Why fight (relative) poverty?

I was a bit disappointed by Julia Unwin's new short book "Why Fight Poverty?". The subtitle on the US amazon edition is perhaps a better title: "And Why it is So Hard". The most interesting part of the book is about the emotional responses to poverty that make it it hard to get the public to care - shame, fear, disgust, difference, mistrust. She doesn't address why it is so hard to get the public to care about global poverty.

I knew the book would be about UK poverty (Julia Unwin is Chief Exec of the Joseph Rowntree Foundation, which has been working on UK poverty since 1904), but maybe I hoped for a more substantial treatment of the difference between UK and international poverty. Actually to be honest I was probably just annoyed that she dismisses those (like me) who claim that we should think differently about rich world poverty and extreme poverty in poorer countries. This is the sum total of discussion about international poverty in the book:

"[many] argue that while there is real poverty in other countries, any poverty in the UK is less severe, and describing it as such is misleading and untruthful. They are right to some extent ... [but] All poverty is relative and needs to be seen in context. Needs are relative in every society and differ depending on the price of food and other goods, and social norms ... Because UK poverty is relative, it can be easier to ignore or dismiss - but it is real and affects a sizeable portion of our population."

I've written before about why I'm sceptical about the relative importance of relative poverty, but I also worry about too quickly dismissing the experiences of people living in the UK. Jack Monroe has given powerful descriptions of her own experience living with poverty and hunger in the UK.

"Poverty isn’t just having no heating, or not quite enough food, or unplugging your fridge and turning your hot water off ... Poverty is the sinking feeling when your small boy finishes his one weetabix and says ‘more mummy, bread and jam please mummy’ as you’re wondering whether to take the TV or the guitar to the pawn shop first, and how to tell him that there is no bread or jam."

And here:

"sitting across the table from your young son enviously staring down his breakfast ... it’s distressing. Depressing. Destabilising. ... Imagine those 77 days of being chased for rent that you can’t pay, ignoring the phone, ignoring the door, drawing the curtains so the bailiffs can’t see that you’re home, cradling your son to your chest and sobbing that this is where it’s all ended up. It feels endless. Hopeless. Cold. Wet."

You should read both in full. It breaks your heart. And yet... thanks to her blog, Oxfam invited Jack to Tanzania, to meet some of the people they work with. Jack concluded;

"Our experiences of hunger and poverty are different, but we need to see the similarities too."

Well yes. But let's think about those differences and similarities, and make that comparison.

Going hungry is much more common in Tanzania than it is in the UK. Maybe that makes it relatively less bad, psychologically less painful? I imagine it might. You might be less likely to imagine hunger as a personal failure in a society where it is more common. And yet... Perhaps it's time to put some numbers on this. 

Let's say that the single mother who Jack met in Tanzania - Irene - earns £200 per year. This is below the poverty line, and 15% less than the average (median) income of around £230 a year.

Let's say that someone like Jack living in poverty in the UK earns £10,000 a year. Below the poverty line, and less than half of average income of £21,000 (these numbers aren't exact, but they are realistic).

So if we agree that "poverty is relative and needs to be seen in context", that "needs are relative", well for her relative income, Jack (48% of average income) is much worse off than Irene (87% of average income). But is Jack really worse off than Irene? The same? Similar? Comparable? Remembering that in absolute terms she earns 50 times more than Irene?

What if we flipped it around. Imagine a very rich society. Perhaps it is Britain in 100 years, after 3% annual growth. Average income is now £400,000. A single mother - Abby - living in poverty, earns "just" £100,000. That is a quarter of average income. Relatively speaking, Abby is now much worse off than Jack. Do you feel sympathy for Abby, on her relative pittance of £100,000? Or does that sound silly? And yet Jack is more similar to Abby (Jack earns 10% of Abby's income) than Irene is to Jack (Irene earns just 2% of Jack's income).

Or to take another example, think about this headline from the Atlantic: "America’s 1% live in relative poverty compared to the .01%". The top 1% in America earn a measly $2 million a year, just a fraction of the $30 million that the top .01% earns. If the top 1% all decided to set up their own new country, Richland, should we suddenly start feeling sympathy for the lowly $2 million a year earners, who are on just a small fraction of the median income, and well below the relative poverty line?

The other thing to consider when what we're really interested in is some concept of wellbeing rather just cash, is what happens when we try and directly measure wellbeing? Gallup surveys have asked individuals around the world to rate their own life satisfaction on a scale of 1 to 10. If relative poverty in the UK was comparable to poverty in developing countries in terms of their lived experience rather than in terms of their income, we might expect to see some similarity in self-reports of life satisfaction. 

Well, the difference in life satisfaction is perhaps unsurprisingly much smaller than the income gap (life satisfaction is measured on a bounded 1-10 scale, but income is measured on a much wider and unbounded scale). But the surveys show that even the poorest people living in developed countries like the UK report higher levels of life satisfaction than everyone in developing countries, almost no matter what they earn. You can just about make out from the chart below; the poorest in Britain (GBR) are more satisfied with their life than the richest in Indonesia (IDN), Nigeria (NGA), India (IND), Pakistan (PAK), and South Africa (ZAF) (for more details see the Brookings briefing, based on a paper by Stevenson and Wolfers).

So. In conclusion, I suppose I remain sceptical about relative poverty.

If you are buying flowers for tomorrow, buy them from Kenya

The Mirror has an exposé looking at the shocking conditions of workers on Kenyan flower farms - some earning just £30 a month. 

What they fail to point out is that absolutely the best thing you can do for global welfare is to buy your flowers from Africa rather than Europe. Even if flower-pickers are on a low wage, it's a better wage than their alternative, your spending stimulates the Kenyan economy, and it is even good for the environment (flights from sunny places on the Equator pollute less than all the electric lights you need to grow flowers in cloudy Europe).

Yes be shocked at wage rates in Kenya. But then the best thing you can do to fix that is to do more business with Kenya and spend more money on Kenyan products. Happy Valentine's Day. 

Is it wrong to shop from places that use child labour?

I got told off recently for shopping at H&M because of some sweatshop / child labour scandal (a burden I share with Beyonce who has also been criticised for her H&M links). But is a boycott really the right individual action?

Two new(ish) papers look at the impact of government bans on child labour in India:

One economics paper by Bharadwaj, Lakdawala, and Li (via Berk Ozler) looks at the impact of India’s Child Labour (Prohibition and Regulation) Act of 1986. They find that the ban led to a decrease in child wages and an increase in child labour. This is consistent with the theory that families use child labour to reach subsistence levels - so a ban which leads to a reduction in child wages, will make families make their children work more to earn the same amount and reach that subsistence level.  

Second is a note by my colleagues (Ian MacAuslan, Valentina Barca, Yashodhan Ghorpade and Gitanjali Pande) based on qualitative fieldwork in India (150 interviews and focus groups with both children and adults). Their findings support the results of Bharadwaj et al - parents make rational trade-offs, child labour is driven by household poverty, and outright bans might be counter-productive - better to invest in social protection and improving the quality of schooling.

What does all of this imply for me and my new H&M jumper? I'm not really sure. I asked the question a few years ago in Juba, and further quick googling hasn't got me any closer to an answer. I suppose the theory of change is that individual boycotts could force H&M to improve their procurement and make sure no child labour is involved. But this could either lead to those children leaving the factory and going to school, or perhaps more likely and in line with these two papers, a reduction in the going wage rate for children, and an actual increase in child labour.

Any ideas? References? Once again, I'm left wishing that there existed some rigorous impartial GiveWell-style analysis for consumption decisions so I could outsource some more everyday moral dilemmas and not have to do the thinking myself.

Breaking: The country is going to the dogs

One of many bizarre things about public opinion on immigration in the UK is the divergence in opinion between impacts "on your local area" and impacts on the country at large. People are much more worried about the country than about their local area. 

Sunder Katwala, Director of British Future who commissioned a recent survey showing this fact, said to the Guardian:

"People are obviously very anxious about immigration. But I was struck by how much higher it was as a national rather than a local tension. That to me suggests that managing local tensions is obviously very important, but it is probably not the answer entirely because people have this national-level concern. 

"I think it would be wrong to say that local concerns are real and national concerns are just driven by the media, but I think what is going on there is people asking: does the system work? And I don't think anyone has any confidence as how it is managed as a system. Also there is a concern around national cohesion, identity and ability to cope with the scale of change."

Clearly he's being polite here. How on earth do people know how immigration is affecting the rest of the country except through the media? Are survey respondents travelling up and down the country carrying out their own research each weekend?

A nation is an "imagined community." In your own local area you know people. By contrast: "[A nation] is imagined because the members of even the smallest nation will never know most of their fellow-members, meet them, or even hear of them, yet in the minds of each lives the image of their communion".

So almost by definition it is true that national concerns about immigration are driven by media. 

This phenomenon is not just limited to immigration. A recent Populus survey finds that people systematically think that things are going worse "for the country as a whole" than for "you and your family". Is it even possible for things to be going well for all of us as individuals but badly "for the country as a whole"? What is the country as a whole but the aggregation of all of us individually? 

Maybe just maybe it is in fact our relentless diet of media pessimism that is giving us a distorted view of reality?

Evidence on global education: A lit review in one chart

From Stefan Dercon's presentation at the recent "Town Hall" event on funding opportunities for international education research. He explains further in this blog post. Other presentations from representatives from the World Bank, USAID, and ESRC, are available here. 

The results agenda is yet to take hold in the UK

DFID Annual Budget: £10 billion

Current (domestic) UK Government "Major projects expenditure" with no plans to evaluate impact or value for money: £49 billion (NAO 2013: Evaluation in Government)

My favourite thing about the World Bank Nairobi office

It's a pretty close tie between the Nyama Choma crisps and the statistics-packed toilet paper.

The panoramic view from the 17th floor across Nairobi isn't bad either, but somehow I didn't manage to prioritise taking any photos of that. 

Safety nets and economic growth

Stefan Dercon wrote a paper a couple of years ago about how cash transfers might boost growth - by focusing on investments in ECD, smoothing geographical mobility, or smoothing the school-to-work transition.

To those possible avenues, Harold Alderman and Ruslan Yemtsov (ungated) now add:

• improving financial markets
• improving insurance markets
• improving infrastructure (through public works programmes), and
• relaxing political barriers to policy change

I find the last one particularly interesting. So for example, Ghana recently tried to offset the removal of fuel subsidies with a doubling of the coverage of the still-small national cash transfer programme to 150,000 households - helping to avoid Nigeria-style protests. Alderman and Yemtsov note that Indonesia pulled a similar trick on subsidy reform, and Mexico's safety nets helped usher NAFTA in.

But this political point goes beyond relaxing barriers to policy change, to relaxing barriers to technological change. Otis Reid pointed out to me this paper by economic historians Avner Greif and Murat Iyigun which argues that:

"England’s premodern social institutions–specifically, the Old Poor Law (1601-1834)–contributed to her transition to the modern economy. It reduced violent, innovation-inhibiting reactions from the economic agents threatened by economic change."

To be crude - it's worth paying off the Luddites so they don't get in the way of growth-enhancing technological change.

Economists prove importance of transparency in social protection?

"We find that the mistargeting of a cash transfer program in Indonesia is significantly associated with increases in crime and declines in social capital within communities. Hence poorly administered transfer programs have a potentially large negative downside that extends beyond the pure financial costs that have been the focus of the literature to date."

A new paper by Lisa Cameron and Manisha Shah  (ungated). A similar point made by my colleagues Ian and Nils a few years ago based on some qualitative fieldwork.

Cameron and Shah conclude that:

"This study underscores the importance of targeting programs in a way that is acceptable to the a ffected communities. Program acceptance can be enhanced by improving targeting accuracy and by transparent communication of this mechanism and the program's aims to the general population."

DFID discovers "Economic Development"

Justine Greening sounded very pleased with herself this morning for discovering this thing called "economic development." Very impressive stuff from an "International Development" Minister. Actually the policy changes all sounds pretty reasonable and balanced. I like the talk of new partnerships between UK accountants, insurers, Stock Exchange folks, major retailers, and their counterparts in developing countries. Perhaps just a few things rankled:

"For the first time we have financed business projects in developing countries through returnable loans…which means our money comes back when businesses are successful."

Isn't that what the CDC has been doing since 1948?

"Smart aid can take the form of building a better tax regime, helping to reduce trade barriers, or giving entrepreneurs and small businesses an economic launchpad. 

It can also be focusing on what the Prime Minister calls the Golden Thread. In other words, helping to build the institutions, the values by which individual rights to liberty and property are safeguarded…elements that represent a green light to companies thinking about investing in a frontier economy."

I buy that aid can help improve tax regimes (look at Rwanda and Burundi) and reduce trade barriers. But build institutions? If the lesson you got from Acemoglu and Robinson is that aid can build institutions, I'm pretty sure you're reading it wrong.

"I’m acutely aware that Britain’s future economic strength depends on us increasing our global exports ... We all recognise the importance of the world’s new emerging powers ... But what about tomorrow’s BRICS and MINT countries? ... we could wait until these markets have grown, until they are less risky and the opportunities are more obvious. ... But how much better to start our relationships with these countries sooner rather than later." 

Which is basically fine in practice, but perhaps we should be careful about our language given that actually we started our relationships with most of these countries some time ago ...

(ahem: see the few countries that Britain has not invaded) 

... and that in many cases our self-interested engagement with developing countries didn't work out so well for them (see for example the mysterious case of the disappearing Indian colonial-era textile industry).

"As the Prime Minister has said, we’re in a global race and if we want to be ahead of the game, we can’t simply follow the crowd."

TOO MANY METAPHORS. And finally:

"Smart"

Does repeating the word 11 times make it so?

Cash transfers taking off in South Sudan

Tombura-Yambio Catholic Diocese launched a Conditional Cash Transfer project last friday - supporting 120 households looking after children whose parents have died of HIV/AIDS, with 200 SSP per month ($63/£38) each.

This is the second NGO-implemented one I'm aware of, after the Save the Children pilot in 2011 (incidentally, whatever happened to that?).

Meanwhile a new civil society initiative Fresh Start South Sudan calls for putting oil money directly in the hands of the poor.

Thanks to Tom for the links.

Addendum: A friend reminds me that DFID have planned cash transfers as part of the Girl's Education project - published details here on the very good DFID project tracker.

What can be done about India’s failing primary schools?

This is a guest post by Abhijeet Singh, Research Officer at the University of Oxford

It’s that time of the year again. As India’s Annual Survey of Education Report (ASER) was released last week (15th Jan), we are reminded of how abysmal learning levels in the country are. Most children are in school, but very few are learning. Less than half the children in Grade 5 can read a Grade 3 text, and only about a quarter can divide a three-digit number by a one-digit number. And the learning levels seem to be going down every year.

Remedies that won’t work

The real question is what can be done to improve learning outcomes. And the first lesson is that most of what is being proposed is not promising:

Inputs alone won’t improve learning: School reform in India seems to consist mostly of getting kids in school and then improving the inputs they get. But this ‘business-as-usual’ approach doesn’t work. The decline in achievement levels in government schools has coincided with major improvements in inputs. Across developing countries, the link between increasing school resources and student achievement is surprisingly weak: building libraries, providing more money to schools, teaching aids like flipcharts or providing a laptop to every child all don’t seem to improve learning by much, if at all. Upgrading school inputs won’t solve this mess.

Private schooling won’t do too much either: ASER documents, as do a number of studies, that students in private schools do better on average than students in government schools. But these students come from better-off households, with more educated parents – so it is hard to tell whether the schools caused this difference in test scores. 

Two recent studies – one study tracking the same children for 7 years that I recently authored, and another based on a randomized evaluation of school vouchers, both find that private school students do better in a number of dimensions, (English, Science and Hindi) even after background factors are accounted for. But even here the ‘private school effect’ is only a small part of the gap between students’ actual achievement and any objective standards of quality we expect a functioning school system to deliver. And in some key areas, such as Maths, we don’t see any private school effect at all. 

The key constraint is service delivery (but reform is hard!): A quarter of government school teachers seem to not come to school on a given day. And when in school nearly half of the teachers are not teaching. Researchers have looked for solutions: for example, giving teachers performance bonuses, monitoring attendance with cameras, and even giving them detailed information about their students’ learning needs. But even when these interventions seem to have an impact, it is hard to see how these can be scaled up. 

So what might work?

Better pre-school preparation: One new pattern highlighted in ASER this year is that children in government schools seem to start earlier than children in private schools and are less ‘school ready’. A recent paper of mine, published this month in the Oxford Review of Education, finds the same pattern but goes further: gaps between children in the private and government sectors arise before school entry and aren’t just a reflection of household incomes and parental education: at least part of the failure probably comes from the failure of government pre-schools. Investing in early childhood education could be the best investment to make, including in developing countries, but most of India’s anganwadis (pre-school centres) aren’t geared towards education at all.

Supplementary teaching: Karthik Muralidharan, one of the most prominent researchers into primary schooling in India, had a different proposal for India’s Five-Year plan. He suggested supplementing class teachers with more teaching assistants who can provide individual learning support (which has been shown to improve test scores in India). And then to facilitate a system that allows the best of these teaching assistants to become regular teachers and receive preference in hiring. This will not be a cure-all, but it could improve matters significantly. And it could be sustainable not just economically but also politically.

Rethink what is taught and how: A more far-reaching reform, proposed both by the ASER team and by Lant Pritchett, is to rethink what we expect students to learn in primary school. The system focuses on a grade-specific curriculum that requires teachers to complete a list of topics per year, regardless of what students need. The curriculum is targeted at the top 10% of children, the other 90% gain nothing because they are already too far behind. And in a setting where children from many grades sit in the same class, a grade-specific syllabus might not be something to aspire to anyway. Much better to focus on the skills we expect children to acquire, rather than the textbook chapters a teacher can tick off whether or not the children have really understood.

Reforming a situation so dire will not be easy. But the first step, in all of this, is to acknowledge the problem. Perhaps the saddest thing of all about the latest ASER report is the government’s refusal to accept that a problem exists and that it is getting worse. This is not the first time such denials have occurred. India cannot progress without assessing whether children are learning at school and without evaluating what works in the school system and what doesn’t. As reactions to the ASER report demonstrate, India’s researchers and civil society have made that leap. It is time the government does so too.

A new theory of why Brits don't like immigrants #awkward

"As it seems to be the day for chucking one's opinion into the fray, here is mine, as an immigrant of 23 years to these lovely shores. Many British people seem to find foreigners challenging. This a country which runs on rules, etiquette and routine. Foreigners are, de facto, more likely to be ignorant of those rules. Having to explain them is awkward. Awkwardness must be avoided at all costs. Don't get me wrong – you certainly like us individually and as individuals. But as one group to another, you tolerate us grudgingly; you tut a lot and roll your eyes, when we don't know that one stands on the right of the escalator."

Alex Andreou 

All economists care about is money

"The love of money as a possession -as distinguished from the love of money as a means to the enjoyments and realities of life -will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease. ... the love of money is detestable"

JM Keynes, writing in 1930 about what the world might be like in 2030.