Berkley, notes 25 June 2000:
Comments on Dollar/Kray
explanation: Dollar and Kraay (correct
spelling) were the authors of a document heavily publicised by the World Bank,
for example on its home page.
It made several claims, including that average economic activity in a country ("growth") was "good for the poor" because it benefits the poorest people in the same proportion as others, and that social spending was of no special benefit to the poorest.]
...If exchange rates are not involved (i.e. it’s not a dollar measure) then how is the purchasing power of the poor’s money assessed?
[MB later note: The answer to this question is: It is not. The tradition in economists' large policy studies is to use the wrong inflation rates. The studies did not look at poor people’s prices at all when recommending policies.]
Under this way of measuring income, what happens if a) a lot of people die off, e.g. children;
my thoughts had been “they can’t know the average rise for the poorest in each
country, because they don’t know how many survived”.]
b) people lose or gain land through inheritance or having to sell at a knockdown price?
subsistence farmers the most important determinants of food security are
ownership of land, favourable weather, and agricultural efficiency - people
eat free food.
An increase in the amount of money going round the system may reflect an increase in landlessness.
[I was wrong in principle about "free food". The World Bank statistics are supposed to include, or mostly include, the value of food which people farm, gather, hunt or fish.
However, the extent to which that is done reasonably accurately is not clear.
What I said may be right for another reason. The statistics exclude the value of living in your own home. That would seem to falsely indicate people who lose their family homes, or do not own a home whereas their parents did, as richer because they now pay rent. That is in addition to this method failing to include the capital loss or non-acquisition of capital. If population pressures (land being subdivided among offspring) or urbanisation lead to less land ownership, these kinds of consideration may be significant.
occurred to me around that time that it was odd if economists' global studies
for policy advice did
not consider what people needed in each country whose policies were supposed
to be compared.
I found the idea strange that "poverty" could be assessed by looking at income but not needs.]
MB, document 25 June 2000:
.....Sen also talks about capabilities, in contrast to income, as important aims of development. I like this more, but I would like to see more of an emphasis on increasing capabilities by removing constraints (the main one being risk of dying) since these are what matter most to people.
sensible decisions about enabling people to avoid the worst things happening to
them, policy makers need to know the evolving situation of the people
most at risk.
Unfortunately even the big reports from the UN Devt Programme and UNICEF just give health and “human development index” figures for whole countries.
This is a very poor basis for policy - it’s not surprising that lots of people die off.