Communications

Abstract

An important empirical question addressed in the field of social economics is one of allocation. Given a certain level of income, does one system of social organization systematically devote more of its resources to basic needs than another? Or stated differently, does the welfare of man differ from one economic system to another, and is it better in one system than in others? The question was empirically examined by Hor vat [1974], who found that the countries he labeled as etatist achieved unambiguously higher basic welfare than other [p. 32] He also found that the countries with a long welfare or social tradition fared better than did capitalist countries where such a tradition was less popular. Horvat, however, acknowledges that the welfare ranking of the high income countries is biased downward while that of the poor countries may be biased upward, which may explain his results. To correct for this bias and determine whether it influenced Horvat's conclusion, Mandle [1980] replicated the study and eliminated both the richest and poorest countries. He failed, however, to reject Horvat's findings. Hella [1983] examined some questions about data, methodol? ogy and interpretation in both papers but failed to reject their con? clusions. As we see it, there are two problems with these studies. First, they are all based on Horvat's data, which covers the period 1970-1976. A replication with more recent data is justified because following the turbulent sixties and during the seventies, the so called capitalist coun? tries moved aggressively to provide various forms of social welfare (safety nets) to individuals. Second, these studies rely on one combination of three measures of basic needs (life expectancy, education and health services) used by Horvat to define the welfare of the common man. This combination may be biased toward certain countries and does not reflect all possible dimensions of life expectancy, education and health. Therefore, a repli? cation using various combinations of measures of life expectancy, educa