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Abstract:
The World Bank's approach to estimating the extent, distribution and trend of global income poverty is neither meaningful nor reliable. The Bank uses an arbitrary international poverty line that is not adequately anchored in any specification of the real requirements of human beings. Moreover, it employs a concept of purchasing power equivalence that is neither well defined nor appropriate for poverty assessment. These difficulties are inherent in the Bank's "money-metric" approach and cannot be credibly overcome without dispensing with this approach altogether. In addition, the Bank extrapolates incorrectly from limited data and thereby creates an appearance of precision that masks the high probable error of its estimates. It is difficult to judge the nature and extent of the errors in global poverty estimates that these three flaws produce. However, there is reason to believe that the Bank's approach may have led it to understate the extent of global income poverty and to infer without adequate justification that global income poverty has steeply declined in the recent period. A new methodology of global poverty assessment, focused directly on what is needed to achieve elementary human requirements, is feasible and necessary. A practical approach to implementing an alternative is described.

Poverty, Global Poverty, World Bank, Elementary Human Requirements, $1 per day, $2 per day

Abstract:
The estimates of the extent, distribution and trend of global income poverty provided in the World Bank's World Development Reports for 1990 and 2000/01 are neither meaningful nor reliable. The Bank uses an arbitrary international poverty line unrelated to any clear conception of what poverty is. It employs a misleading and inaccurate measure of purchasing power equivalence that vitiates international and inter-temporal comparisons of income poverty. It extrapolates incorrectly from limited data and thereby creates an appearance of precision that masks the high probable error of its estimates. The systematic distortion introduced by these three flaws likely leads to a large understatement of the extent of global income poverty and to an incorrect inference that it has declined. A new methodology of global poverty assessment is feasible and necessary.

World Poverty, $1 per day, $2 per day, World Bank, PPPs, elementary human requirements

Abstract:
We analyze the growth impact of official development assistance to developing countries.Our approach is different from that of previous studies in two major ways. First, we disentangle the effects of two kinds of aid: developmental and non-developmental. Second,our specifications allow for the effect of aid on economic growth to occur over long periods.Our results indicate that developmental aid promotes long-run growth. The effect is significant, large and robust to different specifications and estimation techniques.

Cross country analysis, Developing countries, Development assistance, Economic growth, Economic models, Resource mobilization

Abstract:
We analyze the growth impact of official development assistance to developing countries. Our approach is different from that of previous studies in two major ways. First, we disentangle the effects of two kinds of aid: developmental and non-developmental. Second, our specifications allow for the effect of aid on economic growth to occur over long time-lags. Our results indicate that developmental aid promotes long-run growth. The effect is significant, large and robust to different specifications and estimation techniques.

foreign aid, bilateral aid, aid effectiveness, aid allocation, economic growth

Abstract:
We evaluate the claim that world consumption poverty has fallen since 1990 in light of alternative assumptions about the extent of initial poverty and the rate of subsequent poverty reduction in China, India, and the rest of the developing world. We use two poverty indicators: the aggregate headcount and the headcount ratio, and consider two widely-used international poverty lines ($1/day and $2/day). We conclude that, because of uncertainties in relation to the extent and trend of poverty in China, India, and the rest of the developing world, global poverty may or may not have increased. The extent of the estimated increase or decrease in world poverty is critically dependent on the assumptions made. Our conclusions highlight the importance of improving the quality of global poverty statistics.

Abstract:
We evaluate the claim that world consumption poverty has fallen since 1990 in light of alternative assumptions about the extent of initial poverty and the rate of subsequent poverty reduction in China, India, and the rest of the developing world. We use two poverty indicators: the aggregate headcount and the headcount ratio, and consider two widely-used international poverty lines ($1/day and $2/day). We conclude that, because of uncertainties in relation to the extent and trend of poverty in China, India, and the rest of the developing world, global poverty may or may not have increased. The extent of the estimated increase or decrease in world poverty is critically dependent on the assumptions made. Our conclusions highlight the importance of improving the quality of global poverty statistics.

world poverty, sensitivity analysis, China, India, Millennium Development Goals

Abstract:
Effective strategic choices for achieving the MDGs must be based on sound assessments of the costs and benefits of alternative policies. However, existing approaches to identifying these costs and benefits are unreliable. In particular, estimates of the costs and benefits of alternative strategies derive from implausible and restrictive assumptions, often depend on poor quality data, and are of limited value in guiding long-term decisions due to substantial uncertainties concerning the future. These weaknesses of existing analytical models can be mitigated but not overcome. An alternative to the technocratic approach to strategic planning is needed, in view of the potential damage from the use of erroneous analytical models.

Poverty, Development, Millennium Development Goals

Abstract:
We argue that inter-country comparisons of income poverty based on poverty lines uniformly reflecting the costs of the basic requirements of human beings are superior to the existing money-metric approaches. In this exercise, we implement a uniform approach to poverty assessment based on basic human capabilities for three countries: Nicaragua, Tanzania, and Vietnam. We compute standard errors of the resulting poverty estimates and compare the incidence of poverty across these three countries. The choice of approach affects both cardinal estimates and ordinal rankings of poverty across countries and over time. Meaningful and coherent inter-country poverty comparisons can be advanced through international co-ordination in survey design and in the construction of income poverty lines that uniformly reflect the costs of the basic requirements of human beings.

Poverty, Poverty Measurement, Capabilities, Functionings, International Comparisons, Intersection Partial Orderings, Hasse Diagrams, Tanzania, Nicaragua, Vietnam

Abstract:
Poverty and inequality are often estimated from grouped data as complete household surveys are neither always available to researchers nor easy to analyze. In this study we assess the performance of functional forms proposed by Kakwani (1980a) and Villasenor and Arnold (1989) to estimate the Lorenz curve from grouped data. The methods are implemented using the computational tools POVCAL and SimSIP, developed and distributed by the World Bank. To identify biases associated with these methods, we use unit data from several household surveys and theoretical distributions. We find that poverty and inequality are better estimated when the true distribution is unimodal than multimodal. For unimodal distributions, biases associated with poverty measures are rarely larger than one percentage point. For data from multi-peaked or heavily skewed distributions, the biases are likely to be higher and of unknown sign.

grouped data, Lorenz curve, poverty, inequality, income distribution, POVCAL, SimSIP

Abstract:
This paper investigates how estimates of the extent and trend of consumption poverty in China between 1990 and 2004 vary as a result of alternative plausible assumptions concerning the poverty line and estimated levels of consumption. Our methodology focuses on the following sources of variation: purchasing power exchange rates (used to convert an international poverty line), alternative levels and distributions of private incomes, alternative estimates of the propensity to consume of different income groups, and alternative spatial and temporal price indices. We report national, urban and rural poverty estimates corresponding to distinct assumptions. It is widely believed that substantial poverty reduction took place in China in the 1990s, and we find this conclusion to be largely robust to the choice of assumptions, although estimates of the extent of Chinese poverty, and therefore of world poverty, in any year are greatly influenced by this choice.

consumption poverty, China, sensitivity analysis, urban poverty, rural poverty, world poverty

Abstract:
We review The Great Indian Poverty Debate edited by Angus Deaton and Valerie Kozel. The volume has great value as a survey of the complex issues involved in estimating poverty in India, which have recently been the subject of substantial controversy. However, the volume has notable omissions. The official poverty lines presently applied in India are of doubtful value, especially in the assessment of poverty trends. We propose an alternative approach to defining and updating poverty lines for India, by anchoring them in the real requirements of achieving elementary human capabilities.

India, poverty, National Sample Survey, poverty line, capabilities, India, recall period, national accounts

Abstract:
We analyze the performance of kernel density methods applied to grouped data to estimate poverty (as applied in Sala-i-Martin, 2006, QJE). Using Monte Carlo simulations and household surveys, we find that the technique gives rise to biases in poverty estimates, the sign and magnitude of which vary with the bandwidth, the kernel, the number of datapoints, and across poverty lines. Depending on the chosen bandwidth, the $1/day poverty rate in 2000 varies by a factor of 1.8, while the $2/day headcount in 2000 varies by 287 million people. Our findings challenge the validity and robustness of poverty estimates derived through kernel density estimation on grouped data.

Poverty, Economic models, Income distribution, Data analysis

Abstract:
Kernel density estimation (KDE) has been prominently used to measure poverty from grouped data (Sala-i-Martin, 2006, QJE). In this paper we analyze the performance of this method. Using Monte Carlo simulations for plausible income distributions and unit data from several household surveys, we compare KDE-based poverty estimates with their true and survey counterparts. We find that the technique gives rise to biases in poverty estimates the sign and magnitude of which vary with the bandwidth, the kernel, the number of data-points analyzed, and the poverty indicators used. We also demonstrate that KDE-based estimates of global poverty are highly sensitive to the choice of bandwidth. Depending on the choice of this parameter alone, the estimated proportion of '$1/day poor' in 2000 varies by a factor of 1.8, while the estimated number of '$2/day poor' in 2000 varies by 287 million people. These findings give rise to serious concern about the validity and robustness of kernel density estimation in poverty analysis.

kernel density estimation, income distribution, grouped data, poverty

Abstract:
Kernel density estimation (KDE) has been prominently used to measure poverty from grouped data (Sala-i-Martin, 2006, QJE). In this paper we analyze the performance of this method. Using Monte Carlo simulations for plausible income distributions and unit data from several household surveys, we compare KDE-based poverty estimates with their true and survey counterparts. We find that the technique gives rise to biases in poverty estimates the sign and magnitude of which vary with the bandwidth, the kernel, the number of data-points analyzed, and the poverty indicators used. We also demonstrate that KDE-based estimates of global poverty are highly sensitive to the choice of bandwidth. Depending on the choice of this parameter alone, the estimated proportion of '$1/day poor' in 2000 varies by a factor of 1.8, while the estimated number of '$2/day poor' in 2000 varies by 287 million people. These findings give rise to concern about the validity and robustness of kernel density estimation in poverty analysis.

kernel density estimation, income distribution, grouped data, poverty

Abstract:
When a society's overall deprivation or living standard is assessed in a multi-attribute framework, the following procedure is often used. First, for each attribute, a summary index is constructed to reflect a society's performance in relation to this attribute. Then, an indicator of the overall performance of the society in terms of all the attributes together is constructed. This paper discusses a difficulty associated with this procedure. We show that the difficulty lies in its inability to reconcile two highly attractive ethical principles - the first reflecting a requirement of treating individuals symmetrically and the second reflecting a requirement for equity-sensitivity. This problem implies that this widely-used procedure must lead to possibly untenable conclusions, and that it is necessary to adopt alternative procedures. The alternative procedure must permit describing a society's overall deprivation or living standard as an aggregate of the comprehensive deprivations or living standards experienced by the individuals in the society.

deprivation, well being, living standards, equity, multiple attributes, anonymity, invariance, human development index, human poverty index

Abstract:
The deep flaw of existing approaches to development is their dirigisme: the assumption, common to nearly all development theory, that there is an expert agent that already sees the future. A common thread connects the emergent alternatives to development orthodoxy: the enhancement of the conditions of individual and collective learning. This approach to development highlights the existence of unresolved problems and the necessity of problem solving in every sphere. The enhancement of the conditions of learning can be the key to improving performance, resolving deadlocks, and overcoming blockages, at every level at which common dilemmas and collective problem solving occur - from the global commons to the local enterprise.

Development, dirigisme, learning, problem solving, democracy

Abstract:
In this paper we seek to examine the relationship between globalisation in its current form and social outcomes (in particular, poverty and inequality) in developing countries with special reference to channels of causation that involve the effects of globalisation on labour markets. In particular, we focus on the effect of the current form of globalisation on employment, wages, and working conditions, and thereby on poverty and inequality. A priori dogmas concerning the impact of the current form of globalisation on social outcomes are not borne out by microeconomic theory or evidence, which suggests that the empirical impact has been mixed, and dependent on various pertinent factors. The state of knowledge suggests caution in the pursuit of any one macroeconomic prescription, and draws attention to the importance of complementary microeconomic measures directly aimed at the outcomes of concern.

Globalization, labor, poverty, inequality

Abstract:
A number of strategies to achieve the Millennium Development Goals (MDGs) and associated cost estimates have recently been presented, most influentially by the Millennium Project and the World Bank. The models underlying the recommended strategies are flawed, as a result of their reliance on implausible and restrictive assumptions and poor quality data and their failure adequately to reflect uncertainties about the future. These weaknesses of technocratic predictive models can be mitigated but not overcome. An alternative approach to strategic planning should establish an institutional framework for continuous informed policy choice by representative decision-makers. The alternative approach to achieving the MDGs can be implemented through a process of periodic peer and partner review. The process of peer and partner review would enable each country to learn from its own experience and that of other countries and thereby increases the likelihood of success of achieving the MDGs.

Poverty, Development, Millennium Development Goals

Abstract:
We introduce concepts and measures relating to inequality between identity groups. We define and discuss the concepts of Representational Inequality, Sequence Inequality and Group Inequality Comparison. Representational Inequality captures the extent to which an attribute is shared between members of distinct groups. Sequence Inequality captures the extent to which groups are ordered hierarchically. Group Inequality Comparison captures the extent of differences between groups-. The concepts have application in interpreting segregation, clustering and polarization in societies. There exists a mapping from familiar inequality measures to the measures we identify, making them empirically applicable.

identity, inequality, segregation, polarization, clustering, groups, discrimination, conflict

Abstract:
This paper examines the phenomenon of real-income stagnation (in which real-income growth is uninterruptedly negligible or negative for a sizable sequence of years). We analyze data for four decades from a large cross-section of countries. Real income stagnation is a conceptually distinct phenomenon from low average growth and other features of the growth sequence that have been previously considered. We find that real income stagnation has affected a significant number of countries (103 out of 168), and resulted in substantial income loss. Countries that suffered spells of real income stagnation were more likely to be poor, in Latin America or sub-Saharan Africa, conflict ridden and dependent on primary commodity exports. Stagnation is also very likely to persist over time. Countries that were afflicted with stagnation in the 1960s had a likelihood of seventy-five percent of also being afflicted with stagnation in the 1990s.

real income stagnation, patterns of economic growth

Abstract:
We examine whether China's remarkable reduction in income poverty has been accompanied by comparable progress in health. Our findings are fourfold: (a) province-level rates of improvement in life expectancy were higher in the 1990s than in the 1970s and the 1980s, and were lowest in the 1980s. (b) Even in the 1990s, when the province-level rates of improvement in life expectancy were highest, they were lower than for many countries with similar initial life expectancy level (although higher than the average for all such countries). (c) China's life expectancy improvement between 1980 and 2000 was achieved much more quickly by almost all other countries considered, and in particular by most lower middle income countries that had similar life expectancy improvements. Similar conclusions are drawn from an analysis of China's life expectancy improvements relative to two other sets of comparator countries: selected presently rich countries and high-growth East Asian countries. (d) Even those Chinese provinces which performed best over the period experienced rates of improvement that were significantly lower than for comparator countries.

China's experience of reducing health deprivations has been notably less impressive than its record of income poverty reduction. Our conclusions suggest the need for China to invest in the development and maintenance of its public health infrastructure.

China, health, life expectancy

Abstract:
This paper defines and discusses the choices that are implicit in alternative approaches to constructing index numbers. The central theoretical result is the exogeneity theorem, which states that an index number system possesses certain generally desirable properties, associated with meaningfulness, relevance and consistency if and only if it admits of a welfare interpretation that is invariant to the data to which it is applied. An index number system that does not permit a fixed welfare interpretation of this kind will fail to possess these properties. Moreover, it will not be possible to undertake meaningful multilateral comparisons between all possible units of comparison to which the index number system may be applied without adopting a meta-evaluative criterion that expresses welfare judgments concerning the relation between distinct evaluative standards. Therefore, explicit or implicit normative judgments are inescapable in the construction and use of index numbers intended to permit meaningful comparisons over an unrestricted domain.

We identify a set of bounds on the index numbers that an index number system produces (the generalized within bounds requirement) which define necessary and sufficient conditions for them to be rationalizable (i.e. to possess a welfare interpretation). However, multilateral index number systems that are widely in use violate this and other requirements of the exogeneity theorem. As a result, the index numbers they produce do not admit of a welfare interpretation which is invariant to the data to which they are applied, and indeed may not admit of any welfare interpretation at all. The exogeneity theorem establishes that the rationale for exact index number systems is much less compelling than widely believed.

A fixed welfare interpretation is also a necessary and sufficient condition for the path-independence of the Divisia index. The theorem therefore establishes a three-way equivalence between desirable properties of continuous index number systems, desirable properties of discrete index number systems and the existence of a fixed welfare interpretation.

Index Numbers, Rationalizability, Welfare Interpretation

Abstract:
Poor persons in poor countries are greatly exposed to the risk of adverse shocks, many of international origin, which can create long-lasting damage to individual well-being. There is a strong moral and prudential case for taking measures which reduce the extent to which such shocks arise and diminish their adverse effects. We develop a formal framework for representing the choice of an optimal set of policies to diminish both the occurrence of such shocks and their adverse effects. We survey existing mechanisms to insure poor countries against aggregate shocks from exogenous sources. We argue that these existing mechanisms do not sufficiently protect the poor, because of their focus on insuring countries only against particular types of risk and their focus only on aggregate income. We recommend the establishment of an international level mechanism (such as a global reinsurance scheme) to insure countries against the risk of increased demands for social protection from the poor and to subsidize the provision of such protection to the extent feasible and appropriate. A mechanism of this type would foster the widespread introduction in countries of standing national social safety nets (such as employment guarantee schemes) capable of rapidly securing the living standards of the poor against the impact of adverse shocks, whether of national or international origin.

adverse shocks, risk, poverty, poor, social safety nets, employment guarantee

Abstract:
Present arrangements governing the accumulation and discharge of debt by states are difficult to justify fully on the basis of underlying normative considerations. States are different from individuals in important respects and the deontological justifications that explain why individuals have a strong burden to abide by promises to repay do not straightforwardly apply to countries. Consequentialist considerations must play a central role in determining what norms should govern the accumulation and discharge of sovereign debt. Modified background norms for the accumulation and discharge of international debt which permit countries' repayments to be made formally contingent on specific circumstances and the reasons that these circumstances have arisen are more likely to be morally justifiable than the existing rules, which in general require countries to repay their debts according to an inflexible schedule. Modified rules for the accumulation and discharge of international sovereign debt can codify the moral and legal basis for existing ad hoc deviations and present a justifiable framework within which international lending and borrowing can take place.

International Debt, Moral Assessment, Consequentalism, Deontology, Arrow-Debreu securities, state contingent repayment

Abstract:
It has been widely argued that international agreements over labor standards are undesirable because they are bound to "hurt those that they are meant to help." We develop a model in which an appropriately designed international labor standards agreement improves welfare for all persons in all countries.

International Trade, Labor Standards, Linkage

Abstract:
International monetary arrangements - the practices and rules governing the creation, distribution, and management of money and credit in the world economy - have received little attention from philosophers concerned with international distributive justice. A convincing account of the requirements of greater international distributive justice demands a description of such arrangements. Current international monetary arrangements at times have consequences that are difficult to justify morally. Empirical reasoning, normative reasoning and institutional imagination must be employed together in order to identify alternatives that are desirable and realizable.

Monetary arrangements, international justice, global justice, egalitarianism, prioritarianism, institutional imagination

Abstract:
We present a formal model of the effect of heightened product market competition induced by trade liberalization on the distribution of income between profits and wages. Integration increases the employment cost of wage demands, thereby decreasing bargained wages and the share of rents accruing to workers. This effect is amplified because of the existence of strategic complementarities which bring about a race to the bottom. Trade-liberalization induced wage discipline mitigates the impact of increased competition on firm rents, and may even raise profits.

Trade, Bargaining, Rent-Sharing, Income Distribution,Threat Effects

Abstract:
Inequality between identity groups has long been thought of as an important contributor to social unrest and violence as well as being important in assessing the justice of societies. Yet, the measurement of the ways in which such groups differ and are unequal remains underdeveloped. Accordingly, this paper introduces three distinct but interlinked concepts relating to inequality between groups which can be used in empirical estimation of group based inequality. We define and discuss the concepts of Representational Inequality, Sequence Inequality and Group Inequality Comparison. Representational Inequality captures the extent to which a given level of attribute is shared between members of distinct groups, Sequence Inequality captures the extent to which groups are ordered hierarchically in their possession of the attribute and Group Inequality Comparison captures the extent to which differences between groups account for the overall inequality of individuals. These concepts can be used to measure the degree of segregation, clustering and polarization between groups. In order to illustrate the merit of these concepts and their joint application to understanding group based inequality we provide an example using DHS data for five societies. It may be seen that the choice of measures is greatly consequential in applied work.

identity, inequality, segregation, polarization, clustering, groups, discrimination, conflict

Abstract:
We review the relationship between trade and poverty in less developed countries, surveying both relevant economic theory and empirical evidence. We conclude that, while there certainly are circumstances under which greater trade openness can lead to poverty reduction, these circumstances do not always obtain. Trade liberalization will only be an effective instrument of poverty reduction under specific structural conditions. There may be more direct and effective means of attaining anti-poverty objectives.

Trade, poverty, developing countries

Abstract:
India is experiencing a long democratic revolution. A social and political transformation extending over half a century has made widening circles of its citizens in to politically conscious and active agents who exercise pressures upon the state. This democratic revolution has given rise to a sharp expansion of demands without a correspondingly rapid increase in the capacities of the state. The consequence may be especially observed in the weakening fiscal position of central and state governments in India. The democratic revolution has significant consequences for the future of India's public institutions.

India, Political Economy, Public Institutions, Democratic Revolution, Public Finance

Abstract:
This article argues that, although effective strategic choices for achieving global development goals need to be based on assessments of the costs and benefits of alternative approaches, existing methods of arriving at such assessments are highly unreliable, in particular deriving from implausible and restrictive assumptions and often depending on data of poor quality, and on the pretense that the future can be adequately known. Such weaknesses can be mitigated, but not easily overcome, without abandoning deeply held technocratic presumptions.

Abstract:
This paper investigates how estimates of the extent and trend of consumption poverty in China between 1990 and 2004 vary as a result of alternative plausible assumptions concerning the poverty line and estimated levels of consumption. Our methodology focuses on the following sources of variation: purchasing power exchange rates (used to convert an international poverty line), alternative levels and distributions of private incomes, alternative estimates of the propensity to consume of different income groups, and alternative spatial and temporal price indices. We report national, urban and rural poverty estimates corresponding to distinct assumptions. It is widely believed that substantial poverty reduction took place in China in the 1990s, and we find this conclusion to be largely robust to the choice of assumptions, although estimates of the extent of Chinese poverty, and therefore of world poverty, in any year are greatly influenced by this choice.

Abstract:
Should some rights to engage in international trade be made conditional on the promotion of labor standards? The critics of such conditionality, known as linkage, are right to be concerned about its possible adverse effects. However, linkage can be desirable. A set of rules for international trade that incorporates linkage can serve the interests of developing countries, and in particular of less advantaged individuals within them - if it is un-imposed, transparent and rule-based, applied in a manner reflecting a country's level of development, demands adequate international burden-sharing, and incorporates measures that ensure that appropriate account is taken of different viewpoints within each country. Such a linkage system could substantially reduce the costs that are incurred by exporting countries when they attempt to promote the interests of workers. By enabling and encouraging countries to promote labor standards, an appropriate form of linkage can serve as a cornerstone of a worker-oriented world trading system.

linkage, labor standards, international trade, WTO

Abstract:
Should some rights to engage in international trade be made conditional on the promotion of labor standards? The critics of such conditionality, known as linkage, are right to be concerned about its possible adverse effects. However, linkage can be desirable. A set of rules for international trade that incorporates linkage can serve the interests of developing countries, and in particular of less advantaged individuals within them - if it is unimposed, transparent and rule-based, applied in a manner reflecting a country's level of development, demands adequate international burden-sharing, and incorporates measures that ensure that appropriate account is taken of different viewpoints within each country. Such a linkage system could substantially reduce the costs that are incurred by exporting countries when they attempt to promote the interests of workers. By enabling and encouraging countries to promote labor standards, an appropriate form of linkage can serve as a cornerstone of a worker-oriented world trading system.

linkage, labor standards, international trade, WTO

Abstract:
Recent influential studies among development economists claim that aid to developing countries is not nearly as beneficial to recipient nations as had been expected. Are these statistical analyses right? One problem is that total aid, on which most studies are based, includes two distinct kinds of aid. The first is what we might call "developmental" aid, and the second, geopolitical aid. When the authors focus only on the first kind of aid, they find strong correlations between the level of such aid and average economic growth experienced over the long term. Moreover, they do not find that aid is only effective under specific policy conditions.

official development assistance, developmental aid, economic growth