There has been much discussion around the World Bank on the choice of a "global poverty target" that can be used to measure global progress against poverty. To be successful, such a target needs to be (a) simple to understand, and (b) relevant to all World Bank client countries.
The previous post in this blog discussed the positive dynamic effects of conditional cash transfer (CCT) programs in Mexico and Nicaragua – in particular on asset accumulation and the incidence of entrepreneurship by the rural poor.
After last week’s review of Mark Rosenzweig’s review of Poor Economics, I got asked, via email and comments, what I thought about Martin Ravallion’s review in the same issue of the Journal of Economic Literature.
Suppose that you’re told that a program reduced the rate of dropping out of school among 15 year-olds by 17% and this reduction was statistically significant. You are also told that the same figure among 12 year-olds is 38%. You would likely take note. Suppose now you’re told that these are the effects of a conditional cash transfer program, where the dropout rate among the control group is 37.7% and 16.8%, respectively for ages 15 and 12, thus the absolute effect sizes are 6.4 percentage points in each case.
As the United States prepares for its first presidential election after the Great Recession, inequality has emerged as a central political issue. This is not unremarkable: Americans have historically seemed much less troubled by income differences than, say, Europeans. You may remember a 2004 article by Alberto Alesina, Rafael di Tella and Robert MacCulloch in the Journal of Public Economics, which reported that happiness in the US was much less sensitive to inequality than in Europe.