The Poor May Not Be Getting Richer
But they are living longer, eating better, and learning to read
— Ronald Bailey
Wealthier is healthier—and more educated, more equal for women, more electrified, automotive, and computer-literate.
So the conventional wisdom in development economics has long been that to boost the prospects of the world’s poor, one needs to boost their incomes. This is still true, but as World Bank economist Charles Kenny points out in a provocative article titled "Why Are We Worried About Income? Nearly Everything that Matters is Converging," income growth does not tell the full story.
Even though some of the world’s poorest people are not earning much more than they were two generations ago, they’re still living much better than they were. In fact, many quality of life indicators are converging toward levels found in the richer countries.
To illustrate this point, Kenny compares what has happened to life expectancy in Britain and India. The average age span in both countries was 24 years in the 14th century, but Britain then began a gradual rise, and by 1931 its life expectancy was 60.8 years, compared to just 26.8 for its colony. Since then, though, the numbers have begun to converge—by 1999, Indians lived on average to 63, while Brits nudged upward to 77.
One of the main reasons for the gap-closing is the fall of infant mortality. In 1900 Britain, the infant survival rate was 846 per 1,000 births, compared to 655 in India. Today, 992 British infants out of every 1,000 survive, compared to 920 Indians.
Kenny notes that increasing life expectancy correlates with greater caloric intake. "Worldwide, the proportion of the world’s population living in countries where per capita food supplies are under 2,200 [calories per day] was 56 percent in the mid-1960s, compared to below 10 percent by the 1990s," Kenny notes. And although he doesn’t mention it, one reason is that buying food is a whole lot cheaper than it used to be—the real prices for corn, wheat, and rice have decreased by more than 70 percent since 1900.
Other social indicators, such as literacy rates, are also converging. In 1913, only 9 percent of Indians could read, compared to 96 percent of Britons. Today, 57 percent of Indians and 100 percent of people in the UK are literate. According to Kenny, between 1950 and 1999, global literacy increased from 52 percent to 81 percent of the world. And women have made up much of the gap: Female literacy as a percentage of male literacy has increased from 59 percent in 1970 to 80 percent in 2000.
Kenny also observes that what he calls "non-necessary consumption" has been increasing for the world poorest, too. For example, while the bottom 20 percent and the top 20 percent of the world’s population both increased their beer drinking between 1950 and 1990, the bottom quintile’s consumption grew five times as fast.
Incomes in the world’s poorest countries have been rising slightly over the past 50 years, so perhaps these large improvements demonstrate that small changes in earning power at the lower income levels have dramatic effects? Surely that’s been part of the story, but Kenny points out that incomes have been falling since 1950 in several basket-case countries like Cuba, Angola, Nicaragua, Mozambique, and Bolivia, yet life expectancy, literacy rates and the percentage of kids in primary school have still gone up.
So why is the quality of life for the world’s poorest people improving, and in fact converging toward levels found in the richer countries? Because improvements become cheaper over time. Kenny notes: "Broadly, the results suggest that it takes one-tenth the income to achieve the same life expectancy in 1999 as it took in 1870.
Consider the virtuous circle of agricultural improvements, such as the way discovering how to properly use inorganic fertilizers boosted agricultural production, which increased the calories available to families, which in turn meant they didn’t need their kids to work the fields full time, thus permitting them to go to school to become literate, which enabled them to more effectively adopt even better farming techniques, and so forth. Literacy makes educating people about the germ theory of disease a lot easier. Once-expensive medicines like
penicillin eventually cost only pennies per pill. Although building infrastructure remains relatively expensive, technology can leapfrog entire costly steps, as has been demonstrated by the lightning-fast growth of cellular-telephone adoption from zero to 1.5 billion people.
The world’s poor have clearly benefited enormously from spillover knowledge and technologies devised in the rich capitalist countries. But they would be a whole lot better off if their incomes increased, too. For that to happen, institutions like private property and the rule of law must be adopted. Poor countries remain poor largely because the incompetent despots who rule over them keep them that way. Poverty was once humanity’s natural state, but today it is almost always man-made.
Ronald Bailey is reason’s science correspondent. His book Liberation Biology: The Moral and Scientific Defense of the Biotech Revolution, Or Why You Should Relax and Enjoy the Brave New World will be published in June by Prometheus Books.
Source: Reason.com
The site now looks way better than it used to before. Very nice and serene choice of colors. Keep up the good work
“Why are we worried about income?” – maybe Charles Kenny can accept a substantial pay cut if income is not “something that matters”.
Developing countries are managing to converge their life quality without converging incomes. The main reason for this is that the cost of necessities have gone down. But new discoveries and new “necessities” still remain beyind the means of the developing countries. It will be sometime before, for example, the usage of computers and Internet, in the developing world converges to that of the developed world. And if such new innovations are considered important for a good quality of life in the developed world, why shouldn’t they be considered so in the developing world?
The writer’s argument is analagous to setting lower targets and being satisfied, while the real goal looms far away.
Arguably income is not the only indicator, but income is definitely a good objective indicator. Quality of life and its parameters are rather subjective – I would consider availability of Internet over beer consumption as an indicator of better quality of life.
And non-converging incomes is a reason to worry. Its rather worrying that a World Bank official does not seem to think so.
I am reminded of a story a friend of mine told me about his trip to our dear Kerala. They were from France and he had rented a houseboat in the backwaters and were drifting along in leisure. They enjoyed it immensly.
They had been to Mumbai before, so they were not shocked to see all the shacks by the side of the canals. But what they found very interesting was the way the people living in those shacks behaved. The kids were smiling and waving at them, they were invited to some of the homes – there were no electricity or running water – but they were charmed by the treatment they got. And since my friend was already in a Salwar (they were French), there were ladies and girls trying to help her with the fitting or helping her to handle the “chunni”.
What they told me was that after visiting quite a bit of India – north, west and south – cities and villages, they somehow felt that the happiest of people were living in those shacks – in one of the most serene place they have ever seen.
And to be frank I think I can concur with them based on my travels across India too. I think this observation supports what the authors – both Ronald and Charles are trying to convey.
I don’t think it is analogous to lowering targets and being satisfied with it. It is setting “appropriate” targets and trying to achieve them – leading to satisfaction. And in this context – very often income is not a relevant indicator at all.
It is not just valid in case of those who were living in those shacks my friends went to. Another valid example are school teachers in Kerala. I don’t know whether you live in a village or in a city in Kerala (or have lived). But if you go to any village you will be surprised to see the life being led by school teachers – and the willingness of many to pay hunderds of thousand Rupees to get such a job. It is again not about income – but about quality of life.
Also the question of how to measure quality of life – I think its very context specific. In Germany where beer is available all over the place and is part of the life – Internet access might provide a good indicator. But in Nordic countries, with over 95% penetration of Internet, we will need to find some other example to calibrate quality of life – which can be measured relative to local population only.
India unfortunately is perhaps one of the few countries with the largest variation in quality of life. An advantage I think China has over India. I don’t think that China has as much abject poverty as India does. India – one of the five space powers, the first country to premiere a movie on cell phone – where it is not difficult to see kids fighting with stray dogs to get bit of a thrown away bread.
So it is important that overall – we in India should be focussing not much on increasing percapita income, but rather improving quality of life. Kerala – interestingly is the best possible example of this.
Pramod, I agree that with you that the quality of life is very important – but my point is, as you have rightly said, it is ‘context specific’. So measuring a few parameters, which may or may not be relevant to the context and saying that they converge and hence there is nothing to worry about – that is what I don’t agree with. Income, by far, is the most ‘objective’ indicator, relevant across all contexts and if this does not converge across developing and developed countries – there is reason to worry. If there is no reason to worry, why do we have projects such as the UN Millenium project?
I have lived in Kerala and do know some school teachers who have paid the amounts you were talking about. But I am pretty sure, the regular monthly income that the job provided definitely had something to do with their willingness to part with the money in the first place.
And this is probably a more philosophical argument – but happiness is just a state of mind. It may have something to do with one’s quality of life – but just because someone has a good quality of life doesn’t mean he is happy and vice versa.
And in my personal experience, one is happy when one chooses to be happy. External circumstances don’t matter all that much.