Sunday, 22 May 2022

The global inequality boomerang

Overall, global inequality has been decreasing over the last several decades. That may contrast with the rhetoric about inequality that you are familiar with from the media. However, the global decrease in inequality has mostly been driven by the substantial rise in incomes in China. However, China's contribution to decreasing global inequality may be about to change. In a new working paper, Ravi Kanbur (Cornell University), Eduardo Ortiz-Juarez and Andy Sumner (both King’s College London), discuss the possibility of a 'global inequality boomerang'.

Focusing on between-country inequality (essentially assuming that within-country inequality doesn't change), and using a cool dataset on the income distribution for every country scraped as percentiles from the World Bank's PovcalNet database, Kanbur et al. find that:

...there will be a reversal, or ‘boomerang’, in the recent declining (between-country) inequality trend by the early-2030s. Specifically, if each country’s income bins grow at the average annual rate observed over 1990–2019 (scenario 1), the declining trend recorded since 2000 would reach a minimum by the end-2020s, followed by the emergence of a global income inequality boomerang...

This outcome is illustrated in their Figure 4, which shows the historical decline in inequality since the 1980s, along with their projections forward to 2040:

Scenario 1 assumes an almost immediate return to pre-pandemic rates of growth. Scenario 2 assumes slower growth rates for countries with lower rates of vaccination. Neither scenario is particularly likely, but the future trend in global inequality is likely to be somewhere between them, and likely to be moving upwards. Why is that? Between-country inequality has been decreasing as China's average income has increased towards the global average. In other words, Chinese household incomes have increased, decreasing the gap between Chinese households and households in the developed world. However, once China crosses the global average, further increases in Chinese average income will tend to increase between-country inequality.

Of course, this might be a pessimistic take, because if other populous poor countries (including India, Indonesia, Pakistan, Nigeria, and Ethiopia) grow more quickly, then their growth might reduce inequality enough to offset the inequality-increasing effect of Chinese growth. However, that is a big 'if'. According to World Bank data, China's GDP per capita growth rate averaged 8.5 percent per year between 1991 and 2020. Compare that with 4.2 percent for India, 3.2 percent for Indonesia, 1.5 percent for Pakistan, 1.4 percent for Nigeria, and 3.9 percent for Ethiopia. These other countries would have to increase their growth rates massively to offset Chinese growth's effect on inequality.

This isn't the first time that Chinese growth has been a concern for the future of global inequality. Branko Milanovic estimated back in 2016 that China would be contributing to increasing global inequality by 2020 (see my post on that here). Things may not have moved quite that quickly (a pandemic intervened, after all). Kanbur et al. are estimating under their Scenario 1 that the turning point will be around 2029 (and around 2024 under their Scenario 2). Slower Chinese growth, and faster growth in the rest of the world, have no doubt played a part in this delay. However, it's likely that the turning point in global inequality cannot continue to be delayed for much longer.

Read more:

Saturday, 21 May 2022

Ian Pool, 1936-2022

I was very saddened to hear of the passing of Ian Pool at the end of last month. I have held off on posting about this, waiting for a good obituary to show up online. I was not to be disappointed - Stuff published a beautiful obituary by Brian Easton earlier today. For those who don't know, Ian Pool is widely regarded as the founding father of New Zealand demography. He set up the Population Studies Centre (PSC) at the University of Waikato, which remains a national centre of excellence in demography and population studies (in its latest incarnation, renamed as Te Ngira - Institute for Population Research). Ian was well known for his work on African demography, as well as Māori demography, among many other contributions to the field.

I had many interactions with Ian over the years, including as a co-author and a co-researcher. When I first met him, sometime in the mid-2000s, I was working as a research assistant for Jacques Poot at the PSC, and completing my PhD in economics. Ian initially struck me as one of those infuriating people who have the habit of constantly name-dropping famous people they have met. However, Ian's name-dropping wasn't merely a cynical attempt to big-note himself - he really did know and had closely interacted with Joseph Stiglitz, Thomas Piketty, and others. And I have to admit feeling a bit of a warm glow some years later when Ian name-checked me in a seminar or presentation (more than once) for my work on stochastic population projections.

My interactions with Ian also resulted in what is possibly one of the big missed opportunities of my career. Ian was very keen to have me work on a new research idea, distributional national accounts. I was mildly interested, but didn't have the time to devote to it immediately. I also had other priorities, especially in trying to establish a longitudinal ageing study based at Waikato (an initiative that eventually proved to be a dead end, as despite a lot of positive end-user engagement, we couldn't secure sufficient funding to make the study feasible). Anyway, I hadn't realised at the time just how important the idea of distributional national accounts was to become, as well as its centrality to the work of Piketty, Emmanuel Saez, and others. Distributional national accounts were also a key contribution to the work of the High-Level Expert Group on the Measurement of Economic Performance and Social Progress, co-chaired by Stiglitz, Fitoussi, and Durand, as noted in the book Measuring What Counts (which I reviewed here). Ian was at the cutting edge, but sadly, I don't believe that he did find someone to work on New Zealand's distributional national accounts.

I was never a student of Ian's, but I did sit in on a workshop that he gave some years ago, on how to derive and interpret life tables. He was an excellent communicator, and clearly would have been a great teacher and mentor to students at all levels. I have had the pleasure of working with a number of his excellent former PhD and graduate students, including Natalie Jackson and Tahu Kukutai. I'm sure that a more complete roll call of Ian's students would reveal just how much of an impact he has had, and continues to have, on population studies and demography both in New Zealand and internationally.

Aside from his research contributions, Ian was just a lovely, generous, and sincere man. He was patient and kind to colleagues and students alike, and a fountain of knowledge on many things. He will be greatly missed.

Friday, 20 May 2022

The problem with studies on the relationship between alcohol outlets and sexually transmitted diseases

I've done a fair amount of research on the impacts of alcohol outlets on various measures of alcohol-related harm. That work has focused predominantly on violence, property damage, and crime generally. One thing I haven't looked at is the relationship with sexually transmitted diseases. That is for good reason. Crime is an acute outcome associated with drinking, and is measurable almost immediately. That distinguished crime from longer-term negative consequences of drinking such as liver cirrhosis, for example.

However, in-between those two extremes are some alcohol-related harms that we could refer to as medium-term harms. For example, the theoretical link between alcohol consumption and risky behaviour, including risky sex, seems clear. So, if having more alcohol outlets in a particular area is associated with greater alcohol consumption (following availability theory, as I discussed in this post earlier this week), then alcohol outlets should be positively associated with greater prevalence of sexually transmitted diseases. Sexually transmitted diseases do not become immediately apparent in the way that violence or property damage does, but they don't take years to manifest in the way that cirrhosis does.

There have only been a few studies on the relationship between alcohol outlets and sexually transmitted diseases. So, I was interested to read two studies recently related to this topic, which had been sitting on my to-be-read pile for some time. The first study was reported in this 2015 article by Molly Rosenberg (Harvard School of Public Health) and co-authors, published in the journal Sexually Transmitted Diseases (ungated NLM version here). They look at the relationship between alcohol outlets and Herpes Simplex Virus Type 2 (HSV-2) prevalence among young women (aged 13-21 years) in the Agincourt Health and Demographic Surveillance System site in South Africa. The Agincourt sample has predominantly been used as an HIV surveillance site, and there are dozens of studies based on this sample. However, they didn't look at HIV as an outcome in this study:

...because of the small number of prevalent infections at baseline and the likelihood that at least some of the cases were a result of perinatal, as opposed to sexual, transmission.

Fair enough. Perinatal transmission of HIV (transmission at or around the time of birth) has been a serious problem, but I guess it must be less of a problem for HSV-2. In their analysis, Rosenberg et al. essentially counted the number of alcohol outlets (both on-licence and off-licence combined) in each village, and related that number to HSV-2 prevalence for the 2533 young women in their sample. They found that:

Treating the alcohol outlet exposure numerically, for every 1-unit increase in number of alcohol outlets per village, the odds of prevalent HSV-2 infection increased 8% (odds ratio [OR; 95% CI], 1.08 (1.01–1.15]). The point estimate changed minimally after adjustment for village- and individual-level covariates (OR [95% CI], 1.11 (0.98–1.25]); however, this adjusted estimate was less precise.

Not only was it less precise, but it becomes statistically insignificant (barely), which they don't note. So, this doesn't provide strong evidence of a link between alcohol outlets and sexually transmitted diseases, although the evidence is suggestive. The problem is that the analysis essentially assumes that all young women in the same village have the same exposure to alcohol. This marks the number of outlets as an imperfect proxy for the real exposure variable, and suggests that the real effect might be larger. Again, this is suggestive evidence at best.

The second study was reported in this 2015 article by Matthew Rossheim (George Mason University), Dennis Thombs, and Sumihiro Suzuki (both University of North Texas), published in the journal Drug and Alcohol Dependence (sorry, I don't see an ungated version of this one online). This study did look at HIV as an outcome, relating zip-code-level HIV prevalence to the number of alcohol outlets (of different types) across 350 cities in the US. Perinatal transmission of HIV is not much of a problem in the US (certainly not compared to South Africa at the time that the Agincourt sample were born). Based on their data for a little over 1000 zip codes, Rossheim et al. found that:

...the presence of one additional on-premise alcohol outlet in a ZIP code was associated with an increase in HIV prevalence by 1.5% (rate ratio [RR] = 1.015). In contrast, more beer, wine, and liquor stores and gas stations with convenience stores were associated with lower HIV rates (RR = 0.981 and 0.990, respectively). Number of pharmacies and drug stores was not associated with HIV prevalence (p = 0.355).

On-premise outlets (predominantly bars and nightclubs) were associated with higher HIV prevalence, while liquor stores and gas stations were associated with lower HIV prevalence. Rossheim et al. don't have a good explanation for why, although they note a number of obvious limitations with their study. The literature on the impacts of alcohol outlets is littered with these sorts of inconsistent findings.

The real problem with a study like this is the time lapse between the alcohol consumption and the measured outcome variable. As I noted at the start of this post, with acute harm (like violence or property damage), the effect is immediately seen and can be measured, and likely occurred close to the location of alcohol consumption. With HIV prevalence, there is only a small chance that HIV was contracted as a result of activity within the local area. People move about over time, they 'interact' with people in many locations, and they can migrate from city to city. So, all we can say with this study is that people living with HIV tend to live in areas that have lots of bars and night clubs, and tend to live in areas that have fewer liquor stores and gas stations. Call this the gay-men-live-near-night-clubs effect, if you want to evoke a bunch of stereotypes. This effect is correlation, and it is difficult to say with any certainty if there is any causal relationship here.

Now, the Agincourt study has this problem as well, but the young women there probably still live in the same village they grew up in, so in that case the exposure to alcohol can be (imperfectly, as I noted above) proxied by the number of outlets in the village. And the symptoms of HSV-2 appear within a week, rather than weeks or months later as can be the case for HIV. So, moving about is less of an issue, although not eliminated entirely.

Anyway, these two studies are interesting, but they mainly highlight the problems with this broader literature. When we move beyond measuring acute harms associated with alcohol outlets, it isn't clear that the associations that are being measured are anything more than spurious correlation.

Thursday, 19 May 2022

Stephen Hickson on the fight against woolly words

I'm loving Stephen Hickson's work lately. In addition to writing about the stupidity of removing GST from food last week (which I posted about here), and co-authoring a piece in The Conversation with myself and others on our 'quick takes' on Budget 2022, he wrote the most hilarious post on LinkedIn yesterday:

Woolly words...

I came across this article today (not sure if you need a subscription to read it or not but the gist of it is in the first paragraph "FIRE-FIGHTING FOAM starves the flames of oxygen. A handful of overused words have the same deadening effect on people’s ability to think. These are words like “innovation”, “collaboration”, “flexibility”, “purpose” and “sustainability”. They coat consultants’ websites, blanket candidates’ CVs and spray from managers’ mouths. They are anodyne to the point of being useless. These words are ubiquitous in part because they are so hard to argue against."

Imagine if the government becomes aware of the damage that the excessive use of these words is causing… there's a good chance that the Government will sign up to an international accord to limit the use of Woolly Words. In an attempt to make good on that commitment they will introduce a Woolly Words Trading Scheme (WWTS). In order to get political buy-in some sectors will initially be exempt despite being the biggest users of Woolly Words, e.g. Marketing companies. Additionally the cap on Woolly Words won’t initially be binding and so everyone will agree that the WWTS is pretty weak. Eventually this will get fixed though it will take a while. But a WWTS isn’t very sexy and doesn’t look like the government is really doing anything. So they’ll start doing things that make little sense and are expensive but look a lot sexier. For example they’ll offer to subsidise at great expense the use of better words in mission statements and annual reports of some arbitrarily favoured organisations in return for them reducing their own use of Woolly Words. Or they’ll simply ban the use of Woolly Words in some sectors such as health. While this makes these organisations and sectors less woolly it doesn’t reduce the overall quantity of Woolly Words available when the WWTS is binding. It couldn't possibly happen could it?

It's not hard to see that this is a satirical take on the emissions trading scheme, including the exclusion of agriculture, and the various tinkering the government undertakes to try and solve problems that would more easily be solved if the scheme were comprehensive. In my ECONS102 class, we characterise an efficient property rights system as one that has four key features:

  1. Universal - all resources are privately, publicly, or communally owned and all entitlements are completely specified;
  2. Exclusive - all benefits and costs accrued as a result of owning and using the resources should accrue to the owner whether directly or indirectly;
  3. Transferable - all property rights should be transferable from one owner to another in a voluntary exchange; and
  4. Enforceable - property rights should be secure from involuntary seizure or encroachment by others.

The emissions trading scheme (and the woolly words trading scheme) creates a property right - the right to emit carbon (or the right to use woolly words). The scheme will only be efficient if it is universal - that is, all emissions (or woolly words) must be covered by the scheme. When agriculture (or marketing) is excluded, they can generate as many emissions (or woolly words) as they like, essentially without consequence. If the government is concerned about their emissions (or woolly words), then the government has to create all sort of other regulations to keep them in line. Which is completely unnecessary, since including them within the trading scheme would be much more efficient (lower cost, and simpler all around).

If we really are concerned about carbon emissions (or woolly words), we have the means to limit them. Excluding favoured sectors from the trading scheme is pure politics, combined with a fair amount of fingers-in-the-ears-I'm-not-listening-to-you, and that is going to cost us far more in the long term.