11 June 2015

Focussing on the absolute

Martin Ravallion returned to ANU for a public lecture. He's now a professor at Georgetown University and has been Director of the World Bank's research department. He was speaking at the ANU Crawford School of Public Policy. All indicative of a worthy and informed discussion on the topic, Global inequality : are the world's poor being left behind. It was certainly worthy, even important, but not quite what we expected. MR considered traditional assessments of poverty that show major reductions in the number of people below the poverty line in developing countries. The statistical technique is the Counting approach but this aggregates and misses the poor who remain at the poverty line. MR has developed (very recently, it seems, so this lecture was significant) an alternative approach that he called a Rawlsian approach and that measures whether the consumption floor is rising, so the poorest are rising. This is absolute, not relative, inequality. He quoted Ban Ki-Moon and Gandhi's talisman and IFRI and ILO which also highlight the poorest, and he observed that economists consistently utilise and perhaps see no issue with the more averaged counting method. He's now matching his approach against relevant data for countries to further investigate its effectiveness. And here is the approach (if I copied correctly): probability of number at or near the consumption floor is expressed by E(ymin/y) where (?) y(1*-SPG/PG). As I said, not your average public lecture. The questions were a mix of academic and public and perhaps expanded on the real socio-political implications. There's a biological floor where the poorest die, but this is not the consumption floor in most countries, including developing countries. The poverty level in China has recently been raised from $US1pd to $US2pd; the poverty level in USA is $US13pd; the international poverty level was determined in 2015 as $US1.25pd. All this is not a function of capitalism but of the effectiveness of social policy through social safety net schemes, although approaches to these may coincide in different countries. Social safety nets are increasingly widespread, including in developing countries, but often don't raise the consumption level of the very poorest. The role of colonialism is significant but often exaggerated. Foreign aid can be workfair (?) programs or cash transfers and the better option is not obvious and depends on circumstances. I guess his final message would be: don't focus on the floor alone, but don't ignore it. So, more mathematical, more theoretical, more narrowly focussed than most public lectures, but worthy and informative.

Dr Martin Ravallion spoke at the ANU on global inequality.

  • No-one left behind? / Martin Ravallion, 12 Jan 2015 Essentially this presentation without the formula
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