Measuring multidimensional inequality and well-being: methods and an empirical application to Italian

In this paper, focusing on the normative approach, we review and discuss the main multidimensional inequality measures and inequality-adjusted multidimensional well-being indicators. Using Italian data on individual income, education and health status from the 2005 and 2008 Italian Survey on Income and Living Conditions (IT-SILC), an empirical analysis of multidimensional inequality and inequality-adjusted well-being levels in Italian regions has been performed. Given the variability that characterizes inequality and well-being indicators, depending on the uncertainty connected to the survey nature of the data as well as on the alternative parameter combinations chosen, the regional indices are presented together with the corresponding confidence intervals, as an instrument for assessing the robustness of well-being rankings.A significant result of the analysis is that distributional concerns, both across individuals and between dimensions, remarkably affects discrepancies in regional well-being. More specifically, increasing inequality aversion and decreasing substitutability between attributes progressively widen regional well-being differences. The same pattern emerges from the analysis of the evolution of regional well-being over time, revealing that high growth rates are related with improvements in the equity of interpersonal well-being distribution and, especially, with a recovery in its worse-off dimensions