Measuring Economic Insecurity in Rich and Poor Nations

Worrying about possible future economic dangers subtracts from the present well-being of individuals, which is why affluent societies have complex systems of private insurance and public social protection to provide a degree of economic security. However, such protections are largely unavailable to the citizens of poor nations (i.e., most of humanity). How can one measure economic security in these very different contexts? This paper examines trends in the IEWB Economic Security Index for four affluent OECD countries and compares a cross-section of 70 rich and poor countries in 2007/08. To reflect better the reality of developing countries, it revises the IEWB index to: (1) include the volatility of food production in the risk of loss of livelihood; (2) adjust the risks of health care costs to consider the proportion of household spending on food (which is non-discretionary, and large in poor countries); and (3) add adult male mortality to the risk of divorce in calculation of the risk of single parent poverty.