Standard of living and measuring welfare effects

A few posts caught my eye today by bloggers discussing different, but related topics. All of them suggest that the most measurable outcomes are not necessarily the metrics of policy success or failure we should focus on.

Francisco Toro, at his new blog the Campaign for Boring Development, comments on how microfinance may not raise the incomes of participants, but it does have the potential to increase standards of living.

Matt Yglesias, at Slate, slams the media for misinterpreting (willfully?) the CBO report that says the equivalent of more than 2 million full time (equivalent) jobs will disappear as a result of the ACA. The Plum Line says it’s not a “job-killer,” but people might choose to work fewer hours because now they can afford healthcare. Is that really so bad?

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Development Bloat

Marc F. Bellemare has a piece in Foreign Affairs today on development bloat, or how myriad causes and niche agencies and mission creep are harming the ultimate goal of development, to increase and stabilize incomes for the poor around the world. His argument is that funneling money to secondary needs diverts resources from meeting the basic ones, the ones that,if met, would ultimately lift everyone out of poverty.

Many of the things promoted nowadays by development — breastfeeding, the use of cookstoves, gender equality, environmental sustainability, an independent media, Internet access, and so on — fall into place naturally once people have met their basic needs, such as clean water, plentiful and nutritious food, and found a steady source of income. In other words, many conditions targeted by idealistic development goals arose in wealthier countries as byproducts of higher incomes, and trying to provide them at the same time as more fundamental things puts the cart before the horse.

It’s an excellent, important read and though I’m with Marc on most of his points, gender equality doesn’t belong on this list. Stabilizing incomes is necessary and great and ultimately the goal, but if half of your population (or often more than half of your population) is systematically denied access to those basic needs, it doesn’t matter that much that they’re being “met” on a national- or community-level.

In an extensive review of the literature, Esther Duflo shows that development itself, or higher incomes, does not necessarily lead to gender equality. If it’s something we care about, and I believe that we should, then a dedicated policy infrastructure devoted to improving outcomes for women and girls is necessary to ensure that development works for everyone.