American Development Bank

Development in the Americas (DIA) is the flagship publication of the Inter-American Development Bank. This issue was produced under the direction of Eduardo Lora, Chief Economist and General Manager, a.i., of the Research Department. Rita Funaro, Publications Coordinator of the department, was the editorial advisor; Carlos Andrés GómezPeña, Technical and Research Assistant, provided production coordination. The Bank’s Office of External Relations was in charge of editorial review and of the publication process, under the supervision of Pablo Halpern. Carol Graham, a researcher at the Brookings Institution, was the external technical advisor. The principal authors of each individual chapter are presented below: Chapters 1 and 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9

Eduardo Lora Eduardo Lora in collaboration with Juan Camilo Chaparro Eduardo Lora in collaboration with Juan Camilo Chaparro and María Victoria Rodríguez-Pombo William Savedoff in collaboration with Mariana Alfonso and Suzanne Duryea Suzanne Duryea, Juan Carlos Navarro, and Aimee Verdisco Carmen Pagés in collaboration with Lucía Madrigal Eduardo Lora, Andrew Powell, and Pablo Sanguinetti Carlos Scartascini in collaboration with Rita Funaro

Juan Camilo Chaparro, Ted Enamorado, Lucas Higuera, Ana Carolina Izaguirre, Lucía Madrigal, Karla Rodríguez, María Victoria Rodríguez-Pombo, Miguel Rueda, and Mariana Salazni were the research assistants. John Dunn Smith was proofreader. This study benefited from the results of three projects of the Bank’s Research Centers Network: 1. Multidimensional Quality of Life, coordinated by Eduardo Lora; Jere R. Behrman, Carol Graham, and Ravi Kanbur were the academic advisors to this project, in which the following research teams participated: • Argentina: Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS), Universidad Nacional de La Plata (UNLP). Leonardo Gasparini, Walter Sosa Escudero, Mariana Marchionni, and Sergio Olivieri. • Brazil: Centro de Políticas Sociais, Fundação Getúlio Vargas. Marcelo Côrtes Néri, Aloísio Pessoa de Araújo, Gabriel Buchmann, Samanta dos Reis Sacramento Monte, and Ana Beatriz Urbano Andari. • Brazil: Instituto Futuro Brasil and Universidade de São Paulo. Naércio Aquino Menezes-Filho, Raphael Bottura Corbi, and Andréa Zaitune Curi.

Acknowledgments