Transcript The Palma, ODI 18 April 2013

UNCOUNTED
Inequality, post-2015 and
measurement as power
Alex Cobham, CGD
International Parliamentary Conference on
the Post-2015 Development Agenda
28 November 2013
Pop quiz
Which measure would you prefer?
P = y/x
G = 58.1y – 119.5x + 41.86
50 ways to be uncounted
• Blatant ‘uncounting’
– Choice of reporting
– Manipulation of data and targets
– Patterns of being uncounted
• Choices for Post-2015
– Choice of ‘development’ priorities
– Choice of indicators, e.g. the Palma
– Modest proposals
Blatant 1: Choice of reporting
The power to choose
what is reported
can exacerbate inequality
Blatant 2: Manipulation
The power to revise ‘results’
can render targets meaningless
The power to revise targets
can eradicate ambition
Blatant 3: Patterns of uncounted
Uncounted, through power
• Top end of distributions (countries,
people);
• Criminality
Uncounted, through lack of power
• Bottom end of distributions;
• Marginality
Choice of ‘development’ aspects
Positive
Millennium Development
Goals:
Decisions by…
Gender
MDGs
• Technocrats
(not $-a-day!)
• Pragmatism
• Inertia ?
Disaggregation
Post-2015 HLP
& Illicit flows
Negative
Inequality
Economic
inequality
Choice of indicators
•Pigou-Dalton
Criteria:
transfer principle: rules out
Technical
Policy
counter-intuitive
responses
to transfers
– Technical
accuracy
Atkinson axiom: Are the value judgments
of using this indicator sufficiently explicit?
– scale
Political
accountability
Income
independence:
should not
Policy-signal axiom: Is it clear what signal
respond to proportional changes to all
given to policymakers on direction of
– (Cost?)
change?
Dalton’s principle of population: measure
shouldn’t respond to merging of identical
populations
Clarity axiom: Is it clear to a non-technical
audience what has changed?
Anonymity or symmetry: measure is
independent of any non-income
characteristic of individuals
Policy-response axiom: Is the policy
response sufficiently clear?
Decomposability: overall ineq is related
consistently to ineq among sub-groups
A horizontal axiom: Can measure also
capture horizontal inequality?
• An example: Inequality
The Palma
• Ratio of national income shares:
top 10% to bottom 40%
• Rests on Gabriel Palma finding:
stability of ‘middle’ deciles (5-9)
• ‘Basically, it seems that a schoolteacher, a junior or midlevel civil servant, a young professional (other than
economics graduates working in financial markets), a
skilled worker, middle-manager or a taxi driver who owns
his or her own car, all tend to earn the same income
across the world — as long as their incomes are
normalized by income per capita of respective country.’
Middle stability across countries
Highest 10%
Lowest 40%
Middle 50%
35%
30%
25%
20%
15%
10%
5%
0%
1990
2010
Combined
Middle stability across time
UK
Venezuela
Peru
Paraguay
Panama
Mexico
Honduras
El Salvador
Ecuador
Dominican Rep.
Top 10%
Costa Rica
Middle 50%
Colombia
Bottom 40%
Chile
Brazil
Argentina
0%
2%
4%
6%
8%
10%
12%
14%
Stability across income stages
100%
Top 10%
80%
Bottom 40%
60%
Middle 50%
40%
20%
0%
Argentina
-20%
Brazil
Mexico
Peru
Most and least equal income distributions, 2010
Country
Zambia
Colombia
Paraguay
Panama
Rwanda
…
Serbia
Montenegro
Belarus
Ukraine
Romania
Palma
4.77
4.52
3.73
3.63
3.22
Gini
57.49
55.91
52.42
51.92
50.82
1.08
1.02
0.98
0.89
0.80
29.62
28.58
27.7
25.62
24.24
Palma vs Gini
Policy
If Palma so closely related
to Gini; and
Atkinson axiom: Are the value judgments
using this indicator
sufficiently explicit?
Palma ignores half the ofincome
distribution;
why would you possiblyPolicy-signal
want axiom:
to use
it?
Is it clear what signal
given to policymakers on direction of
change?
Clarity axiom: Is it clear to a non-technical
1. Policy axioms
audience what has changed?
2. Gini flaws
Policy-response axiom: Is the policy
response sufficiently clear?
P = y/x
G = 58.1y – 119.5x + 41.86
A horizontal axiom: Can measure also
capture horizontal inequality?
Pop quiz
Which measure would you prefer?
Palma = top 10% share/bottom 40% share
Gini
=
58.1(top 10% share)
– 119.5(bottom 40% share)
+ 41.86
Choice of ‘development’ aspects
Alternative approach:
Global process defines (global) political priorities;
National (and local?) process sets targets
i.e. if it’s “too political” to impose targets, don’t;
instead, set targets through a political process.
Conclusions
• Being uncounted reflects power
• Decisions on statistics are political
• Post-2015 offers great opportunities for
progress (not least disaggregation, illicit
flows); but not without recognising and
confronting the (political) obstacles.
Proposals
• Inclusive politics (as far as possible)
• Indicators chosen for accountability
• Data to follow ambition (not v.v.)
• Funding now (NSOs <0.1% of aid)
Thank you
cgdev.org/europe
@AlexCobham
Blatant 1: Choice of reporting
E.g. banking confidentiality
– Shadow banking:
The Morning After the Night Before
– Data provision: to BIS not public
Blatant 1: Choice of reporting
RANK
1
2
3
4
5
6
7
8
9
10
Jurisdiction
Switzerland
Luxembourg
Hong Kong
Cayman Islands
Singapore
USA
Lebanon
Germany
Jersey
Japan
FSI 2013 -Value
1,765.3
1,454.5
1,283.4
1,233.6
1,216.9
1,213.0
747.9
738.3
591.7
513.1
Blatant 1: Choice of reporting
E.g. political suppression
– The Black Book of Sudan: Who holds power?
Blatant 1: Choice of reporting
140
Development expenditure per capita, 1996-2000 (North=100)
120
Female IMR, 1993 (North=100)
100
80
60
40
20
0
North
Central, ex Kh
East
Darfur
Kordofan
Blatant 1: Choice of reporting
E.g. political suppression
– The Black Book of Sudan: Who holds power?
– Data provision: to IMF not citizens (then; now)
Blatant 2: Manipulation…
• …of data
– ‘1990 revisionism’
• …of targets (Thomas Pogge)
World Food
Summit
MDG-1 as
adopted
MDG-1 as
revised
Language
Halve number
Halve fraction of
world population
Halve fraction of
dev’g population
Baseline year
1996
2000
1990
Baseline, millions
1,656
1,665
1,813
Target 2015 reduction
50.0%
40.4%
27.0%
Target for 2015, millions
828
993
1,324
Required annual reduction
3.58%
3.39%
1.25%
Choice of ‘development’ aspects
High-Level Panel:
We recognized that every country is wrestling with
how to address income inequality, but felt that
national policy in each country, not global
goalsetting, must provide the answer. History also
shows that countries tend to have cycles in their
income inequality as conventionally measured;
and countries differ widely both in their view of
what levels of income inequality are acceptable
and in the strategies they adopt to reduce it.
Choice of ‘development’ aspects
Thought experiment:
We recognized that every country is wrestling with
how to address gender violence, but felt that
national policy in each country, not global
goalsetting, must provide the answer. History also
shows that countries tend to have cycles in their
gender violence as conventionally measured; and
countries differ widely both in their view of what
levels of gender violence are acceptable and in
the strategies they adopt to reduce it.
Palma vs Gini
Decile Income shares (%)
1
6.25
4.17
3.13
2.50
2.08
1.79
1.56
1.39
1.25
1.14
2
6.25
4.17
3.13
2.50
2.08
1.79
1.56
1.39
1.25
1.14
3
6.25
4.17
3.13
2.50
2.08
1.79
1.56
1.39
1.25
1.14
4
6.25
4.17
3.13
2.50
2.08
1.79
1.56
1.39
1.25
1.14
5
10
10
10
10
10
10
10
10
10
10
6
10
10
10
10
10
10
10
10
10
10
7
10
10
10
10
10
10
10
10
10
10
8
10
10
10
10
10
10
10
10
10
10
9
10
10
10
10
10
10
10
10
10
10
10
25.00
33.33
37.50
40.00
41.67
42.86
43.75
44.44
45.00
45.45
1
2
3
4
5
6
7
8
9
10
0.23
0.35
0.41
0.45
0.48
0.49
0.51
0.52
0.53
0.53
Palma
Gini