Olli Kangas: A Recipe for a Better Life: Experiences from the Nordic Countries. Winter Afternoon at Hanasaari, 5 March 2015, Helsinki. Olli Kangas - Research Director, Kela /Visiting Professor, Department of Political Science, Uppsala University.

1. A Recipe for a Better Life:
Experiences from the Nordic
Countries
Winter Afternoon at Hanasaari
Thursday 5 March 2015
Olli Kangas,
Research Director, Kela /
Visiting Professor,
Department of Political Science
Uppsala University

2. Content of the presentation
• Good / better life?
– Some examples
• Growing inequalities?
• Public institutions as a remedy
• Inclusive & open institutions
• Social policies unify and divide people
• Social investment approach
• Social trust as an outcome and precondition for
a better life
• Conclusions:
– Can (and should) the Nordic model be exported?

3. What is a good life? What is a better life???
• It depends…
• Nordic level of living surveys:
• Should we measure objective or subjective ‘goodness’?
• Material standard?
– Money, GDP per capita, distributional questions?
• Resources:
– the Swedish welfare tradition Sten Johansson: Level of Living Surveys
1966->
• economy, education, safety, social relationship, political participation, employment,
health, leisure
– Capabilities approach: Amartya Sen & Martha Nussbaum
• Erik Allardt (having, loving, being and doing)
– Also subjective evaluations are important
– Needs satisfaction / satisfaction with life
• Happiness:
– Ruut Veenhoven; Richard Layard, OECD, EU
• Combinatory approach winning terrain

4. Examples of some Objective
Measures
 GDP per capita
 SEN's index: GDP/capita * (1-gini)
 Human development index HDI
 1/3 (Life expectancy) + 1/3 (education) + 1/3 (GDP/capita)
• OECD Human poverty Index HPI-2 =
– [1/4(P1α + P2α + P3 α P4 α ] 1/ α
•
• Where
P1: The probability at birth that the baby does not reach
the age of 60 (multiplied by 100)
P2: The share of those adults that do not have functional literacy
P3: The share of poor (poverty line 50% of median income)
P4: the share of long-term unemployed (more than 1 year)
α: 3

5. BKT , USD/Capita Sen HDI HPI-2
USA NOR NOR SWE
NOR DEN AUS NOR
IRE IRE CAN FIN
SWI USA IRE NL
DEN SWE SWE DEN
AUT AUT SWI GER
CAN SWI JAP SWI
UK FIN NL CAN
NL JAP FRA AUT
SWE NL FIN FRA
FIN CAN USA JAP
BEL BEL DEN AUS
AUS UK AUT BEL
JAP GER UK UK
FRA AUS BEL USA
GER FRA NZL IRE
ITA ITA ITA ITA
NZL NZL GER
Lähde: UNDP http://hdrstat.undp.org/indicators/5.html;
http://hdrstat.undp.org/indicators/5.html

6. GDP & Life expectancy (Kangas 2010)

7. Inequality: remedy or a problem?
• In a globalized world:
– an automatic tendency towards growing
inequalities (Piketty 2014)
• “In many countries majority is living in destitution
because they are ruled by narrow elites that have
organized society for their own benefit at the
expense of the vast mass of people. Political
power has been narrowly concentrated, and has
been used to create great wealth for those who
possess it.” (Acemogly & Robinson (2012): Why Nations Fail?)
• OECD (2011) demands that the governments
should act quickly to tackle growing inequality

8. The Rawlsian principle of justice
• In a good and fair society nobody should
by her or his origin be permanently
doomed in an inferior position
• In good society everyone has fair
possibilities to try to improve his/her lot
• Rawls’ theory of justice
– Veil of ignorance
– Institutions that create inequalities should be
equally open for everybody

9. Long-term and short-term
poverty
• strong correlation between cross-sectional
and long-term poverty
• high cross-sectional poverty neither is
replaced by lower long-term poverty nor
higher income mobility nor exit from
poverty
• Implications for social justice (a la Rawls)
– Higher levels of relative poverty acceptable if
exit out of poverty high
– Higher levels of relative poverty acceptable if
the absolute income level of the poor is
higher

10. GINI
Poverty (60%) Generational
immobility
Differences in PISA
mathematics results
Total Children Elderly University -
Basic
Couples -
Single
Swe .24 NL 11% Nor 10 % NL 7% Den .15 Fin -30 Fin -9
Nor .25 Swe 12% Den 11% Fra 11% Nor .17 Swe -40 Ger -10
Den .25 Nor 13% Fin 11% Nor 16% Fin .18 Nl -43 Fra -18
Nl .26 Den 13% Swe 11% Ger 20% Swe .27 Nor -47 Nor -22
Fin .26 Fra 15% Nl 14% UK 20% Ger .31 Fra -53 Den -26
Fra .29 Fin 15% Ger 18% SA 19% Fra .41 Den -63 Swe -29
Ger .29 Ger 16% Est 19% Swe 21% US .38 US -77 Nl -31
Est .33 Est 20% Fra 19% Den 24% UK .41 Ger -91 US -41
UK .34 UK 17% UK 19% Fin 24%
US .37 US 24% US 29% Est 24%
Mex .44 Mex 26% Mex 30% US 27%

11. Public institutions
• Rawlsian principles
• Aristotle’s Ethics
– rectificatory justice remedies an inequitable
division,
• Universal and free basic education should
be open to everybody
– the best safeguard against poverty of agency
• Egalitarian principles and practices
– Social policy can unify and divide
– Social and health benefits should cover
everyone

12. The social investment perspective
on public policy (Kvist 2015)

13. Social investment
• childcare and school services provide equal
possibilities for all children
• Universal access to healthcare for the population’s
health and wellbeing
• Home service helps the elderly to live longer in
their own homes and,
– institutional care is provided in service homes.
• Public services promote employment and gender
equality.
– Childcare enables both genders to participate equally in
paid labour and fulfil their rights and responsibilities as
parents

14. Child poverty rate among two parents and single
parent families (left) and child poverty rate and
infant mortality (right) (from LIS)

15. Female labour force participation rates
(%) according to age 2010. (OECD 2013)

16. Universalism
• Universal policies for creating social
cohesion among the populace
• When everybody contributes and everybody
benefits when in need, creates strong social
bonds, bridging various social gaps and
cleavages
• Universalism important not only for social
security and basic rights
• it is a trademark of a fair society: equal
possibilities to all persons regardless of their
individual background

17. Trust is an essential element of well-
functioning society and in life satisfaction
• In the Nordics social security
funds have been used as
investment capital to modernize
and rebuild the nation.
• to effectively achieve this goal,
the state has to have the
capacity to carry out reforms
• state capacity is based on the
legitimacy of the regime.
• Lacking legitimacy,
democracies cannot be
effective; and lacking
effectiveness they cannot
develop legitimacy.
• Legitimacy can only be
achieved if the rule of law
concerns everyone
– even those at the very top of
political and economic power.

18. Some measures of subjective well-being
(European social survey 2002-2012 merged data)
Subjective health
very good (%)
Life satisfaction
(0-10)
Problems to cope
on present
income (%)
Feeling very safe
when walking alone
in dark (%)
Den 39 Den 8.5 Den 6 Den 50
Nor 33 Fin 8.0 Nor 8 Nor 49
Swe 39 Nor 7.9 Swe 9 Swe 41
UK 31 Swe 7.9 Nl 11 Fin 38
Fin 21 Nl 7.6 Fin 13 Fra 35
Fra 21 UK 7.2 Ger 14 Ger 25
Nl 17 Ger 7.1 Fra 15 Uk 22
Ger 16 Fra 6.4 UK 17 Nl 18
Est 10 Est 6.1 Est 17 Est 17

19. Nordic experience
• It is possible to unify strong public
institutions and comprehensive welfare
state programs and equality with
competitive and growth oriented
economies
• Economic policy and social policy are
strongly interwoven and support each
other
• Social protection as an investment

20. Can and should the Nordic
model be exported?
• The concept of the ‘Nordic model’ is elusive; a model with 5
exceptions
• Institutions do not travel well
• The Nordic model is difficult to replicate
• HOWEVER the receipts for a better life are applicable
elsewhere (and they are not explicitly Nordic!)
• Rule of law
– the rule of law concerns everyone -> legitimacy -> state capacity
• Rawlsian / Aristotelian view of social justice
• Comprehensive social protection
• Inclusive and open institutions
• Universal and free basic education
• Universal health and social care
• In good society everyone has fair possibilities to try to improve her / his lot.