ISSN: 22782278-3369 International Journal of Advances in Management and Economics Available online at www.managementjournal.info RESEARCH ARTICLE The Social Welfare in Spain before the Crisis: Territorial and Chronological Analysis Pilar Zarzosa Espina Department of Applied Economy, Faculty of Economics, University of Valladolid, Spain. *Corresponding author:[email protected] [email protected] Abstract The aim of this paper is measure social welfare in Spanish autonomous regions before the economic crisis. To achieve this, we use the distance method P2 to compose a synthetic indicator of welfare for 2007. The index comprises information on different social indicators from various life domains and enables a classification of Spanish autonomous communities, in order to determine regional disparities in social welfare levels. Finally, a chronological comparison is made. Keywords: Keywords: Social welfare, Social indicators, Synthetic indicator of welfare, Distance method. Introduction This paper summarizes the results obtained in research on social welfare in Spanish autonomous regions1. The aim is to determine regional disparities and to analyze chronological changes before the current economic crisis. A synthetic welfare indicator2 is obtained, using the distance method P2 [1]. This methodology adopts the multidimensional measurement approach [2-4] that is, the social indicator approach [4-8] and solve the main problems for the development of a synthetic indicator of welfare [9-12]. Said problems are: selecting the areas into which social welfare may be broken down; choosing the simple or partial indicators which are appropriate statistical measures for measuring each area; and aggregating the simple indicators through a suitable synthetic welfare indicator. Therefore said synthetic indicator should resolve such important problems as the heterogeneity of the measuring units of the various simple indicators, and the weighting system (duplicity of information contained therein, and the impact attached to each). Somarriba [13] and Somarriba and Pena [14] compare the DP2 indicator to other methods in order to obtain synthetic indicators such as Principal Component Analysis and Data Envelopment Analysis, concluding that the former evidences certain advantages over the other methods. Examples of works which apply the DP2 1 Except Ceuta and Melilla. Research funded by Junta de Castilla y León: CES, 2009, principal investigators J: M: Gómez García and M. Prieto Alaiz; and CEH, 1995, principal investigator P. Zarzosa Espina. Molpeceres (2008) conducted a detailed description of the most widely known and internationally used synthetic welfare indicators 2 Pilar Zarzosa Espina| July.-Aug. 2012 | Vol.1 | Issue 4|165-171 method to creating indicators in the area of welfare include Cuenca et al. [15], Maestro and Martínez [16], Rodríguez [17], Somarriba [18], Somarriba and Pena [19], Zarzosa [20], Zarzosa [21], and Zarzosa and Somarriba [22]. Merino, Somarriba and Negro [23] apply the DP2 method to measuring the employment quality in the Spanish regions. Recent applications of other synthetic indicators applied for various goals in the case of Spain may be found in Ayala and Navarro [24], Jurado and Pérez-Mayo [25], Murias et al. [26,27], and PérezMayo[28]. However, there is a line of research which obtains synthetic welfare indicators comprising solely economic indicators, such as Ayala et al. [29, 30]. Somarriba [15] applies the multidimensional measurement approach to the European case, Halleröd and Larsson [31] to Sweden and Van Oorschot and Meuleman [32] to the Netherlands. Haveman [33] proposes a multidimensional approach for measuring poverty and social exclusion in European Union countries. Kakwani and Silber [34,35] discuss the many dimensions of poverty and presents different techniques for applying the multidimensional approach to measuring poverty. Caminada, Goudswaard and Koster [36] use a multidimensional approach (multiple regression) to analyzing the impact that social expenditure has on poverty rates for OECD countries. The paper is structured as follows. Firstly, a brief overview is provided of the methodology used to 165 Available online at www.managementjournal.info measuring social welfare. The following section presents the system of simples indicators used to create the synthetic indicator. We then apply our synthetic indicator to measuring welfare in Spanish Autonomous Regions, before the present economic crisis. After, we performed a chronological analysis of social welfare in Spain before the economic crisis. The final section contains the main conclusions to emerge from the work. Methodology Besides being based on the concept of distance, the DP2 indicator belongs to a group of measures based on axiomatic derivations (Deutsch and Silber, 2005), in other words created to meet a series of requirements deemed necessary to achieve the stated goal. The DP2 indicator verifies a set of properties which we shall see later.For a thorough review of the P2 indicator, see Pena [1], Zarzosa and Somarrib [22]. Here, we merely offer a brief overview of the technique in order to provide a basic outline of its application to the current research. The P2 Distance from region j is defined as follows: ( ) d i 1 − R 2 i , i − 1 ,..., 1 σ i i=1 2 with R1 = 0 ; where d i = d i (r ∗) = xri − x*i with DP 2 = n ∑ thereference base X * = ( x*1 , x*2 ,..., x*n ) where: - n is the number of variables - xri, is the value of the variable i in region r - σ i is the standard deviation of variable i - Ri2,i −1,...,1 is the coefficient of determination in the regression of Xi over Xi-1, Xi-2,...,X1 , already included Thus defined, the synthetic indicator measures the distance, with regard to the object studied, between each region and a fictitious base reference. In this instance, the base reference comprises the results from an imaginary region which reflects the worst possible scenario for all the simple indicators and would therefore be attributed a value of zero in the synthetic welfare indicator. By dividing it by a standard deviation, the problem of heterogeneity of the measuring units of the variables is dealt with, such that all the partial indicators (quotients involved in the expression) are expressed in abstract units. The coefficient of determination, R2i.i-1,...,1, measures the part of the variance of each variable explained by the linear regression estimated Pilar Zarzosa Espina| July.-Aug. 2012 | Vol.1 | Issue 4|165-171 using the preceding variables. As a result, the factor (1-R2i.i-1,...,1), referred to as the ”correction factor" by Pena, prevents redundancy by removing from the partial indicators the information already contained in the preceding indicators. In this way, the synthetic indicator only includes the new information from each variable. The properties established by the P2 distance synthetic indicator make it the ideal measure for the purpose set out in the current research. Said properties are expressed using the following names: Existence and Determination, Monotony, Uniqueness quantification, Invariance, Homogeneity, Transitivity, Exhaustiveness, Additivity, Invariance compared to the base reference, Conformity, and non-arbitrariness in the importance attached to the simple indicators. For a brief description of these, see Zarzosa and Somarriba [22]. Any interested readers who wish to delve deeper into these properties may consult the previously cited references, Pena [1] and Zarzosa [37]. Selecting and Devising Simple Indicators Since the approach to measuring social welfare in the present research involves using indicators, we need to select and devise a system of simple or partial indicators which allows us to gauge the actual opportunities that people have in the various areas or aspects of social welfare [5]. More than 100 indicators were designed and analyzed at the initial stage, data generally corresponding to 2007. The sources used were: Caja España [38], INE (The Spanish National Statistics Institute, 2008), Jiménez-Ridruejo and López [39] and La Caixa [40]3. At the second stage, 72 partial indicators were chosen. The table 1 shows the 31 simple or partial indicators obtained as a result of a third process of selection [41,42]. A full description of the indicators, and of the criteria used, is provided in Zarzosa and Somarriba [22]. The small set of indicators is felt to include most of the available information concerning regional welfare in Spain which is to be used in the synthetic indicator. As is common when applying the social indicator approach, simple indicators are grouped in various domains, also known as fields, components, dimensions, areas, etc. In this case, 3 The methodology used to calculate the regional results requires obtaining previously provincial results. Unfortunately, the need to have provincial data for all the simple indicators means that information provided by surveys such as the EU-SILC (Eurostat, 2010) and INE (2010) cannot be used, therefore forcing us to reject subjective information. Despite this drawback, studying welfare at such a level of territorial desegregation, albeit using objective information, is of great interest with regard to decision-making and developing policies aimed at enhancing citizens’ well-being. 166 Available online at www.managementjournal.info Table 1: Variables chosen to calculate the synthetic DP2 indicator, arranged in dimensions4 Income and Education Work Social protection wealth GDP Illiterate males Male unemployment Unemployment benefit Higher academic Fatal work accidents Average non-contributory qualifications pension males Physical Culture Social cohesion Health Culture and environment leisure Bank Film screens Admission to hospitals Infant mortality -women branches Film-goers due to alcohol and drug Perinatal mortality Registered Hotel places dependence Female deaths caused by vehicles Overnight stays Arrests diseases which could be Motorways in hotels Violent deaths avoided through primary Burned forest Campsite places (murders) prevention land Female deaths caused by diseases which could be prevented through medical health care Hospital beds Psychiatric visits AIDS patients Traffic accident injuries New technologies Broad-band lines Municipal indexes Economic activity index Tourist index Mercociudad Spanish ranking of cities Source: Own. Table 2: Ranking of spanish regions, applying the DP2 synthetic welfare indicator. 2007 Ranking Spanish autonomous regions Ordered synthetic welfare indicator 1 Madrid 32,85 2 Navarra 32,44 3 Baleares 32,21 4 Cataluña 31,48 5 Rioja 31,21 6 País Vasco 28,41 7 Cantabria 27,87 8 Aragón 26,79 9 Comunidad Valenciana 26,00 10 Castilla y León 25,33 11 Canarias 23,59 12 Murcia 22,51 13 Asturias 22,25 14 Galicia 22,17 15 Castilla La Mancha 21,99 16 Andalucía 21,10 17 Extremadura 19,85 Source: Own Table 3: Descriptive measures of the DP2 synthetic welfare indicator for spanish regions grouped in terms of the synthetic indicator values. 2007. Spanish autonomous regions Distance/Total Distance High Welfare (5) 0,13 Medium Welfare (5) 0,24 Low Welfare (7) 0,29 Spain (17) 1,00 Mean Difference to the Spain Distance/Mean Mean 32,04 5,68 26,88 21,92 26,36 0,52 -4,44 Variation coefficient 0,06 0,02 0,12 0,04 0,14 0,05 0,49 0,16 0 Source: Own. 4 The factor referred to as demography does not appear in this table, since no simple indicator of said factor was selected. A full description of all the indicators analysed, as well as the sources used, is provided in Zarzosa and Somarriba (2012). Pilar Zarzosa Espina| July.-Aug. 2012 | Vol.1 | Issue 4|165-171 167 Available online at www.managementjournal.info we principally drew on the National Institute of Statistics (INE-Spanish acronym) classification [43], such that the following are taken into account: demography, family income and wealth, education, employment, social protection, health, physical environment, culture and leisure, social cohesion, new technologies and municipal indices. Social Welfare Regions in Spanish Autonomous Applying the DP2 method to the simple indicators contained in Table 1 gives the results shown in Table 2, wherein the various autonomous regions are ranked in order of their welfare indicator value. Following the definition given in the base reference, the greater the value of the synthetic indicator, the greater the level of welfare. An imaginary region which reflected the worst situation for all the simple indicators would have a value of zero in the synthetic welfare indicator. Moreover, to facilitate analysis, a cartogram has been created showing the geographic location of the various regions, grouped in terms of the synthetic indicator values. Regions are grouped in terms of the percentage increase on the minimum value of the synthetic indicator: High welfare (>50), medium welfare (between 20 and 50) and low welfare (<20). Fig. 1: Classification of spanish autonomous regions, following the DP2 synthetic welfare indicator. 2007 The darker the colour, the lower the level of regional welfare. The above figure reveals a clear geographical pattern in which regions located in the north-east of the peninsula enjoy a higher level of welfare.Given the properties of synthetic indicator DP2, it is possible to interpret in cardinal terms the distances between each region. Extremadura, for instance, which has the lowest synthetic indicator value, is therefore 19.85 units away from the undesired imaginary region (zero synthetic indicator value) and 13 units away (distance) from the best region, which is Madrid. Pilar Zarzosa Espina| July.-Aug. 2012 | Vol.1 | Issue 4|165-171 All the remaining interregional distances may be determined likewise. A series of descriptive measures has been estimated for each of the groups to facilitate analysis: As can be seen, the distance values in the three groups differ, the largest dispersion occurring between provinces with the smallest welfare. The explanatory factors of Spanish disparities in social welfare, are analyzed in Zarzosa and Somarriba [22]. Chronological Analysis The results were compared with those obtained with 1991 data [44]. The classification obtained using the same criteria, was as follows: -High welfare: Navarra, Madrid, Aragón and País Vasco. -Medium welfare: Cantabria, Castilla y León, Cataluña, Rioja, Asturias, Comunidad Valenciana, Baleares, Castilla La Mancha and Galicia. -Low welfare: Murcia, Extremadura, Canarias and Andalucía. The figure 2 reflects the geographic location. Fig. 2: Classification of spanish autonomous regions, following the DP2 synthetic welfare indicator. 1991 As can be seen, in the period 1991-2007, before the economic crisis, the situation worsens considerably. In 1991 the group of low level of welfare contained only 4 autonomous regions, located in the south of the country. However, in 2007 the autonomous regions with low welfare are 7.In addition, in 1991 the 3 groups had approximately the same dispersion. However, in 2007 the dispersion is different in the 3 groups, the regions with less welfare have more dispersion. The global dispersion also increases throughout the period, with regard to the 168 Available online at www.managementjournal.info Table 4: Descriptive measures of the DP2 synthetic welfare indicator for Spanish regions grouped in terms of the synthetic indicator values. values. 1991 Spanish autonomous regions Distance/Total Distance Mean High Welfare (4) Medium Welfare (9) Low Welfare (4) Spain (17) 0,26 0,26 0,20 1,00 40,58 34,71 27,86 34,48 variation coefficient (0,14-0,16). The total distance of each group with regard to its mean increases in the group with lower welfare and decreases in the other two groups, especially within the greater welfare. That is, throughout the analyzed period, worsens the situation of the regions with the worst level of welfare.However, the total distance with regard to the Spain mean decreases in the analyzed period (0,54-0,49). In addition, the difference to the Spain mean decreases in the two extreme groups. That is, although the global disparity (variation coefficient) increases, but the disparity within groups of high and medium welfare decreased. Conclusions The findings to emerge in the present research are based on a specific set of simple indicators taken from recently available information for all Spanish provinces. These indicators have been chosen and filtered, providing us with a final total of 31 objective indicators to work with, given the absence of any subjective information for a territorial desegregation of this nature.Using this set of indicators, we calculate a provincial Synthetic Welfare Indicator (SWI) using distance DP2, the methodology for which is briefly explained in the article. Based on the results to emerge from this indicator, the following conclusions may be drawn.The various statistical criteria used indicate that the degree of disparity in welfare levels amongst Spanish provinces is extremely moderate. The Difference to the Spain Distance/Mean Distance/Mean Mean 6,1 0,14 0,23 0,14 -6,62 0,11 0 0,54 Variation coefficient 0,05 0,05 0,05 0,14 greatest dispersion, both in absolute as well as relative terms, is apparent in provinces evidencing the highest welfare.In terms of geographical distribution, we see how provinces located in the North and North-East of the peninsula enjoy the highest levels of welfare.The current work should be seen as an initial approach towards measuring social welfare amongst Spaniards, and as an attempt to provide further, albeit small, insights into research which seeks to provide information aimed at offering a basis for improving citizens’ welfare. 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