Document 11 August 2000: ...adding up income doesn’t show the amount of productive activity, just the amount of money changing hands. .............. Subj: Curiouser and curiouser Date: 23 April 2001 ...Well I'm even more stunned than before - it seems that all statistics (and so policies) on four billion people have been put together with nobody at all asking whether changes are due to demographic changes, rather than changes for real people. So I'm writing all this up, encouraged by Ravi Kanbur....He said maybe Sen, the Nobel prizewinner should have been looking at this. Utterly bizarre, since I'm just saying something anybody in the pub might say. It's hard to avoid the conclusion that unless social scientists can prove the effects are always small, social science theory has to agree that they cannot say anything about what's good for people in countries with variable mortality rates, without knowing who survives. Like doctors, they might want to tell people their survival chances as well as benefits for the survivors. And I've got the task of trying to say this politely! Surely economists haven't really left this out? .......................... Draft 25 April 2001: Cost-benefit analysis of countries’ policies over the long term The point I make about cost-benefit analysis applies to the study of economies over the long term. Resource-poor countries whose policies on health care and other matters have resulted in longer lives for the poor, tend to lag behind in average per capita income. Other countries, where the poor live shorter lives, have had faster increases in per capita income. Is there an obvious connection here? If we do not look at aggregate mortality over the years, we will not know how much a faster increase in income among those now living is due to raised living standards among the survivors, and how much to a statistical increase because more of the poorest died along the way. We can then ask where the burden of proof lies. If the above is a possibility, then we cannot say to the poor of today that they will be better off with one set of policies or the other, without knowing their survival chances based on mortality data. The poor of today want to know the total costs and benefits of each option. ... 7) the burden of proof, and a minimum set of conditions that must be met, if researchers claim on the basis of income data that x is good for the poor (must show that a. there were no skewing effects of mortality on the average; b. differences in mortality risk for the poor in different countries, and any upward trends, did not outweigh benefits of increase in average income; and c. that there was no significant decrease in assets. ........................... From draft of 26 April 2001 "Version 1": 7. If mortality rates can affect welfare indices of the living, and a social scientist makes a claim that x has been good for the poor on the basis of these indices, where does the burden of proof lie? ... 1) to our brains, the output information - usually, the scale - has to make sense. Humans think in linear ways about numbers, and this is one reason logarithms are so useful: we can compare numbers which otherwise our brains can’t cope with. In the case of the needs of the poor, the problem isn’t that the numbers are very big but that the range for, for example, nutrition where the level makes a lot of difference may be very compressed. A graph which is devised according to a scale of need is more unusual, but by no means less honest than one based on the scale used for the measurements. ... One argument that is put forward by social scientists about variable-mortality countries is that the poor replace dead children with new babies, so the numbers and proportion of poor people end up the same. At this point, the moral and political philosopher who lies within every reader may be tempted to make a comment. To the author, confronting this issue squarely, from the point of view of how it relates to our values, is unavoidable. Nevertheless, if we want to see what may have happened in economic history, we can ask about the possible influence of this factor. As with many statements about human behaviour and social processes - for which, contrary to what we may be tempted to think, there are very few universal laws - the real question is not whether it is true, but to what extent, in what way, under what circumstances, and what the implications are for other questions we think are important. So let’s look at our imagined Britain. The task I propose here is not to give an estimate of the effect of demographic change, but to look at what we might consider acceptable concepts, given what real human events the statistics on income might be influenced by. If there is a possibility that statistics that look good are reflecting outcomes we consider bad, then a fundamental question arises as to the burden of proof, and another about what concepts and terminology describe accurately enough what is going on. If anyone beyond a certain age dies, it is too late for them to be replaced by a new baby in the same family. It does not sound plausible that other families will then produce the right number of new babies to make the proporiton of poor people constant. .......... From second draft of 26 April 2001: Draft - quotable with permission A modest proposal: Economics and variable mortality A short note on set theory and inference from changes over time in groups with variable populations to real populations ... Assets as a better predictor than income of disproportionate mortality Poor people’s incomes go up and down a lot, as shown by the study of welfare dynamics. On the income scale, they swap places. But the impression that because they go up and down on this scale, they go up and down to an equivalent extent on the vulnerability scale, may not be anything more than an impression. If I am a poor farmer in a time of crisis, I will, if I have any sense, eat less rather than sell off, at a knock-down price, my last piece of land, which I know represents my last piece of security for my family. Other relevant assets would fairly obviously include access to clean water and drainage. ............................ Social science and survival. Draft 2 May 2001. Same day: second conversation with Professor Kanbur: If there is a possibility that statistics that look good are reflecting outcomes we consider bad, then a fundamental question arises as to the burden of proof, and another about what concepts and terminology describe accurately enough what is going on. ............................ From draft, 14 May 2001: The predictors of future economic activity among the very deprived are very different from the predictors of future economic activity among the less-poor - even those who have very little more. This non-linearity is very similar to the common distinction between growth and recession in a country - governments take very seriously a small drop in output which tips the statistic into indicating recession. Why? Because it’s hard to get out of. This is exactly the position of people who are malnourished and have few assets. Once you go down, it’s harder to come up again. Keeping out of personal recession is always, for the individual and also as a predictor of their future economic activity, more important than an equivalent percentage change in income at a time when they are out of the risk of personal recession. This is simply the law of diminishing returns, and it operates at the macro level. .......... From draft 26 May 2001: Statistics and survival Social science, language and logic: the status of inferred conclusions from data on living populations ... Statistical averages of the living - and other measures based on data compiled on the living, such as Gini coefficients or poverty gaps - are always partly measures of past survival rates, if the variable being measured in the original data is correlated with life length. ..................................... Subj: Measuring individual income trends Date: 25/11/02 To: dhausman@wisc.edu File: C:\WINDOWS\Desktop\Current articles\The Wealth of Persons 24 Nov.doc (351232 bytes) Dear Dan Thank you for your interest in my work and your encouraging comments. Here is the latest version of my document on logical fallacies in economics. You are not alone in thinking that there must be theoretical work behind the basic concepts in welfare economics. I thought the same, and so do the majority of philosophers I have spoken to. I would like to answer a couple of points you made in our conversation. The first is about exceptional cases. My understanding of your point is this: the consensus in the WHO is that, apart from a few exceptional cases such as Sierra Leone and countries affected by AIDS, life length among the poor has improved. But my own points are not about global trends. They are about what constitutes an adequate mathematical framework for the scientific study of individual outcomes in any situation. If there are exceptional cases, then my points apply to any studies which include those cases. In fact what happens is that even when economists are talking about an exceptional case like Uganda (where life expectancy went down) they apply the (unfounded) assumption that if the proportion of people below the poverty line went down, and/or there was economic growth, then people must have benefited more than somewhere else where these statistical trends were less pronounced. There is no theory in economics for either identifying or dealing with exceptional cases, and, to my knowledge, no theory in medical or nutritional statistics to deal with the effects of mortality trends on either statistical averages or proportions of people living at a later date. For example, if the proportion of hungry people goes down, most people in the development industry think this is always a good thing, and make no link with death rates. Official statements always use the unfounded assumption. Also, there is no statistial theory for identifying cases which would cause bogus results in the context of particular statistical procedures. For example, it could be easy for a researcher to "show", in a multi-country study using regression analysis, that "abolishing free health care increases poor people's welfare", if they ignored the real variable affecting the result - the number of early deaths among poor people. In a regression analysis, a small difference between death rates in different countries could make a big difference in the conclusion. That is why I am looking under the hood. I did look at the Global Burden of Disease documents a few weeks ago; I wrote to Christopher Murray asking whether some of the problems for economics had been considered in relation to epidemiological statistics, but received no reply. I did speak to his colleague Gary King, because of his work on ecological inferences, and he's looking at an earlier draft or what I attach here. The second point is this. I take your point about the possibility of social scientists putting asterisks by conclusions: it would be reasonable for a social scientist to state that certain results should only be interpreted with the appropriate qualifying statements. But this is not the way economics is done, or the way it is presented. For example, the most prominent UN and World Bank statistics are not presented using asterisks, by which I mean that they do not state their assumptions. I have found, in talking to senior development economists and statisticians, that often they have not even thought about what the assumptions are. When I raise logico-mathematical points, they often change the subject and begin to talk about such things as benefits to future generations, rather than sticking to the question of how we might come to conclusions about, for example, average income gains to individuals. I have bee somewhat surprised to find myself having to point out which of their conclusions are calculable from the data, and which are inferred from assumptions about causes of statistical change. Nor do macroeconomists provide estimates of probability for their conclusions, in respect of the reliability of both data and the assumptions about what the data are telling us. In other words, a whole load of opinions are presented as mathematical fact. If anyone has previously stated what I say next, I would be very interested to know. The equation of "average income was 1% higher in the population at the end of the period than in the population at its beginning" with "on average, incomes rose 1%" - which is the underlying assumption behind macroeconomic theory - is incomplete. The fact is that for mortal, mobile creatures which start small and useless and grow bigger and productive, demographic change is also a mathematical determinant of the average at the end of the period. Where A = average gain E = economic growth and D = the influence on the growth statistic of demographic change, A = E if and only if D = 0. Where D is unknown, Average gain is unknown. Anyway, I know you are very busy. It looks to me as if I will have to write several books to try and get these points across. Thanks again for your time. I'm attaching the document in case it's of interest to you at some point. Matt ..................................... "Wealth of persons 7 Jan" - may be from another date in January 2003: There’s an even more fundamental point I want to make about measurement. Why measure something at all? My answer is this. The point of measuring some particular thing is to get information that’s more accurate, more reliable, more unbiased, or all three, than what we could get by not measuring it. ... A. Inequality fallacy (time version) The word “distribution” can mean two things. Firstly, it can mean how much is received by some people compared with others during a period. Secondly, in statistics and economics, it can mean how much people were receiving at the end of a period according to their position on the scale of incomes, compared to people at the start of the period. Statements about differences in static distribution between the start population and the end population are not equivalent to statements about the distribution of benefits among people during the period. A change from less income inequality in an earlier population to more income inequality in a later population does not tell us, on its own, that the poor had lower percentage income gains than other people. Here again, demography influences the statistics if cross-sectional data are used. For instance, if the poor live longer, other things being equal inequality will be higher at a later date. The principle that demographic changes are mathematical determinants of measures of change in inequality applies to Gini coefficients and other statistics which rely on snapshot measures of welfare of whoever is alive at the time (cross-sectional data). A policy’s effects on distribution in a later population are logically distinct from its effects on the distribution of income among real people. A government could lower income inequality by stopping old-age pension, unemployment benefits, and free health care; or by genocide of a poorer racial group. As in the case of social welfare functions concerned with simple averages, social welfare functions concerned with distributional effects are incomplete without equations dealing with demographic change. Otherwise, someone who says, knowing nothing about the extent of demographic change in a place, what the effects were on real people’s incomes is not talking about statistics, but expressing an uninformed opinion. Since people’s income and consumption have mathematical relationships with age, changes in birth rates and age structure across the income spectrum will affect inequality measures. ... You don’t usually need twice the food to get twice the benefit if you’re malnourished. There is an exception to this rule - beyond a certain point you need much more than twice your food budget to cure the malnutrition. But if you aren’t as bad as that, then a little more at certain times will help you survive for much longer. The practical lower limit on food consumption expenditure is not zero - at least, not for very long. If you eat less, you live for less time. As you get hungrier, the value to you of a unit of food increases. This increasing marginal return is not captured by linear measures of consumption expenditure. Perhaps this is not worth bothering about as a technical issue, since really what we need to know if we are trying to help malnourished people is how to keep them alive. ............. Email to Howard Nye 7 January 2003: ...life expectancy went down in Uganda. Where this happens disproportionately to people on below-mean income, we can't assume that the average gain was the same as the change in per capita income, or the average gain to poor people the same as the change in poorest-quintile average income. ............... Finance Ministers, Truth and Logic, 26 January 2003: Because of the functional differences, which I have expanded on above, the poor as defined using a meaningful concept may suffer or gain in very different proportion to others, from the same external circumstances. For one thing, they are by definition much closer to the edge of survival. For another, they cannot insulate themselves against economic shocks due to crop failure, epidemics, demand for labour or price volatility. For another, insolvency brings costs in a non-linear fashion: you get ill, you can’t work, you borrow money, you pay interest. The solvent have more linear economic responses to personal, family or community economic crises. There is thus a very high and nonlinear gain from avoiding a vicious spiral of poverty. The analogy of the firm is appropriate here. A firm with no cash flow to fund even low-cost opportunities to generate income is in a bad state. There are minimal levels of cash flow, assets, and income, and maximum levels of outgoings and debts which can support a viable firm. There is another level of those things which can support the taking of reasonable economic risks. Subsistence farmers with land are small firms. Landless labourers are either self-employed or long-term employees, and the economic position of each can be thought of as we might think of a firm which does not have a lot to spare. Once an individual or firm is slightly solvent, they can earn interest rather than pay it, buy cheap, sell high, and so on. ... You don’t usually need twice the food to get twice the benefit if you’re malnourished. There is an exception to this rule - beyond a certain point you need much more than twice your food budget to cure the malnutrition. But if you aren’t as bad as that, then a little more at certain times will help you survive for much longer. The practical lower limit on food consumption expenditure is not zero - at least, not for very long. If you eat less, you live for less time. As you get hungrier, the value to you of a unit of food increases. This increasing marginal return is not captured by linear measures of consumption expenditure. Perhaps this is not worth bothering about as a technical issue, since really what we need to know if we are trying to help malnourished people is how to keep them alive. ... 1) Reported income (or consumption expenditure) misses out several important economic gains and losses - changes in: 2) Assets, including the value of a house; and natural resources which diminish the need to spend money; 3) Debt level, 4) Undeclared income/consumption. 5) Public services used or available as insurance 6) Earnings in kind, and incidental benefits from employment (e.g. gifts from other companies; subsidised meals, housing, dual-purpose business-plus-holiday travel) such as share options, and tax relief for pension contributions 7) Gifts from relatives and friends (things) 8) Favours from relatives, friends and others (benefits which save you money, e.g. a place to live in for nothing) 9) Outgoings: expenditure, where income is measured; other expenditure, where consumption expenditure is measured. Rent. Interest payments. 10) Inherited cash and assets, and not least 11) Longevity, which increases or decreases the overall value of economic gains to the individual. If something is an indicator of welfare, then more years of it is clearly better. People do not simply act to maximise annual economic gains. Whatever they act to maximise, part of the equation is obviously longer life. This makes an acronym, which we can make into the name of a fictional and sane economic theorist: RADU PEGFOIL. ....................... Email to Caroline Lucas, 1 February 2003: The technical problems involved in estimating consumption levels among poor people using money are vast: you have to collect data from many regions, cities, towns, villages; standardise the questions globally; and then (something which the World Bank does not do) find out what prices were paid by how many poor people in each region of a country; and then try to convert the monetary values internationally even though people eat different food. But there is a further problem. The notion that the "income share" of the poorest 20% tells you about changing consumption levels is a fallacy, because the prices paid by the poor may have risen or fallen relative to the rate of inflation for the whole economy. ... Consumption expenditure - which is measured in "income" studies of poor people - is of course only one component of economic welfare. Environmentalists point out correctly that this excludes both natural resources and non-monetary economic activities. But it also excludes changes in land ownership, and even savings made by poor people in better times. ....................... To Tony Lawson, 4 March 2003: The World Bank does not have adequate information on price inflation for poor people's goods. The fact that a person's consumption expenditure rose does not tell us that their consumption rose. The World Bank, and many economists, make this mistake. It seems to me that this means economists can claim, if, say, water or health care prices rise, that the poor did not lose out much - because the overall inflation rate is not much affected. The overall inflation rate may bear no relationship whatsoever to inflation rate for the poor. This is an additional reason why the notion, which even Oxfam believes, that "an increased share of national consumption expenditure by the poorest quintile [given static or rising overall consumption] shows poverty reduction" is false. The World Bank's research methods use as outcome variables either: i) the proportion of people on under PPP $1 [sometimes plus the "poverty gap ratio", which is not really a poverty gap, but a consumption-expenditure gap ignoring the ratio of adults to children and thus the need for food] or ii) the "income share" [in reality, usually the consumption-expenditure share] of the poorest fifth as an abstract segment of the economy (for whose members they certainly do not have price data). Therefore, their conclusions that their policies help poor people rely heavily on both implausible and obviously wrong inferential leaps. These leaps are the foundation of international policies against poverty. This is clearly the case, since economic growth is now taken as an essential part of "poverty reduction" policies. This relies heavily on World Bank research claiming to show that "growth is good for the poor". As I said, heads of department in Oxford and the LSE, as well as the Chief of Statistical Services at the UN, disagree with this research. Even well-meaning economists fail to take these problems into account, having had no training in them. The idea that cross-sectional statistics give mathematical conclusions as to longitudinal trends (i.e. gains and losses to real people) is deeply ingrained in "welfare economics". It is completely false unless demographic differences (and in the case of income or consumption, also prices) are taken into account. The notion of "maximising utility" as aiming for a higher average in a later population (economist's practical definition) is very different from the notion of "maximising utility" as promoting the greatest good of the greatest number. If poor people live longer (which does happen in real countries) the first of these is not furthered, while the second is. Matt .................. From "The Wealth of Persons", perhaps 2 May 2003: The usefulness of statistical conclusions is not in proportion to their own reliability, but in proportion to their reliability compared with other ways of finding things out. If we have no other information, then we have to use statistics even if they’re unreliable. If we do have other good information (which is of course a matter of judgement) then the statistics need to be reliable if they are going to convince us that the other information is wrong. Just using your own senses might make you have a narrow understanding of what’s going on. Just using statistics given you by other people might also narrow your understanding of what’s going on, if you don’t find out how they came to their conclusions. This doesn’t have to be very complex - it just means requiring the person making the person making statements about numbers to say publicly 1) exactly how they worked out the conclusion - in plain language - and 2) how far they trust each step of the process they used. When people talk about “statistics”, often what they are referring to is not the statistics. In other words, not the numbers. Often, they are referring to the statements which are made about numbers. ................ From email to James Galbraith - appears to be from 2003: The context for my theoretical remarks is that economists make categorical statements using regression analyses, to apparently great precision - see Growth is Good for the Poor and the ensuing criticism, almost all of which assumes that demographic factors were irrelevant (and prices too. I think the only exceptions I have seen are Srinivasan and Deaton. ... We cannot now have data on AIDS deaths in the future. But economics will be badly prepared if it equates rises in income per capita with the average gain. Theory is important irrespective of recent trends, because it helps to clarify thought. I.M.D. Little recently published a book in which he said that aiming for a higher average was in practice equivalent to aiming for a better result for people. But that is not a given, and it is not a given in the context of vastly revised population projections in African countries, partly due to AIDS. AIDS reduces not only life expectancy but also the birth rate. .................. 1015. Ten fundamental problems in the theory of welfare economics and fifteen technical reasons why the United Nations should use life-length statistics in place of economic data to assess the progress of poor people Draft 17 June 2003: The cost of each of the extra items (which may include water, rent, transport, fuel and so on) may even fall - which would bring the inflation rate down. Then the cost of living according the consumer price index would have fallen. But in reality it has risen. The cost of living is the cost of living, not the cost of items irrespective of which items are necessary. For an economist to say that they have measured the changing cost of living because they have measured price changes is a false statement. [Sort-of mistake:] It is fairly obvious that the economic welfare of people who don’t have enough to eat is measurable by how adequate their food intake is. ....................... Email to Thomas Pogge Perhaps June 2003: RE: Economics and poverty statistics The paper "1015" mentions data quality issues. One of the features of research on world "income poverty" is that the main dataset is known to be unreliable. Put that together with the inflation flaw and the mortality flaw and we can see the weak evidential basis for all economists' statements about large-scale "poverty" trends. The whole debate about "growth" and "distribution" relies on income without data on prices, as do all other debates about the effects of policies on poor people. .......... Document, Life, economics and poverty latest .doc 22 June 2003: Without information on changes in assets, you do not know whether someone’s income rise hid an overall economic gain or a loss. There are some things which we might debate all night as to whether they are key aspects of economic welfare. But assets are key aspects. So are prices. So are debts. So are environmental assets which necessitate less expenditure. So are needs, according to whether you are a big or a small person. If there is an academic tradition in the world which is capable of policing itself, it is not the economics profession. ... A responsible social scientist needs to be aware not only of the features of the real world which affect their statistics (at which economists have failed catastrophically, at least in an intellectual sense; it would seem likely in the real world as well, since the flawed methods have been used to determine policy), but also of the features of the real world in which those statistics will be used. ....................... Email to Chair of UK House of Commons International Development Committee, 25 June 2003: All of the World Bank’s major research conclusions (“Assessing Aid”; “Growth is Good for the Poor”; “Globalisation, Growth and Poverty”; and measures of income inequality) suffer from these flaws. To measure the outcome for the survivors is not to measure outcomes for people during the period. To measure income without knowing the price of staple food is not to measure poverty. Measures of income “inequality” - income ratios or Gini indices - falsely show more inequality if poor people live longer. The extent of this problem is unknown. Fundamentally, the change in average income does not tell us the average gain. Average income falls if the poor live longer. Average income rises if people in the majority on below-mean incomes die earlier. The poor are bad for growth. In the cases of both the mortality flaw and the inflation flaw, the poor can look as if they have done better when they have in fact done much worse, or vice versa. Martin Ravallion, who designed the methodology for the World Bank’s global poverty counts, wrote of the mortality flaw in 1996. Despite this, the World Bank has claimed that their statistics show the degree of benefit to poor people. This is not good enough in any age, but is especially alarming in the age of AIDS. Thirdly, the Select Committee should know that prominent academics do not consider the main World Bank dataset to be reliable. The main dataset for research on world poverty is the Deininger and Squire dataset of 1996. Its critics include Tony Atkinson of Oxford, who is one of the most respected authorities on inequality in the world, and James Galbraith of Texas. The criticisms are eminently sensible for prima facie reasons as well as comparisons with other data. The surveys in different countries are carried out using a wide range of different techniques, and it is unreasonable to expect poor countries’ statistical departments to have carried out rigorous and comparable surveys. After all, these are poor countries. The data are a jumble of gross income, net income and expenditure, all assessed using different methods. In the document “Growth is Good for the Poor” the authors admitted that for some data they did not know whether the income was gross or net. Martin Ravallion is on record as saying that the rich and the very poor do not cooperate with surveys, so that there are gaps in the data. Problems as to the reliability of the data for measuring the numerical values of income are in addition to the problems of making inferences from a) the numerical value of income to b) purchasing power to c) economic gains, which include changes in assets and debts. ... Another difference is that I take the commonsense view that without the required data, a social scientist does not have a firm conclusion. That is not to say that social scientists should not speculate, or assume, or infer. The point is that speculation, assumption and inference should be labelled as such. The social scientist might infer a conclusion from general knowledge, but that is not the same as saying that they have calculated the answer. Oddly, it is the tradition in economics to state, for example, that there "is" a relationship between a policy and economic gains to poor people, without the required data on prices. .................... Email to Richard Zeckhauser, 2 July 2003: Price data for poor people are not taken into account in any major cross-country studies on poor countries. This illustrates an alarming tendency among macroeconomists to reject anything which is not “hard” data, but then to come to an unsupportable conclusion about what the data mean. ........................ Discoverer of Global Poverty Error Calls for Statistics on Survival. Published in Addis Tribune, Ethiopian newspaper. Similar or identical to media release by Matt Berkley. 28 November 2003: There is a target to halve the proportion on under a World Bank dollar (a fraction of a real dollar). That is not a poverty target unless you know something about how you know needs changed. ....................... Possible solutions to some puzzles in international statistics Draft 26 September 2004: Many of the errors above apply equally to economists' and governments' statements about prosperity among people who are not usually considered poor. The idea that additional items of expenditure (such as commuting costs) should not be counted against income is absurd. The idea that debts and assets are not part of economic gains and losses is absurd. The idea that most people are better off dead is absurd. The idea that no matter how long or short working hours, people are equally well off is absurd. The idea that money measures, with all these fallacies of reasoning and misdescriptions of data, can measure human welfare with no reference to the quality of life is absurd. This article examines problems in economists' claims about policies and international poverty. Such claims ("policy X reduces poverty"; "the world is on track to halving poverty by 2015") have been quoted in policy documents and public pronouncements from the World Bank, the UK Department of International Development and elsewhere. The article argues that the aim of "poverty reduction" is fundamentally flawed, since in traditional economic theory in a country where the worst-off survive longer, the economists say that the poor have done "worse"; and that what is measured by economists currently in countries where most humans live is not poverty. ... The theory behind economists' large-scale statements as to how well or badly people have done does not address the question of what people need. The available statistics are therefore not poverty statistics. ... These confusions by economists may help explain several puzzles in international statistics: 1) why Cubans, Sri Lankans and Keralans have lived a long time despite economists saying they were very poor; 2) why Millennium Goal Indicator 1 has been reported as significantly ahead of most of the others (we might expect people to eat better if they are getting richer, and health to improve if hungry people eat better: so why are health indicators not in line with economic indicators?); 3) why global health goals are not being met (perhaps the wrong economic policies are being promoted). Possible solutions to some puzzles in international statistics Draft 26 September 2004 http://web.archive.org/web/20040928112856/http://www.mattberkley.dsl.pipex.com:80/ .................................... Hunger in the human species: Problems and possible solutions Matt Berkley Draft 26 September 2004 Revised 1 October 2004: The second problem with economists' statements on poverty is that for countries where most people live there are no estimates of need from year to year. Economists sometimes make statements as to how well or badly people have done. But this is done without addressing the question of what people need. The available statistics are therefore not poverty statistics. The article argues that if the aim is to help poor people, it is better to trust sources of information other than macroeconomists in devising policies. What is measured by economists currently in international studies of countries where most humans live cannot rationally be described as poverty, if poverty is unmet need. That is so because none of the following are estimated: food needs, other needs, food prices, other prices, or survival rates. ... The article also argues that if the aim is to help poor people, it is better to trust sources of information other than economists. What is measured by economists currently in international studies of countries where most humans live is not poverty. It cannot be poverty if poverty is unmet need, since none of the following are estimated: food needs, other needs, food prices, other prices, or survival rates. The first problem is that in standard economic theory there is no benefit for people in living longer. The second is that there are no estimates of need. The theory behind economists' large-scale statements as to how well or badly people have done does not address the question of what people need. The available statistics are therefore not poverty statistics. ... Overarching problem 2: Claiming to measure poverty without looking at the cost of living The second problem is that poverty is a state of need, but the theory behind the economists' claims failed to define needs. Whether or not poverty can be quantified is a reasonable question to ask. It is perhaps equivalent to the question whether prosperity can be quantified. What is perhaps unreasonable is for someone to claim how much better or worse the poorest people did under a policy without any reference to a) survival rates b) food prices c) other prices d) food needs or e) other needs f) changes in assets or g) changes in debts. It is important to understand what economists refer to when they talk about "income". It is a shorthand word for something more complex. In respect of countries where most humans live, the statistics often refer to a) consumption expenditure and/or b) the monetary value of food eaten. From these statistics, economists have claimed "average benefits" of x% with a policy, or that y number "rose out of poverty". But these statistics about money cannot tell a researcher about food. Economists have not yet compiled food prices for the target group in each country. Nor have they compiled prices for anything else which the target group need. https://web.archive.org/web/20041011063831/http://www.mattberkley.dsl.pipex.com:80/index.htm .................................. Five axioms, four puzzles and four suggestions on hunger in the human species Draft, 27 October 2004: "It is inaccurate to refer to...results of studies of the numerical distribution of "income" as if they represented consumption amounts, or consumption adequacy (consumption poverty), or "income poverty" without estimating necessary expenditure." (similar or identical text in online drafts dated 9 September and 1 October) ... "A consumption gain, of good food to a hungry person, is not useful if they cannot absorb the food. That may depend on the state of their digestive system." ... If a government encourages average economic activity without looking at costs (in terms of landlessness, mortality, time at work, time commuting, changes in need to rent accommodation, food prices, water prices, commuting costs, debt levels) then we might not be surprised if income or expenditure statistics (or the nominal monetary value of food) to rise while the standard of living (in terms of food consumption, at least) falls. ... What about the value of water consumption? Here again, what matters to people is the outcome. Unhealthy water is worth less. How to compare the value of food and water across countries - let alone variables such as rents, services, commuting costs and so on - is a vast question. ... It is difficult to see how a researcher who has not estimated needs for fuel, food, water, medicine, rent or other basic items could have estimated poverty. ... It is not clear what philosophical argument might be advanced that income is an indicator of welfare. It does not measure the cost of rent, childcare, transport, fuel, food, water or medical services in any country. It is a measure of money going round the system. Income is a social indicator. https://archive.fo/JNEZe ... ...For people with the least economic resources, land ownership may make the difference between life and death in a crisis. Debt levels may determine a person's basic needs for money. Interest can be expensive. Wealth may also include environmental assets. ... Landlessness is a known problem. Land reform sometimes takes place. People borrow in crises. .......................... Food and wealth Draft for correction, 19 April 2005: The short version is this: economists do not have international data on food prices, rent, electricity, or water; they do not have data estimating food needs; they do not have estimates of requirements for rented accommodation, or capital gains, or debt levels, or survival rates. They therefore do not have statistics which can be reasonably interpreted as showing the economic or welfare progress of people on average or in any other aggregate. The extent of the errors is unknown in the sense that they do not have the data; and unknowable in the sense that there are aspects which are only amenable to subjective, not objective comment (see above). However, there are some features of international statistics which could reasonably be interpreted as caused in part by economists’ structurally biased methods of inquiry. The fact that the biases exist is not deniable. .......................... 2005-10-29 Scope of the survival error in social science old version. Matt Berkley .doc: In any case where someone says they have measured poverty, but cannot produce survival rates for the people they said were poor during that period, they must logically, it seems to me, be wrong - unless they have a watertight method for inferring survival rates from something else. On reflection, it is not clear to me how it is possible that measures applied to living persons could be a guide to survival rates in all reasonably foreseeable circumstances. Diversion on the impossibility of measuring poverty or prosperity It is not clear how poverty or prosperity can be measured at all. A common ground of agreement might be reached that poverty is deficit of resources to meet needs. Now, first, “available resources” [are] difficult to quantify: how to measure, and weigh, environmental resources and shared resources and assets and debts and income?. Second, it would seem sensible to say that needs are not objective. It is not clear what kind of argument might be advanced in favour of the idea that what someone needs is a matter of science, not opinion. I cannot see how a dispute like “This person is poor!” “No she isn’t!” could be resolved even if you knew exactly what she ate, drank, counted her possessions and debts and so on. All arguments about numbers of poor people amount to disagreements of this kind, aggregated. Similarly, if prosperity is measurable, it is only measurable taking survival rates into account. A rich person would prefer to live, usually, to the age of 59 rather than 58. (Personally, I am more interested in a fulfilling life than a very long life). So we have two basic mistakes by economists. .......................... Note on "Statistics and Survival", 3 Jan 2006: For all large international studies, data were not on consumption but mostly on what people said they spent. ........................... Social Science and Government Aims, Draft 10 January 2006: Where a social scientist has information on variable x, and wishes to say something about variable y or express an opinion about z, the burden of proof is on the scientist to show the logic of the inference. ... It is not clear what...argument might be advanced that income is an indicator of welfare. It does not measure the cost of rent, childcare, transport, fuel, food, water or medical services... It is a measure of money going round the system. ... GDP will rise if the government pays people to do useless jobs - such as economists spending time adding up the wrong numbers. ... Opinion, rather than knowledge, is what is possible to give about some matters. In the economic sphere, these include a) the relative importance of assets, debts, community assets, environmental assets, life length, culture, health, leisure time, working conditions, working hours and other aspects of economic conditions to real people; b) what people need. ... 2. Estimate reliability of conclusions. Researchers must consider the reliability of inferences, giving reasons where the inferences are not otherwise clear. The unreliability of a series of inferences is multiplied. For example: If there are two steps in my argument and each has 70% probability then I am probably wrong. 70/100 x 70/100 = 4900/10000 = 49%. Suppose survey data are on answers about spending. This is mostly the case in real life. If an economist is asked by a politician to say something about how well or badly poor people did, here would be some necessary inferences. From i) “what poor people sampled in 1990 and 2000 said they spent” to ii) “what representative samples of poor people in 1990 and 2000 said they spent” to iii). “what poor people spent in 1990 and 2000” to iv) “trends in spending for real poor people over time (taking demographic change into account)” to v) “trends in income for poor people” or “consumption trends for poor people” to vi) “consumption adequacy for real poor people” to vii) “material gains for real poor people” to viii) “gains in well-being for real poor people”. Necessary assumptions might concern at least, not necessarily in this order: a) sample adequacy b) truthfulness of respondents c) memory of respondents d) demographic change (which determines food needs) e) workload (which determines food needs) f) changing food quality g) food prices h) survival rates i) a theory of how well-being relates to spending j) the relative value to people of assets and consumption. In order to understand the inferences it is perhaps important to be clear about different kinds of statements. ... 6. Distinguish spending from income. Reason In the period 1945-2005 most economic data on individuals related to spending; yet in 2005 the tradition in macroeconomics in summaries for the public was to describe the data as “income”. Risk : The public might assume economists counted both savings and spending. Globally, the data mostly related to spending. A minority of data were on income (notably in Latin America). Some data were on the money value of items eaten or used. Most of the numbers were on what a sample of people said they spent. Examples of what are strictly speaking errors: a) Any reference to Millennium Goal indicators as on “income”. Millennium Goal Indicator 1 is mostly concerned with reducing the proportion of low spenders. b) Any reference to the economic data in policy assessments, as “income”. For example, even if there were no other problems, a claim by economists that “poor people’s incomes rose at the same rate as policy X” would still be misleading. More accurate would be “poor people’s spending rose with policy X”. Terminological issue: The fact that the international data are a mixture poses a linguistic problem for researchers: how to describe the data accurately and concisely. “Income” is misleading. It would be more accurate to describe the data as on spending. In order not to mislead, it might be better for economists to use the term “the economic data”. 7. Distinguish spending from consumption. Purpose of standard To ensure the phrase “consumption expenditure” is shortened to “spending” rather than “consumption”. Note The word “consumption” would perhaps most naturally be taken by a non-economist to refer to “items or services received or used”. In this sense, consumption would be “things received”, not “money spent”. An economist who had data on spending and who then wrote “consumption has risen” would not be misleading the public in the same way as one who wrote “poverty has fallen” or “incomes have risen” but would still be misleading them. The definition of what counts as consumption is in any case perhaps in some ways arbitrary. ... At the abstract level, there is a philosophical question about where a dividing line might be between “my material circumstances” and “the environment around me”. The abstract question arises because things which are legally not mine but which I use (for example trees or hills) may be functionally equivalent to legal possessions. A reasonable line of argument might be that this does not matter very much, since other aspects of prosperity - the relative importance of life length, health, assets, debts, stability, self-respect, consumption of particular items, variety and so on - are subjective anyway. Another line of reasoning might be this: Arguments about whether people have done “better” or “worse” under different policies are largely pointless, since some important aspects of the human condition are not possible to research. http://www.mattberkley.com/SSGA.htm ............ 5 February 2006: The sceptic...points out what the scientist must show. ...the burden of proof is on the scientist to show that their claim is reasonable. ............ The survival error in social science Matt Berkley Draft released as “People, words and numbers”, 5 February 2006 (Retitled 13 February 2007) Longer extracts: the burden of proof is not on the sceptic who points out the scientist’s assumptions. The sceptic in such a case points out what the scientist must show. In this kind of situation, the burden of proof is on the scientist to show that their claim is reasonable. ... A question arises as to how social scientists might describe the existing statistics more accurately. “Poverty” seems wrong, since the data give no specific information about either prices or needs for the relevant people. Even if there had been data on prices, and judgements about relevant prices and relevant needs which were indisputable, income, spending and the money value of consumption could not measure economic poverty as a whole, even in a narrow sense related to legally-defined personal command over resources, since they leave out assets and debts. Statistics on income, spending or the money value of consumption could not by themselves measure income poverty or consumption poverty, since they do not measure consumption need or relevant prices. They do not measure necessary expenses. ................................... Dear Professor Chossudovsky I thought you might like to know some errors I found in the use of macroeconomic data by senior staff at the World Bank and many economists. Here is an email I sent today to a sociologist, Professor Nazrul Islam of the University of Dhaka. Best wishes Matt Berkley Date: Wed, 15 Feb 2006 01:03:19 +0000 Subject: More World Bank errors To: nislamphd@gononet.com Dear Professor Islam I have just seen your paper "World Bank Data of Poverty...." and thought I would let you know of other errors by senior officers of the World Bank. I have looked into the basis of their claims since 2000, when I first saw the document "Growth is Good for the Poor". I thought this had several obvious errors, but economists seemed in general not to have noticed them. One error is to ignore survival rates in claims about how well people are doing. The Millennium Goal Indicator 1 methodology paper is after all called "How did the World's Poorest Fare in the 1990s?". My reaction was, "how can they know that if they don't know how many survived?". The other error is to claim to know about economic adequacy for starving people while ignoring food needs. First, survival rates. In 2000 I noticed an apparent error in economists' statements about poverty using "poorest fifths": the outcomes look "better" if the poorest die. Strictly speaking, it is not possible to aggregate outcomes without looking at survival rates. Another way of looking at this is: Is it possible to assess "the adequacy of consumption to meet basic survival needs" without looking at actual survival rates? This raises a general question as to why anyone might ignore life length in any assessment about how well or badly people were doing. I pointed this problem out to experts beginning in 2000. A letter I wrote to Professor Sachs in 2001 about this, entitled "Economics of Survival" is at www.mattberkley.com/sachs.htm . The implications of the survival error are wide: it occurs in several social sciences and several Millennium Goal indicators. It affects assessments of prosperity in recent history especially in the ex-Soviet Union states and those countries where AIDS has reduced life length. Since in general economists do not know specific life lengths of people in the "poor" category, we might say that even if it were uncontroversial how severe the error was in principle, they do not know how severe poverty is. Second, food needs. In 2000, I thought it was odd that economists used per capita statistics. As I wrote to one economist, one reason why per capita statistics can rise is because birth rates fall. I gave the example of China. Because of the one-child policy, all economists' statements about per capita levels of adequacy, other things being equal, overstate adequacy as time goes by. This is a problem for the World Bank's claim about 400 million being lifted out of poverty in China since 1981. It is also a problem in relation to other countries in Latin America and Asia. A press release I wrote about the food error appeared as an article in the Addis Tribune of 28 November 2003: http://www.addistribune.com/Archives/2003/11/28-11-03/Discoverer.htm . I've corresponded with Professor Galbraith about these things, and spoken with both Professor Pogge and George Monbiot about them. The error of failing to look at inflation for the poor affects not only the global poverty claims but also the claims about particular policies. A claim that trade or GDP per capita brings particular levels of "benefit" to hungry people by looking at their spending but not the price of food is not very sensible, and biased against policies associated with relatively cheap food. It is the standard method in economics. The problem raised by Pogge and Reddy related to PPP rates, but the basic problem is the same with any statistics about the "distribution of income". (In reality, except for Latin America, the standard measure of what economists call "income" is what people said they spent). The distribution of income does not tell an economist about the distribution of prices. Nor does it tell them about the distribution of the cost of living (prices x amounts needed). So it doesn't tell them about poverty. The justification for World Bank policies has been primarily in terms of research based on these elementary mistakes. Pogge and Reddy, if I remember correctly, referred to the inflation problem in the context of World Bank claims about policy success based on the claimed global trends; but Pogge and Reddy did not challenge the policy claims based on distribution of "income" within countries. The PPP flaw has in a way more potential for error than the standard domestic-inflation flaw, because the PPP rates are influenced by the calculations for international inflation as well as within-country inflation for the rich. Can poverty be compared across time and countries? Some economists have written about the survival error after I began pointing it out to famous professors. One economist, to my knowledge, has pointed out the food error in the dollar-a-day measure. But no-one has to my knowledge put the demographic errors alongside the other problems and then come to a judgement about what is the sensible thing to do. In passing, I note that there are other demographic errors as well (even if we ignore migration). The fact that a baby is not born (contraception rise) is not the same as a person "rising out of poverty". But the standard method in economics does not deal with this. Also, both life length and birth rates of the "non-poor" influence the proportion of "poor". No-one has to my knowlege made an argument that, in spite of the subjective elements involved in assessing the relative importance to people of life length, freedom from debt, children's needs, prices of particular items, the quality of accommodation, the quality of food, assets, and so on, poverty might sensibly be described as objectively measurable. I did not see enough reasoning behind Pogge and Reddy's claims that it would be practicable to assess the value to people of consumption. It is easy to see from the work of Angus Deaton how complex surveys are, and how difficult they are to standardise. Further, nutritional adequacy is complex, and not uncontroversial. The quality of accommodation in city versus village is complex and not uncontroversial. Pogge and Reddy did not consider aggregation questions, either in terms of adjusting for children (children's needs are not uncontroversial either, and even their food needs are complex to analyse) or in terms of what are usually referred to as measures of the depth of poverty. The number of rich people doesn't tell you how rich they are. Since economists have made such a mess of their terminology (confusing spending with consumption, income with profit, the average rise with the rise in the average, and so on) I am not sure that it is a sensible idea to give them even more work and more complexity. I think it may be better for social scientists to be forced to state clearly what their statistics refer to. ................. I once lived with an illiterate family in Bogra district for six months, as part of an attempt to understand why people were poor in a world of plenty. The idea was to learn by being in a place. I don't know whether this experience made me automatically spot the errors, having clear pictures of real situations in my head. I have no training in economics - my first degree was in philosophy, ancient Greek and Roman literature and history, and my second degree was in experimental psychology. I would like to believe that if I'd known that economists didn't look at the price of food for the starving, or survival rates, or food needs, I would have spotted the errors without doing a degree or going to Bangladesh. I lived in Bangladesh from the end of 1983 to spring of 1985. I am not sure how I managed, in the reading I did, to fail to see the inflation error, the extra-needs error, the food needs error or the survival error in social science. I'm devising rules for social scientists and government goals, versions of which are on my website. Best wishes, Matt Berkley .................................. Twenty-five, 31 January 2007: Since people don’t agree about the value of different foods, people are unlikely to agree about what adequate consumption is. Also, what counts as consumption in a broader sense is a bit subjective. I consume air, whose quality is important to me. I “consume” the park where I walk. I consume knowledge, some which might help me live longer. I consume water, but of what quality? How much dirty water is of the same value as clean water? ... 10. Distinguish spending from income (most global data on “income” are in fact on what people said they spent). .................................... Email to Chairman of UK House of Commons Select Committee Date: Wed, 22 Feb 2006 To: hendersonc@parliament.uk Subject: For Mr Bruce: DFID and transparency of reporting Dear Mr Bruce DFID and transparency of reporting This communication relates to the International Development Select Committee. It: a) notes previous communications to DFID on errors in reporting, and b) suggests that the Committee consider requiring Ministers to clarify claims on poverty. ... Proposed solutions, 2001 and 2003 I had brought the survival issue to the attention of my Member of Parliament, Andrew Smith, in 2001. He had forwarded my letter to the then Secretary of State. A summary of my proposals concerning the Government is as follows: 2001: Suggested the Government take survival rates into account in aggregating outcomes for the poorest, on grounds that statistics on the living a) cannot tell us about aggregate outcomes and b) look "better" if more die. I mentioned AIDS in this context. Clare Short MP answered my letter without addressing its main point. 2003: (from letter to then Chairman of Select Committee, 25 June) "1) outcome statistics should take survival into account; 2) statements about progress should be based on a credible assessment of the reliability of the data, and 3) income statistics should only be used where prices of staple foods (and any changes in necessary expenditure due for example to the proportion of people in cities, or the changing proportion of adults) are estimated. It would help the effort to feed hungry people - in both the short and long terms, by whatever means are chosen - if the UK Government were to adopt some such guidelines. Otherwise, we will not know what the statistics mean." My reference above to “income statistics” should be seen in the context already noted: most of the data often called collectively “income” are on what people said they spent. Proposal My suggestion is that the Committee consider requirements on: a) Ministers to clarify what is being claimed in reports on poverty; b) DFID to clarify what is being claimed in any reports on policies and poverty used to decide and/or promote policies. Among key distinctions could be clarification as to whether the claims concern: a) spending, or b) consumption, or c) consumption adequacy. This simple change might help both the debate on past progress and the debate on future policies. ............. Unanswered email to Martin Ravallion, 18 May 2007: Thirdly and fourthly, it is not clear to me how surveys have generally dealt with expenditure on personal debt, or costs which are sometimes the subject of public concern and whose incidence varies across countries and times, such as charges for water, medicine or schooling. I would be grateful for any light you might be able to shed on these issues. Thank you. Yours sincerely, Matt Berkley ........... Time to end the myth of official poverty measurement? 14 July 2011: 5. The 2002 Act authorises action likely to benefit people. 5.1 The Act is not concerned with increasing money going round the system. Economic growth, income and consumption expenditure are measures of the flow of money, not its accumulation. They are not in themselves measures of consumption adequacy. ... 5.3 Some factors influencing your and others' economic welfare: Assets Needs Shared debts Debts Prices Environmental benefits Income Shared assets Environmental costs ... Concerns about charges for water, sanitation, electricity, education, health care Is all spending a sign of added prosperity? ............. 16 December 2012 Branko Milanovic: "...thanks to a database of household surveys put together recently by the World Bank, we can actually find out for the first time, from a single and consistent data source, who the real winners and losers of globalization are." Matt Berkley: As a non-economist, perhaps I am failing to understand your thinking. The data omit: a) analysis of what people need to spend, b) capital gains or losses, c) changes in debt levels, d) non-traded benefits such as health or education services or environmental factors, e) spending on things which may be neutral or harmful such as overuse of drugs (tobacco, alcohol), f) spending on things which may represent partial or total compensation for disbenefits such as in the case of medical expenses; g) demographic influences on population or population-segment statistics, as distinct from influences deriving from trend changes for individuals and/or families - you are inferring aggregate longitudinal trends for individuals from cross-sectional statistics. There may be a reason or reasons why you make that statement in the light of those omissions. Could you please explain what such reasons are? http://blogs.worldbank.org/developmenttalk/comment/423#comment-423http://blogs.worldbank.org/developmenttalk/comment/423#comment-423 In response to: The Real Winners and Losers of Globalization Branko Milanovic, 14 December 2012 http://blogs.worldbank.org/developmenttalk/the-real-winners-and-losers-of-globalizationhttp://blogs.worldbank.org/developmenttalk/the-real-winners-and-losers-of-globalization .............. The Economist magazine - Matt Berkley supplementary report for complaint to UK Press Complaints Commission 29 August 2013: 20. The statements about poverty levels, and links between poverty and factors such as GDP per capita, presented comment as fact, since whether people are "out of extreme poverty" is subjective. The Economist clearly meant the word "poverty" to communicate "lack of resources to meet needs". Choices are necessarily subjective as to both resources to count (for example, assets, environment, shared assets, clean water) and what to decide they need (for example, because of their age, work, health status, freedom from debt, natural resources and so on). ... 53. "Consumption" and "consume" in the text and the third chart misled non-economists that the spending numbers show what people received in return, since the numbers are not adjusted by prices faced by the poor. xxxv (footnote xxxv:) The words "consumption" and "consume" in the text and the third chart mislead non-economists that the spending numbers show what people g ot in return, since they are not in fact adjusted by prices faced by the poor. The data are according to the World Bank on what people said they spent or earned, and the value imputed by researchers to people's own produce. The Economist wrote: "Household consumption based on surveys"; "Laurence Chandy, Natasha Ledlie and Veronika Penciakova look at the distribution of consumption (how many people consume $1 a day, $2 a day and so on) in developing countries. They show how it has changed over time, and how it might change in future"; "More people are living at $1.25 than at any other level of consumption. This means growth will result in more people moving across the international poverty line than across any other level of consumption"; "at or just below the poverty line (at a consumption level between $1.20 and $1.25 a day)". Related problems exist in relation to those of the data which are on answers people gave about their income, and the values which researchers imputed to people's answers about their consmption of own produce. ................ Public misled on UN promises Example: Hunger Comments on State of Food Insecurity in the World 2015...and related material, 19 July 2015: Fourth, the FAO now claims countries met the watered-down MDG hunger target if they did not. A further alteration from the WFS pledge to the MDG reports is to include countries which "brought the proportion below" or "kept it close to", 5 per cent. ... The OECD donors' committee, which had asked the UN in April 2001 to produce the MDG list, stated in September 2001 that the MDG water target had a baseline of 2000. ... The fact that you spend more does not mean you are richer. The "income" data, which are collated by the World Bank from national surveys, have been widely criticised in academic debates on poverty. For example, the World Bank do not estimate inflation for the poor, so the FAO are not using estimates of what the poor or hungry could afford to buy. Further, these "income surveys" take no account of needs for transport, accommodation, water, fuel, medicine or needs for other expenditure. They are not in themselves indicators of how much people were able to meet basic needs at different times. As societies evolve, for example, people may need accommodation in a city when they go there to work, and need to pay for transport, whereas they used to live in a village house. The assumption those surveys are a sound basis for inferring food consumption is questionable. ........................................ BBC misleads on world poverty, safe water, and UN pledges After accuracy complaints, the "open" BBC refuses to publish UN pledges - reaffirmed by European Union member states in 2015 - or details of what is now Global Goal 1.1 Last updated: 25 November 2015 ... This problem of using jargon words is exactly what More or Less perpetuated on 9 March 2012. It referred to the World Bank having "consumption" statistics. The significance of this is more because of the false references to an "essential basket" (the word "essential" is still in the Spanish version), "basket of food" and so on. "Consumption" is economists' jargon word for: "household consumption expenditure": which means "what people said they spent", - or for the mixture of numbers such as used by the World Bank from a) what people reported spending or buying in the last two weeks, month or some other period; b) what they said their income was; and c) "imputed income" - researchers' guesses for the value of what people reported they grew, fished, gathered, water they used, accommodation and/or other things. These things are vastly problematic. What is the value of clean versus dirty water? There are no official estimates for numbers of people with access to safe water. So how can economists have ideas about the value of people's consumption? Neither the More or Less team nor the head of editorial complaints answered the complaint about the word "consumption" - or the complaint about a "persistent" error that the World Bank estimated inflation for the poor: "essential basket...etc" - which clearly indicated a variety of terms including "basket of food" in the More or Less 9 March 2012 article which still appears as the only "Editor's Choice" on global poverty from a search for "poverty" on the BBC website. It would have been entirely inappropriate, and irresponsible, and misleading, for More or Less to have used time on the "history" of the famine statistic, the child death statistic or the water statistic without looking at whether the words used reflected real life according to their natural meaning. The context includes what the programme usually does, and what audiences would expect, and the signposts given to the audience - which include the approach taken in its other coverage. The programme was advertised as "Tim Harford assesses how poverty is measured". The method described was incorrect. People spending more does not necessarily mean their lives are better. In some African countries, demographic changes due to AIDS may mean that statistics look better because of deaths. In that context, "measure of extreme poverty...the target's been met...the question remains...how much better are people's lives..." is not impartial. http://millenniumdeclaration.org/bbc.htm ...................................... Global Lies, draft of 16 October 2018: I do not mean to imply that just because someone is respected by others they are, or are likely to be, right on any particular question. That kind of attitude - allowing other people to think for you or assuming that they must be right because other people do - is part of the problem. ... Leaders' promise here is odd, because it is not clear which meeting if any had "agreed" the "MDG" targets at all. In any case, we can ask, as with the 2015 summit: How could nations agree easier targets than the formal pledges in the Millennium Declaration, yet at the same time reaffirm the more ambitious pledges? ... "Absolute poverty is slightly trickier. The definition used by a number of international organisations (such as the UN and the World Bank) is that you cannot afford the basic needs of life - food, clothing, shelter and so on." [! – Incorrect. That is in fact something which people have rightly criticised the "dollar a day" figures for not doing across time or countries. See note below.] "This is absolute in the sense that it is measured relative to a fixed (real) standard of living, [! – It is not absolute. How can Full Fact say it is a "fixed" or "real" "standard of living" when they have not looked at varying needs, prices faced by the poor, assets, debts, or the environment; when the relevant official monitors have repeatedly stated they do not have reliable information on water safety? ] rather than relative to the population you are a member of." Full Fact "The UK's independent fact-checking charity" 18 August 2016 https://web.archive.org/web/20160903090423/https://fullfact.org/economy/poverty-uk-guide-facts-and-figures/ Full Fact is peddling the same nonsense as the BBC's fact-checkers, the More or Less team. The BBC team likewise claimed the official line was based on "a certain level of" "shelter", "health care" and so on – even after complaints. This kind of wrong statement makes the official method, and macroeconomists' policy advice based on similar data, sound more thorough than they are. Let's think. If what Full Fact and the BBC said was correct, and the line was defined in terms of basic needs being met, why would it be the same amount in different countries? Since the surveys do not include the value of avoiding rent by living in your own home, Full Fact's part about the definition including a basic need for "shelter" cannot be true. What is a "basic need for shelter"? I don't know. What would it mean for a basic need for shelter to be met? How do you judge the money value of shelter in towns compared to countryside? I don't know. Does it matter whether the shelter is next to a main road, with pollution? How can you value the shelter if there is no rental market? How do you assess whether children's basic needs are met for shelter? The kind of exercise which would be required if these fact-checkers were right would be huge, hugely complex, hard for outsiders to understand and to a significant degree subjective – like "poverty measures" generally. The researchers cannot tell if basic needs are met, because they do not have nearly adequate information about water safety. They cannot tell from their money numbers what people consumed, because they do not have prices faced by the poor. They do not consider adequacy of consumption, for people with different age distributions, climate, medical needs, and so on. The World Bank line is in fact defined as an amount of money in international, pretend dollars. The line is arrived at by considering the amounts of those international dollars equivalent to a selection of national "poverty" lines. Those lines are based on countries' own, and in the past and perhaps still now in some cases on researchers', criteria for "baskets" of goods and/or services, which vary from country to country. The line is then applied to countries irrespective of what the people may need, and no adjustment for consumption need is made as time goes by, even with changes in proportions of children, proportions in towns, and so on. There are some adjustments for urban versus rural prices, and I do not know if they take into account the changing proportions of people living in each. But in any case, there are no adjustments for consumption need per person as such changes occur. This matters not just to understanding of the official reports on progress over time, but to the public understanding of the thin basis of economists' global "studies" of "income poverty" which governments, intergovernmental organisations and others have used to argue for what is "good for the poor". ... "The UN's "poverty line" does not look at changing needs over time. It is therefore not a poverty line". Discuss. ………………………………..