Humanity and social science
This website concerns humanity in three senses.
First, the subject matter is social science mostly on the largest scale in terms of numbers of people. Some statements by social scientists and by people using social science are about the whole species. A belief that social science shows people are better off in different places or times can influence several aspects of political life. These can include the choice of policies, the presentation of policies, claims about governments' successes or failures, and decisions by citizens as to who to elect.
Second, it considers some ways social science may or may not have reflected, and might in future better reflect, human realities.
Third, it considers issues about how far the
use of social science for policy decisions, and government goals, is humane.
A basic and widespread fallacy about economics is that income equals profit.
That idea has been fundamental to some influential policy research from the World Bank (the assumption being that income without looking at necessary expenditure shows how far GDP or policies benefit the poorest); some thinking by economists at Oxfam and elsewhere; and UN Millennium Goal indicators for the “halving poverty” Goal. It also underlies the ideas that GDP per capita, or average income, or lifetime income, measure prosperity.
Suppose I say this:
“Your income rose 1% above inflation, so you had a financial benefit of 1%”.
What is wrong with that statement?
For one thing, the first part says nothing about capital gains and losses. Your income might have risen because you sold land to pay your debts.
For another thing, strictly speaking the argument would confuse income with profit.
It would also be to confuse inflation with the cost of living.
At the simplest level, ignoring other problems about how to define or assess income, need, wealth, or inflation for any practical purposes:
Income is about money coming in. Income tells you nothing about how much
money you need.
Profit is about money left over: income minus necessary outgoings.
Inflation is about prices. Inflation tells you nothing about how much money you need.
The cost of living is about necessary outgoings. The cost of the food you need to keep living is not the price of food. The cost of that food is what you need, multiplied by prices. The fact that prices have risen 1% does not tell me that you or anyone else had 1% extra necessary outgoings.
Another fallacy is in speaking of “poverty statistics”.
Why is it a fallacy?
If poverty is lack, and overall lack is not quantifiable, then numbers cannot refer to quantities of poverty.
Poverty is in all common definitions, and in all theoretical definitions in social science, based on the idea of resources being “not enough”.
The word “poverty” is sometimes applied in a different sense, as a label used by social scientists for their data, or in a sense which otherwise takes the word away from its fundamental meaning as “lack”.
An easy way to tell the difference is to ask, “How does this information tell me about whether the people had enough?”.
An example of the word “poverty” where the information cannot measure lack
is: “We define poverty as the condition of living on below x units of money”.
That might sound like a sensible idea, perhaps on the following grounds:
a) “if you are going to have a cutoff point, you have to have it somewhere” (which is true by definition, though whether you are going to have a cutoff point in the first place may be influenced by your thinking about what you can measure and what you cannot);
b) “it is possible to ask meaningful numerical questions about money” (which is undoubtedly true but does not help establish how needs can be assessed objectively), and
c) “in a particular place and time we might reasonably think that on average people need at least x amount of money to fulfil their basic needs” (which does not tackle fundamental questions of whether poverty is in principle or in practice measurable even for one place, one time or one set of people. But even if these problems did not exist, why would anyone think what people need this year is the same as last year, or in another country?).
A redefinition of the word “poverty” in terms of an amount of money assigned
as “adequate” removes the element of “what people lack” - the essential part of
the usual definition in terms of inadequacy, insufficiency, shortfall,
“not-enough-ness” - and replaces it by an assumption that for the same income
or spending level, lack is constant across time and place. The redefinition of
the word “poverty” in terms of a money amount has no necessary relevance to any
other time, place, or circumstance.
What you lack depends not just on what you have, but also on what you need. What you need is not measurable. What you need is a matter of opinion, not science.
There is no such amount of food which you “need” in the abstract. The fact that people say “I need X” does not make it true. Usually they mean “I need X if I want to fulfil my aim, Y”. Food need for what purpose? To stay alive? For that purpose, what people need depends on their workload, the weather, their age, and other factors. It is not fixed. Even survival is not a fixed aim. For how long?
Beyond survival, too, the notion of “need” has no meaning except by reference to a purpose. But a definition of poverty which eliminates adjustments for need makes the word an empty shell. Similarly, a definition of hunger in terms of a set amount of food, irrespective of need, fails to fulfil the most basic criterion for being the same concept as “hunger” as ordinarily used. Hunger is not “whether people have eaten x amount each” and poverty is not “whether you have x amount to spend each”.
The mistakes of confusing income with profit, prices with costs, and amount with sufficiency are only some of the fundamental mistakes in large-scale social science which appear to have been widespread among both governments and their critics.
Questions arise concerning failures of the educational system, and failures of professional organisations to maintain standards among their members.
[Note on the survey data: In practice, most survey data which economists call “income”, for countries where most people live, are not on income but spending. World Bank Chief Economists have made statements such as “poor people's incomes rose in line with growth” or “the proportion of people living on below a dollar a day was...”. A person might be forgiven for being confused as to whether “living on” meant that was the people's income. The original data are a mixture of answers to survey questions about either income or spending, according to the type of survey done by the national government, with some surveys including money values to what people said they grew for their own consumption.]
A quick quiz
1. How can economists know the “average outcome for the poorest” if they don’t know how many survived the year?
2. How can economics be based on utilitarianism - the “greatest good for the greatest number” - if it is actually based on averages just for survivors? Other things being equal, most people would raise the average by dying.
3. How can economists’ “per person” statistics measure poverty when adults need more food than children, and the proportion of children is going down?
4. How did the British education system permit the following to happen? A Chief Economist of the World Bank, previously employed as a professor at the London School of Economics, claimed to have measured the benefits of “growth” to the “poorest” without looking at any of the following: Survival rates, debt levels, land ownership, food needs, medical needs, accommodation needs, or food prices.
5. How did the British education system permit the following to happen? Oxfam’s response to the same research failed to note that the World Bank researchers said they had measured benefits to the “poorest” from different policies, without having considered either food prices or food needs.
6. What might need changing in a culture which produced the following situation? The last President of the World Bank, James Wolfensohn, regarded as a successful businessman, managed to confuse income and profit when talking about, and overseeing policies for, the “poor”.
7. In what ways is the World Bank position, “we have good information on which policies have been best for the poor, but we have not yet collected relevant food prices”, similar to or dissimilar from Marie Antoinette’s idea that if the poor can’t get bread, they can eat cake?
8. If I say “I have measured your poverty” under what circumstances would my statement be true?
What Matt Berkley doesn’t know about poverty, and related matters
1. I don’t know why anyone thought it was humane, in the age of AIDS, to devise Millennium Goal indicators which look “better” if people die.
2. I don’t know why anyone thinks a person spending more than a “dollar a day” must have got more in return.
3. I don’t know why anyone thinks per capita income measures “welfare”, “well-being”, “prosperity”, “poverty” or “inequality” when the proportion of children is not constant across countries or time, and adults need more food.
4. I don’t know why anyone thinks economists’ and politicians’ claims about policy successes for the “poor”, based on the idea that the distribution of income measures the distribution of profit, are worth repeating rather than laughing at.
5. I don’t know what kinds of teaching allowed economists to pass their exams, then go on to confuse income and profit.
6. I don’t know why academic economists during the last fifty years were not instructed in the nature of the “utilitarianism” with which they associated their subject so closely. “The greatest good for the greatest number” is a very different concept from “the greatest average for the survivors”. Nor do I know why they didn’t notice that the utilitarian Bentham said the duration of happiness was a factor in working out the consequences.
7. I don’t know what sequences of events may have linked or not linked the
a) my letter of to Professor Jeffrey Sachs of 11 April 2001 explaining that if you want to add up outcomes for people, you need to count dead people as well as survivors, to which he did not reply, and
b) his co-authorship of an academic paper subsequently influential for the way economic prosperity and inequality in the human race are judged by economists, making the same point eight months later.
8. I don’t know how anyone could pass a school or university economics course, or be selected as a parliamentary candidate by a national political party, while believing that to assess people’s wealth, you don’t need to look at their assets or debts.
9. I don’t know why the World Bank report on global “poverty numbers” says it has measured consumption, when in reality the statistics are entirely on money, not what people consumed. Most of the survey data come from responses to questions about what people spent. A minority of the data come from responses to questions about what they earned. A minority of the data come from conversion to money of responses to questions about what people grew to eat.
10. I don’t know why anyone might believe some assumptions underlying the World Bank’s large-scale claims on trade, GDP and poverty. Since no data were compiled on prices for the poor, or assets, debts, needs or survival rates, he assumptions involved seem to me to have been that under all policies, in all countries, at all times and under all economic conditions considered by the researchers:
- prices of necessaries and luxuries always stayed the same relative to one another, despite the fact that food has sometimes been subsidised, and despite varying tax regimes in different countries;
- survival rates were relatively constant, despite the known discrepancies between GDP per capita and longevity levels in some countries;
- food needs did not vary, despite the move towards fewer children per adult;
- accommodation needs did not vary, despite moves towards urbanisation and thus perhaps to more need for rented accommodation;
- medical needs did not vary, despite AIDS;
- asset acquisitions and losses did not vary, despite landlessness as population increased;
- debt acquisitions, repayments, and interest charges for the “poor” did not vary;
- or alternatively that all differences in relative prices, needs, assets and so on, in all circumstances considered, cancelled themselves out in all of the studies.
11. I don’t know why people think that poverty, which means “lack”, is measurable. There is no such thing as a “lack” in the abstract, just as there is no such thing as “sufficiency” in the abstract. A shortfall can only be relative to a specified level. If I say I am in income poverty, I can only meaningfully be saying my income is not enough for particular activities and/or circumstances. In other words, I must lack enough income, not in isolation, but for something or some things. Which things are necessary for an adequate life, is a matter of opinion. Which things compensate for others – among, for instance, differences across time and place in pollution, the quality of food, drudgery at work, and so on – is a matter of opinion.
12. I don’t know why people think prosperity is measurable either. Like “poverty”, “prosperity” is a word without factual content. A concept without factual content is not amenable to quantitative analysis - nothing can’t be counted. I can say you are more prosperous than me, or think that I am more prosperous than you. I can even feel that someone is prosperous, which may be said to occur if I don’t know my reasons. But how can I measure how prosperous you are in reality?
13. I don’t know why people charged with the quality of academic education don’t monitor standards in the areas listed above. I think it is their job. I think they have failed.
14. I don’t know why Parliamentary Committees charged with oversight of international development policies have not monitored standards of reporting and policy analysis in the areas listed above. I think it is their job. I think they have failed.