Published on Let's Talk Development

Targets and Measures, Poverty and Sharing

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In his latest Annual Letter, Bill Gates points to the power of measurement. Change, he reminds us, is often incremental; and so, unless we have a good yardstick, it is difficult to know if the small move we made was in the right direction. Not surprisingly, in the world of technology, new ways to measure energy creation and a micrometer able to gauge miniscule distances, played a vital role in promoting progress. Gates is right in stressing this and that is the reason why even in social and economic ventures, it is important to develop measures that track how we are doing.

Interestingly, the publication of Gates’ letter coincides with the ongoing initiative within the World Bank Group to define targets and measures of well-being that the Bank as a multilateral agency will promote and pursue. We hope to soon be in a position to place our measures and targets in public space. This blog is meant to give readers a flavor of the issues involved and to welcome their suggestions.

Let me begin by advising readers that, when reading Bill Gates, it is important to keep in mind that there is more to learn from successful people’s lives than lines. Gates’ Annual Letter on measurement is an important take away, but we must not forget what his life amply demonstrates--that to focus solely on measurement is to risk missing out on some essential features of life which may be nebulous and not quite measureable but nonetheless important.

With this in mind, we took an early decision that, alongside the targets and measures we develop, we will also have a ‘narrative’ account of what we seek to achieve, for ourselves and for nations that engage with the Bank (and maybe even ones that do not). In the area of climate change and environment, for instance, if we focus solely on what we can attribute to a nation and write up as formal target, we will miss out on a lot that is in our collective interest. And while we should strive to move towards a measure and a target, to zero in on one in a hurry could be counter-productive. 

Given the importance of targets and narrative aspirations, the task of articulating and codifying these is not one that can be taken lightly. Fortunately, we do not have to start from scratch. The World Bank’s own record of research, along with the long-standing tradition in welfare economics of developing formal measures for tracking poverty, inequality, literacy and other dimensions of societal well-being, with major contributions from Amartya Sen, Tony Atkinson, Serge-Christophe Kolm and others, give us a head start.

In our deliberations we were clear that the central aim of the Bank must continue to be the eradication of absolute poverty. It is a shameful fact that even with the poverty line drawn as low as an income of $1.25 per person per day, we find that  around 20% of the world’s population lives in poverty. This translates into  nearly 1.3 billion people living below the poverty line.

Target setting is not an easy task. Make it too ambitious and it will languish, with no impact. Make it too easy, it will be like the guru, in Satyajit Ray’s comic film, Mahapurush, who takes his gullible disciples every morning to stare at the eastern horizon while he “commands” the sun to rise.

The pursuit of major global targets and of the Millennium Development Goals entails a large effort in terms of statistical data collection and analysis. I am heartened by the Bank’s Open Data policy and its partnerships with the Bill & Melinda Gates Foundation and other organizations to keep improving statistical capacity in the realm of human, economic and social development. We are currently engaged in organizing statistical information and setting a reasonable target date by when the percentage of people below the poverty line will be brought down to close to zero. We hope to announce the target soon. The task thereafter will be to work alongside the UN and national governments to develop operational policies to reach that target.

The fight against absolute poverty finds fairly universal support (even though we may dispute its precise measure). What can quickly raise hackles is the pursuit of “shared prosperity,” which the World Bank Group is contemplating adding alongside the poverty eradication target. Poverty eradication has a nice distant ring to it, whereas shared prosperity trespasses into our own backyards. Not surprisingly, there is a tendency in some quarters to equate sharing with discredited political systems. This is the standard ploy of thwarting x by finding a y that is universally discredited and then campaigning to equate x and y. In the case of sharing this is a conspiracy of the selfish, deliberate or unwitting. I am glad that the Bank Group may be poised to add to the earlier goal of poverty eradication the new one of promoting “shared prosperity.” 

In converting this to a formal measure, we want to take both words, “shared” and “prosperity”, seriously. The promotion of prosperity is suggestive of growth, an expanding pie. I believe this is a worthwhile aim that has a natural resonance with rich, poor and middle income countries and it would be foolish to ignore this universal aspiration. “Shared” suggests that this growth ought to be inclusive, one that draws in the weak and the disadvantaged, instead of abandoning them to the margins. A natural way to formalize this is to promote rapid growth of the per capita income of the disadvantaged segment of each nation, such as the poorest 40%. This is a natural way to give shape to the idea of inclusive growth.

Gandhi had advised those facing a dilemma: “Recall the face of the poorest and the weakest man whom you have seen and ask yourself if the step you contemplate is going to be of any use to him.” In developing a yardstick for measuring shared prosperity, we want to capture the idea of the weak and the disadvantaged being drawn into the mainstream. This will entail some sharing with those who are less fortunate and also with those who are not yet born. Unless there is some magical technological breakthrough, it is not clear that the environment can sustain large populations like those of China, India, Indonesia and Brazil, rising to levels of consumption that we find in industrial nations. Hence, to achieve this will entail growth, technological innovation, environmental conservation but also—and there is no getting away from it—sharing. 

We cannot consume, spend conspicuously and use up global resources, unmindful of the fact that there are people on earth who are barely surviving and that there will be others who will come to inhabit the earth long after we are gone. That concern is summed up in the idea of shared inter-temporal prosperity. This takes us headlong into the subject of climate change, environmental protection and bio-diversity. This places on us a responsibility for future generations that are not here to voice their concerns.

Shared prosperity must be a guiding principle for the Bank to do research on and promote activism in areas of inclusive growth, environmental protection and sustainability. Shared prosperity is nothing but an organizing principle but it can, through refinement, debate and discussion, become a compelling idea that guides policy to create a world that is not only more prosperous but also fair and equitable—a better world.


Kaushik Basu

Former Chief Economist & Senior Vice President of the World Bank

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