Subj:	Re: Development economics
Date:	03/12/02
To:	R.Thomas@open.ac.uk

Dear Ray

Thank you for the reply, and I appreciate your interest.     

What I am doing is raising theoretical issues in economics and statistics  -  pointing out the logical steps missed out by anyone who infers average gains from cross-sectional data, in countries and quintiles where demographic changes are unknown.  

...The effects of demographic changes are simply left out of the logic of inferring average gains.    Why this is so, when birth rates and death rates obviously vary so much, I don't know.   

...The life course of everyone's income can remain the same (or get worse), and yet the average income in the whole country can go up simply because of a change in demographic composition.     There is no theory in economics to stop an economist saying "the incomes of the poor rose" even if a dictator makes everyone's income go down, as long as the dictator kills enough poor people.    This sounds incredible, but it's true.    

My thoughts on this started when I read "Growth is good for the poor".   My first reaction was to think "the results might have been due to the poor dying earlier in some countries than others". ...

The equation 

(the percentage rise in average income for the geographical area)    =    (the percentage average income gain to individuals)   

is not a mathematical certainty.    

It's contingent on there being zero demographic change.   

...
Per capita figures are just that.    They only tell us about average individual gains if 

a) we know that demographic changes were minimal or 
b) we somehow calculate the effects on later averages of demographic changes.

This way of looking at it seems to me to be the only way that makes sense.    

The alternative  -   currently, usually taken for granted but with no theoretical support   -   is to assume that demographic change had no effect.  

Why?    I can't think of a reason.   Social scientists assume that demographic changes had no effect unless proved otherwise, but the burden of proof is surely on the social scientist's shoulders.    Otherwise we don't have science.   

These things are fundamental questions of social science theory and philosophy.