Archive for August, 2009

missing girls and economic growth

Friday, August 21st, 2009

In the late 1970s, a Ph.D. student named Monica Das Gupta was conducting anthropological fieldwork in Haryana, a [relatively prosperous] state in the north of India. She observed something striking about families there: parents had a fervent preference for male offspring. …. In fact, the bias against girls was far more pronounced there than in the poorer region in the east of India where Das Gupta was from. ….

[In India and China] girls are actually more likely to be missing in richer areas than in poorer ones, and in cities than in rural areas. Having more money, a better education and (in India) belonging to a higher caste all raise the probability that a family will discriminate against its daughters. The bias against girls applies in some of the wealthiest and best-educated nations in the world, including, in recent years, South Korea, Taiwan and Singapore. It also holds among Indian immigrants in Britain and among Chinese, Indian and South Korean immigrants in the United States. ….

Why should this be? [Das Gupta] … found that it was not true that all daughters were mistreated equally. A firstborn daughter was not typically subjected to inferior treatment; she was treated like her brothers. But a subsequent daughter born to an educated mother was 2.36 times as likely to die before her fifth birthday as her siblings were to die before theirs — mainly because she was less likely to see a doctor. It turned out that a kind of economic logic was at work: with a firstborn girl, families still had plenty of chances to have a boy; but with each additional girl, the pressure to have a son increased. ….

What Das Gupta discovered is that wealthier and more educated women … have smaller families, thus increasing the felt urgency of each birth. In a family that expects to have seven children, the birth of a girl is a disappointment; in a family that anticipates only two or three children, it is a tragedy. ….

Tina Rosenberg, “Idea Lab: The Daughter Deficit”, New York Times Sunday Magazine, 23 August 2009.

This article profiles the work of anthropologist Monica Das Gupta, who currently works for the World Bank.

Journalist Tina Rosenberg concludes “development can worsen, not improve, traditional discrimination” because higher incomes offers parents “new opportunities to discriminate against living girls. After all, if people are very poor, boys and girls are necessarily deprived equally ….” She softens this assertion a bit, noting also that “development can eventually lead to more equal treatment for girls: South Korea’s birth ratios are now approaching normality.”

Das Gupta’s own studies of Asia, with co-authors Woojin Chung and Li Shuzhuo, reveal that child sex ratios peaked in the mid-1990s in South Korea, are peaking in China and India, and “in many sub-national regions are beginning to trend towards less masculinization”. Economic growth is clearly associated with – though it does not necessarily cause – a reduction in discrimination against girls. Rosenberg is overly pessimistic when she asserts “development can worsen, not improve, traditional discrimination”.

This still leaves an anomoly. How can we reconcile negative correlation across households and space between income and discrimination, and the positive correlation over time between these very same variables?

paper recycling can be bad for the planet

Thursday, August 20th, 2009

The standard reflex on the left when confronted with an economic question is to change the topic. Consider, for example, the economic argument against paper recycling. People say that recycling is a way of “saving trees,” yet, in practice, it has exactly the opposite effect. Why are there so many cows in the world? Because people eat cows. Not only that, but the number of cows in the world is a precise function of the number that are eaten. If people decided to eat less beef, there would be fewer cows. Yet the same is true of trees. “Old growth” timber is not used for pulp and paper—the trees that go into making our paper are a cash crop, just like wheat and corn. So one way to increase the number of trees being planted is for us to consume more paper. Furthermore, if we dumped used paper down an old mineshaft, rather than recycling it, we would in effect be engaged in carbon sequestration: taking carbon out of the atmosphere and burying it in the ground. This is exactly what we need to be doing in order to combat global warming. So recycling paper would appear to be bad for the planet, on numerous levels. Aluminum recycling makes sense (as suggested by the fact that it is profitable). But why paper recycling?

It’s possible that there is a coherent response to this argument, but I’ve never seen one. Most environmentalists focus on how recycling reduces deforestation in the short term but ignore the long-term consequences of diminishing the incentive to reforest. More often people just change the topic, decrying how tree farming promotes monoculture, criticizing logging practices, or complaining about the wastefulness of consumer society. What is conspicuously lacking is a simple, cogent line of reasoning that defends the practice against the “economic” objection. Again, this isn’t to say there is no argument, just that I’ve never heard it. What I have heard is a whole host of increasingly ingenious ways of changing the subject.

Joseph Heath, Filthy Lucre: Economics for People Who Hate Capitalism (HarperCollins, Toronto, 2009), p. 6.

Readers, do you have a coherent response to this argument? I don’t, so if one occurs to you, please post a comment.

Philosopher Joseph Heath (1967-) is an Associate Professor at the University of Toronto. He freely admits “I’m not an economist”, having “essentially no formal training in the subject. I did take the usual Economics 101 course as an undergraduate, but I only went to class a couple of times. The professor got on my nerves. …. Since then, I’ve just been reading on my own. I also have no mathematics beyond high school. I did learn calculus, but I can’t remember how to do it. I mention this not to undermine anyone’s confidence in the arguments that follow, but merely to show that the barriers to economic literacy re not as great as they sometimes made out to be.”

I don’t know whether it is because—or in spite of—Heath’s lack of formal training, but this is one of the best economics books I have read in years. I recommend it to everyone, but especially to those the left who might benefit from learning more about the capitalist system they profess to despise. Heath’s book is a joy to read and covers many topics. I have quibbles with parts of the text, but these are minor compared to those I have with the average economics book written by an untrained journalist. Heath has clearly made an effort to understand what economists are trying to say. I especially liked his devastating criticism of libertarian ideology, on pages 24-43.

A US edition is forthcoming next year (2010), but you don’t have to wait for it, as the hardcover Canadian edition is available now at Amazon.com.

a basic income for all Africans

Wednesday, August 19th, 2009

In the small Namibian village of Otjivero, a coalition of aid organizations is attempting to prove … that Africa can be helped — provided it gets the right kind of help, which requires a new and different approach to aid.

The idea is simple: The payment of a basic monthly income, funded with tax revenues, of 100 Namibia dollars, or about €9 ($13), for each citizen [under 60 years of age]. There are no conditions, and nothing is expected in return. The money comes from various organizations, including AIDS foundations, the Friedrich Ebert Foundation and Protestant churches in Germany’s Rhineland and Westphalia regions. ….

Before the introduction of the basic income, women prostituted themselves to earn money for food, while the men stole and poached. They spent the rest of their time sitting idle and in a daze in front of their dilapidated huts, waiting — because there was nothing else to do but wait — and they used alcohol to drown their sorrows. A person who is in absolute poverty has no energy left to concentrate on anything but eating, sleeping and trying to forget. ….

A few weeks ago, [German economist and theologian] Dirk Haarmann published his annual report, which he sent to politicians, the United Nations and even a few presidents. According to the report, economic activity in the village has grown by 10 percent, more people are paying tuition and doctors’ fees, health is improving and the crime rate is down.

The report also stated that the basic income could be funded through the tax system by increasing the value-added tax or income tax by a few percent. Only 3 percent of the gross domestic product, or €115 million, would be enough to provide a basic income for all Namibians.

Dialika Krahe, “A New Approach to Aid: How a Basic Income Program Saved a Namibian Village”, Spiegel Online, 10 August 2009.

Thanks to Michael Littlewood for the tip.

This interesting essay explains how a basic income grant has affected the lives of the poor, and reports the skepticism of wealthy white farmers. Missing is basic information, which is posted elsewhere, on the BIG Coalition Namibia web site. The BIG site is not easy to navigate, so I will supply a few essential facts here.

First, this pilot project is limited to two years. It began in January 2008, so will end in just four months. To me, it seems cruel to withdraw income from the villagers so soon. For less than ten thousand euros a month, donors could continue the project indefinitely, as an example of what could be done with a nationwide basic income grant.

Second, children are eligible for a monthly grant of 100 Namibian dollars, but if the child is under the age of 18, the cash is given to the care-giver, not to the child. For a 39-year old widow whose case is described in the article, the monthly income of N$800 has been a godsend for her and her seven children, permitting her to start a small business, raising and selling chickens from her home.

Third, the author of the essay correctly states that the N$100 grant is given only to those under the age of 60, but does not explain why. The reason is that every Namibian citizen receives a government pension, currently N$370 a month – nearly four times a large as the basic income grant. Namibia is one of the few countries on the planet that provides all residents, regardless of income or employment history, with a universal age pension. This fact gives one some optimism that Namibia might become the first country in the world to offer all its citizens – not just the elderly – a basic income grant (BIG).

The Basic Income Grant or Negative Income Tax has enjoyed wide support from social scientists including, most famously, the British economist James Meade and the US economist Milton Friedman. A group known as Basic Income Earth Network, formerly Basic Income Europe Network) was formed in 1986 and actively promotes this policy. Economists like the idea because a BIG promises to eliminate poverty without the distortions of means-tested programmes. Most importantly, a BIG does not penalize work, since a poor person does not lose the grant if he or she accepts paid employment.

Even if the Basic Income Grant is a good idea, is funding it on a continuous basis a good use of scarce foreign aid funds? I am thinking not of pilot projects like the village of Otjivero, but rather of large, nation-wide programmes that provide grants to all citizens, or only to children (universal child allowances), or only to the elderly (universal age pensions). Would micro-credit be a better use of aid funds? After all, the Spiegel essay highlights villagers in Otjivero who have used grant money to invest in small businesses. So why not limit grants to those who want to invest in some productive activity, and demand repayment at some time in the future? On the other hand, micro-credit programmes miss the very poor, and children who grow up in extreme poverty end up malnourished and illiterate. Perhaps there is a case for allocating foreign aid to universal transfers – to children, the elderly, or everyone – provided local governments supply at least half or three-quarters of the necessary funds. In Namibia, such a subsidy might be sufficient to stimulate a transition from grants restricted to those over the age of 60 to truly universal income grants.

a misleading statistic

Tuesday, August 18th, 2009

Here’s a gory indicator of inequality in access to health care in the United States: People who lack health insurance are far more likely to donate organs than to receive them.

A recent study by the physicians Andrew A. Herring, Steffie Woolhandler and David U. Himmelstein based on hospital data for 2003 finds that 16.9 percent of organ donors were uninsured, compared to 0.8 percent of transplant recipients.

Nancy Folbre, “Insuring Hearts (and Kidneys, Lungs and Livers), Economix, 17 August 2009.

There is a simple explanation for this finding: transplant recipients have better access than organ donors to public insurance. Transplant recipients are almost always in poor health, so more likely than organ donors to be to be eligible for Medicare (a government program for the elderly and disabled) or Medicaid (a government program for the poor).

A close reading of the Herring et al. study cited by Ms Folbre reveals that more than half of the transplant recipients had public insurance (44.2% Medicare and 9.0% Medicaid). In contrast, only 14.6% of donors had Medicare and another 2.6% had Medicaid. A reasonable conclusion is that healthy people are more likely than unhealthy people to be uninsured in the United States. This “indicator of inequality” is neither gory nor surprising. It would be gory if the reverse were true, i.e. if organ donors had better access than transplant recipients to government-funded health care.

Professor Folbre (1952-) is a “feminist economist” who teaches at the University of Massachusetts-Amherst.

The thought du jour blog!

Monday, August 17th, 2009

For more than six years I have sent short messages by email to a select group of friends and colleagues. The list has grown over the years, so I decided to use a weblog to distribute these thoughts more easily. Past thoughts are archived here, here and here.

I look forward to your comments and suggestions.