June 2003
Email to: sachs@columbia.edu

Why the poor get poorer       

Dear Professor Sachs

I think you may be interested in the letter I have just sent to the Taipei Times in reply to your article of yesterday.    I am currently writing about fundamental problems in welfare economics, from the point of view of someone trained not in economics but in experimental psychology and philosophy.     Those interested in my work include Gary King, Uskali Maki and James Galbraith. 

One of the people with whom I have discussed the mortality problem in the past is Ravi Kanbur;  he has now published a paper on differential mortality and poverty measurement.     The paper covers some, but not all, of the ground which I covered in discussing my own work with him.     I also reproduce below an email which I sent you on 11 April 2001 in relation to the WHO Commission. 

If you would like to know more, please feel free to contact me. 

Best wishes,

Matt Berkley

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Dear Sir,

Jeffrey Sachs, in “Why the poor get poorer” (June 3) states that life expectancy of poor people is falling in many places in the world.    And yet a prime aim of international development policy is to reduce the proportion of people in poverty.     There is something wrong here.    The proportion will fall faster if more poor people die earlier.    The proportion is not an indicator of success of hungry people unless you know that survival rates are improving.     Let us hope that the UN will recognise this as soon as possible.    Let us also hope that social scientists will, in their outcome measures, count survival as a good outcome in itself rather than of no welfare value.

Let us also hope that one day economists will recognise that income is not a measure of poverty unless the inflation rate for the poor is taken into account.    No studies of the world’s poor people have done this:  they have relied at best on the overall inflation rate in a country.    Why anyone should think that the cost of rice always changes at the same rate as non-essential goods is beyond me.   Adam Smith noted an observable difference between the inflation rate for food and that for the overall economy in 1776.  

There are other common flaws in economic research on poverty:   such as failure to take into account  a) that extra items of expenditure may be needed in cities, where more poor people now live, and b) that the ratio of adults to children is rising in many countries, and adults need more food.

Together, the mortality flaw and the inflation flaw, in particular, may have contributed to the devising of policies which, though they made the statistics look better, made the condition of poor people worse.    The economic statistics available at present can neither confirm nor deny that.     

What is available is information on life expectancy and child survival.     One day, perhaps poverty experts will understand a simple matter of common sense:   if hungry people eat more, they live longer.      The economics of hunger is measured in years.  

Matt Berkley

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Subj:

Economics of survival

Date:

11/04/01

To:

jeffrey_sachs@harvard.edu

Dear Professor Sachs

I wonder if this of interest to the WHO Commission. 

Here are some theoretical points about mortality rates and the International Development Goals, and then some practical points which are less simplistic.

Among the International Development Goals, progress has been faster on reducing the proportion of people in extreme poverty, and slower on child mortality.   

The question no-one seems to be asking is this:  Is the proportion of poor people getting smaller partly because child mortality is worse than we hoped?

Most of the goals are susceptible to the problem that if the worst-off die, we are closer to the target.

There are good grounds for thinking that the child mortality goal being on track provides a statistical safeguard among the goals  -  if this goal goes according to plan, it ensures that we do not get a false impression of progress towards the other goals simply through high death rates among the poorest. 

Grounds for believing this include the following.  Firstly, child mortality is concentrated among the poorest, so an improvement in the total may well reflect improvement among the target groups.  Secondly, the child mortality rate is believed to give an indication of the rate of early deaths among adults  Policies which reduce child mortality are likely to also reduce early mortality among adults. 

If all this is true, then the closer we are to the required rate of progress on child mortality, the more poor people there are.   Slow progress on child mortality (as now) makes for fewer poor people, so the poverty goal looks closer   -  simply because fewer poor people are alive, not because more of the survivors have raised their living standards.

My hunch is that slower progress on total child mortality means much slower progress on child mortality among the poorest.   If this is so, then the effect is stronger.

To me, no outcome measure is humane unless it takes into account what happened to people who started the period but didn't make it to the end.   If the poorest die, the average income of those alive at the end of the period will be higher than the average when the group included the poorest, even if none of the survivors' income has gone up.  It even looks higher, if enough of the poorest die, when the average among the survivors goes down somewhat  -  simply because the poorest are no longer there to pull the average down.

If we measure the income of those alive in 1995 and then the income of those alive in 2000, we will not notice the decline in income of someone who died in 1998.    The average income of those alive will be exactly the same as if he had survived and raised his income to the average of the group.   In fact, since most people in poor countries work on the land, vulnerability is seasonal, and therefore the people who die may have a declining income for a few weeks or months before they die.  This is too fast for measurements taken every five years.

My suggestion is this:  For any outcome measure  -  reducing poverty, achieving 100% schooling  -   account needs to be taken of those within the relevant group who did not achieve the target, whether through death or any other path.    

In practice, the relationship between child mortality and statistical progress on the goals would appear to need careful research (see below).

Practical considerations

In real life, there may not be such a clear division between the poorest and the less-poor.   However, DHS data seem to point to assets as important determinants of child mortality  -  the lowest 10% can be far more vulnerable than the next 10% (Bonilla-Chacin and Hammer, ""Life and Death among the Poorest"", 1999, revised version 2001 forthcoming, World Bank).   There may be a clear division, for example, in some geographical areas, between the landed and the landless.  

In real life, policies which reduce the proportion of people living under $1 a day may also save the most vulnerable from death.  This cannot be assumed, and may depend on the relative vulnerability of the poorest (see previous point).

In real life, the poorest may produce more children to replace those who have died. The total number of poor children could conceivably be the same in 2015 whatever the child mortality rate.   But if adults as well as children die in hard times this is unlikely. 

The statistical relationship between mortality and outcome measures can only be determined by careful research, together with an intimate knowledge of household behaviour.

Statistical progress on the goals needs to be translated into human terms.   If there is any suspicion that apparent progress on any of the goals is helped by lack of progress on any of the others, then this is an argument for tackling the goals that are furthest behind, not the ones that are furthest ahead.

Matt Berkley

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