In the introduction to a stupid and worthless book, Amartya Sen wrote
The use of the term “targeting” in eradicating poverty is based on
the fact that if you genuinely want to help poor people you need to say which particular people will be helped in a particular way and by how much they will be helped. A target is a goal. Sen thinks differently. He thinks 'targeting' is a claim that is made about a subsidy after the fact- e.g. if super-yachts are subsidized, the job of the economist is to claim that the subsidy targets starving billionaires whose disposable income will be boosted sufficiently to make it possible for them to buy a sandwich from time to time.
It is a separate matter that just as there may be an 'inflation target' so too there may be a 'extreme poverty target' but that is a matter of policy which is decided by politicians on behalf of voters. It has nothing to do with the economist's task designing or implementing a mechanism or other instrument for a specific purpose.
an analogy–a target is something fired at.
No. The dictionary meaning of target is goal. If you are practicing archery, the goat is to hit the 'bull's eye' or get within a small distance from it.
It is not altogether clear whether it is an appropriate analogy.
It is not an analogy. We may speak of metonymy. A word for a fence or a wall came to mean something people would practice throwing or archery at. But it could also mean the small shield used in jousting tournaments. Still, currently, target means 'goal' or 'objective'.
The problem is not so much that the word “target” has combative association.
But 'eradicate' has connotations of genocide. Why does Sen strain at a gnat but swallow a fucking camel?
This it does of course have, and the relationship it implies certainly seems more adversarial than supportive. But it is possible to change the association of ideas, and in fact, to some extent, the usage has already shifted in a permissive direction. The more serious problem lies elsewhere–in the fact that the analogy of a target does not at all suggest that the recipient is an active person, functioning on her own, acting and doing things.
Nonsense! In business, your target is a person who can buy a lot of expensive shit or who has plenty of money to spend.
The image is one of a passive receiver rather than of an active agent.
Poverty may suggest passivity and helplessness. 'Targetting' does not. 'Eradication' suggests that something is undesirable or evil. One way of eradicating poverty is by killing the poor.
To see the objects of targeting as patients rather than as agents can undermine the exercise of poverty removal in many different ways.
To see people as poor and poverty as something which must be eradicated is to see the poor as having an undesirable trait. Is this because of 'inherent vice'? Perhaps. We can target rich investors whom we want to make even richer so as to gain a small portion of their extra wealth in the shape of commission. But in eradicating poverty- what profit can we ourselves make?
The answer is obvious. If the Government raises productivity and thus reduces poverty, it will gain more tax revenue. There will be a virtuous circle.
The people affected by such policies can be very active agents indeed, rather than languid recipients waiting for their handouts.
Sen came from a part of the world where there were no fucking handouts. That's where most of the poverty was concentrated. Indira Gandhi came to power on the slogan 'eradicate poverty'. Her son was certainly guilty of getting rid of poor people so as to 'beautify' Delhi. Why is Sen pretending that Indians were getting handouts back when he hadn't yet run away from India with his best friend's wife?
Not to focus on the fact that they think, choose, act, and respond is to miss something terribly crucial to the entire exercise.
But targeted programs focus on the fact that the people targeted respond to incentives and new information precisely because they are able to think, choose and act.
This is not just a terminological problem. The approach of what is called targeting often has this substantive feature of taking a passive view of the beneficiaries, and this can be a major source of allocational distortion.
But it hasn't actually been any such thing. The fact is even if you go and put money into the hands of poor people you are relying on them being active enough to spend that money in some way that helps themselves.
There is something to be gained from taking, instead, a more activity-centered view of poverty removal.
There is nothing to be gained from listening to Sen.
Let us begin with the central case–the core argument–in favor of targeting.
This is based on the 'Pareto law' or principle which suggests that 80 percent of outcomes are due to 20 per cent of causes. Help the bottom 20 per cent rise up economically and everybody benefits because the whole Pareto frontier shifts outward. This can be because of reduced risk aversion and higher mobility or because aggregate demand becomes more robust but, in the end, everything comes down to productivity or 'value added'.
The theoretical point in favor of targeting in antipoverty policy is clear enough: the more accurate a subsidy in fact is in reaching the poor, the less the wastage, and the less it costs to achieve the desired objective.
Sen is confusing choosing proxies for poverty as targets which is an identification problem of an econometric type with the actual rationale for targeting poverty. Moreover, this is ideographic. Some countries have much better figures for income and consumption than others for historical reasons. Which proxies you use depends on ideographic factors to do with what statistics are available or how much sampling you can do.
It is a matter of cost-effectiveness in securing a particular benefit. Or, to see it another way, it is one of maximizing the poverty- removal benefits accruing from a given burden of cost.
Sen thinks this is a statistical problem. It isn't. The reason it is a good idea to target, in accordance with the relevant Power Law, the poorest 20 percent or even the poorest 20 percent of that 20 percent to get the mean income up with beneficial supply side and aggregate demand benefits. Sen simply didn't understand the subject he himself taught.
If antipoverty policy is to alleviate poverty most effectively, then–on this argument– it is reasonable to make sure that the subsidies reach the poor and only the poor.
No. Taxes and Subsidies should be 'Pigouvian' and have to do with externalities. Targeted anti-poverty policies must identify the 20 percent of the 20 percent and figure out how to sustainably alter outcomes for them. The thing could, on a discounted basis, be fiscally neutral or even yield a surplus. Reduce poverty and you increase opulence which means more tax revenue.
So, the argument concludes, be firm and aim at just that. If the so-called targets were all identifiable and unreacting,
Sen is describing the disabled for whom you need different policy instruments from those used in poverty reduction which actually is nothing but productivity expansion.
that would be the end of the matter–we could converge on a fine strategy whose merit we would all accept.
Fuck off! Nobody would accept funding the lazy and shiftless.
Some of the resonant appeals to the case for more targeting give one the haunting feeling that this is indeed the way the problem of poverty removal is seen by some advocates of no-nonsense targeting.
This may be true of resonant appeals by buddhijivi virtue-signallers. But they are concerned to make a good living by pontificating about poverty to Western audiences. They aren't in the business of actually helping poor people become less poor.
The nature of the real problem of poverty removal differs from it precisely because the people involved act and react and fret and run in response to the policies aimed at poverty removal.
Poor people may run away if we try to help them. Even if we catch them, they may try to bite or scratch us. The mistake Westerners make is that they think poor Indian people will just sit still and let the Government help them by chopping their goolies off.
How so? We can begin with trying to distinguish between the different types of actions and reactions of which any poverty-removal policy has to take note.
Sen always begins by making a meaningless distinction.
That targeting has many direct and indirect costs has been extensively recognized in the literature.
No. Targeting has no cost. The use of wrong proxies can have a cost. There could be an equity efficiency trade off. I should explain, targeting is like a 'lump sum' tax which has no dead weight loss. True, the literature may have been shite because the field only attracted shitheads but Sen is simply displaying his complete ignorance of economics.
It is useful, however, to separate out– and distinguish between–the ways in which such costs can arise and to see how each of these distinct reasons relates to particular acts and responses of the people involved in poverty-alleviation programs.
Nothing Sen has ever done has been useful.
If the subsidy is aimed at the poor who are identified by some specified criterion of being counted as poor, those who would not satisfy that criterion could nevertheless pretend that they do by providing inaccurate information.
Which is why targeting is important. This involves finding 'signals' or using 'screening' devices. Commercial firms do this all the time. The Government is welcome to hire people from the private sector to do the targeting.
When it comes to 'transfers', there can be more or less stringent 'means-testing' and 'workfare' and so forth. Subsidies should be Pigouvian not redistributive. This is Welfare Econ 101.
This is a practice hallowed by tradition and use, and I need not dwell on this well-understood phenomenon. But it might be asked, how could targeting even with informational distortion possibly be worse than no targeting at all?
True, aiming your gun on a shooting range may cause casualties if people are in the habit of disguising themselves as targets. But this is not a common practice.
Targeting transfers means identifying who will get it on the basis of some costly to emulate trait or public signal so the thing is difficult to game. As for 'cheaters', punish the fuck out of them. Sen is saying that opening fire at random into a crowd is better than aiming for and shooting only the bad guy with the machete.
Some would no doubt cheat and will not be caught, but others would not cheat, and surely this is still a better overall result–taking the rough with the smooth–than no targeting at all and providing the subsidy to everyone.
Subsidy? Does this guy mean 'transfer'- like 'basic income'?
The picture is, however, more complex than that. Some would object–not without reason–to having a system that rewards cheating and penalizes honesty. No less important, any policing system that tries to catch the cheats would make mistakes, leave out some bona fide cases, and discourage some who do qualify from applying for the benefits to which they are entitled. Given the asymmetry of information, it is not possible to eliminate cheating without putting some of the honest beneficiaries at considerable risk.
Which is a reason targeting should be done on the basis of the Pareto Principle. At the margin, there can be doubt and ambiguity, but the bottom of the bottom has different traits from the second lowest quartile.
In trying to prevent the type II error of including the nonpoor among the poor, some type I errors of not including some real poor among the listed poor would undoubtedly occur.
Not if you are targeting on the basis of an iterated Pareto law.
Informational distortion cooks the books but does not, on its own, change the underlying real economic situation.
Yes it does. The real economic situation depends on public signals. Where those are misleading there is allocative inefficiency.
But targeted subsidies can also affect people's economic behavior. For example, the prospect of losing the subsidy if one were to earn too much can be a deterrent to economic activities.
Which is why you should have targeting within targeting so as not to get 'poverty trap' type situations. This is easy enough. Increase the amount of 'permitted work' or pay an extra sum under some specific heading- e.g. child care- or give a benefit bump for re-training.
It could be open to question as to how substantial the incentive distortions are in any particular case, but it would be natural to expect that there would be some significant distorting shifts if the qualification for the subsidy is based on a variable (such as income) that is freely adjustable through changing one's economic behavior.
But existing benefit systems already compensated for this. Essentially if you quit your job because you would be better off on benefits, you were disqualified from them. Disincentive effects arise because of aggregation problems. Better targeting is about disaggregation. This can give rise to a positive 'Simpson's paradox' whereby disaggregation means that population is behaving counter-intuitively.
The social costs of behavioral shifts would include inter alia the net loss of the fruits of economic activities forgone as well as
de-skilling or depreciation of 'Human Capital' not
the value of the changes in labor supply .
It doesn't matter if some people drop out of the employment pool provided they are doing something useful outside the market.
Disutility and Stigma
Sen doesn't get that 'disutility' is based on opportunity cost. I may be happy to be paid 1000 dollars an hour to have sex with super-models. Then I find out I could be paid 5000 dollars to sleep with even sexier super-models. Suddenly I feel discontented- i.e. experience disutility.
Stigma doesn't matter if you are making good money and can move to a place where there is no such stigma.
Any system of subsidy that requires people to be identified as poor and that is seen as a special benefaction for those who cannot fend for themselves would tend to have some effects on their self-respect as well as on the respect accorded them by others.
Not if they live in poor communities. Getting benefits shows you are smart. Sen probably thinks that most poor people live in Mayfair. They feel ashamed if they get Income Support because most of their friends are billionaire hedge fund managers. On the other hand, it is true that I had to resign from White's gentlemen's club after the Duke of Westminster called me a 'fackin' scrounger' and poured a glass of lager-shandy on my head.
These features do, of course, have their incentive effects as well, but quite aside from those indirect consequences, there are also direct costs and losses involved in feeling–and being–stigmatized.
Which is why nobody applies for Income Support.
Since this kind of issue is often taken to be of rather marginal interest (a matter, allegedly, of fine detail), I would take the liberty of referring to John Rawls’s argument that self-respect is “perhaps the most important primary good” on which a theory of justice as fairness has to concentrate.
John Rawls, I should explain, was an African American single mother bringing up her numerous brood on welfare checks out in the Projects. Then, one day, Ronald Reagan rode his horse into her living room and called her a 'Welfare Queen'. Rawls cried and cried. Thankfully, a friend was able to disguise Rawls as an elderly White man and get the tosser a gig teaching worthless shite at Harvard.
Administrative and Invasive Losses Any system of targeting–except targeting through self-selection– involves discriminating awards in which some people (typically government officials) judge the applications made by the would-be recipients.
No. You can look at a 'costly to disguise' trait and do targeting on that basis. Thus, in the old days, a philanthropist might first set up a soup kitchen or a free health clinic and identify the most needy on the basis of reports made by those who work at such places. They can be befriended and helped in a discreet way.
The procedure can involve substantial administrative costs, both in the form of resource expenditures and bureaucratic delays.
Because of poor targeting.
No less important, losses of individual privacy and autonomy can be involved in the need for extensive disclosures.
Which are not needed if you get the targeting right. Sen is speaking of difficulties with administering 'transfers' but they exist for a reason. When there is a resource crunch, rather than cancelling entitlements, Governments can quietly ration them using bureaucratic hurdles.
The finer the targeting is meant to be, the more invasive would the investigations typically be.
No. Good targeting means no invasive investigation because there is a costly to disguise public signal. I want to target a nice woman with independent means who might agree to marry me and look after me in my old age. I start by ruling out people with long beards who sleep on the streets. What my next step should be, I haven't worked out yet. Still, at least I'm not married to a bearded hobo who beats me and steals my stuff.
Means-tested awards would require detailed revelation of personal circumstances.
No. You just need to mention your income and savings and whether your spouse or live-in partner is capable of supporting you.
When the targeting takes the form of giving priority to a large group (such as a relatively poor region of the country), the investigations need not be so invasive, but that is only because the targeting is less fine.
That is 'Regional Policy'- which is a separate matter.
In general, there is no way of targeting specific deprivations without a corresponding informational invasion.
Yes there is. Suppose we want to help blind-people. We can find out who they are by looking for something all such people might buy. This would be better than 'self-selection' because a lot of sighted people might claim to be blind in order to get the benefit.
The problem here is not just the necessity of disclosure and the related loss of privacy but also the social costs of the associated programs of investigation and policing. Some of these investigations can be particularly nasty, treating each applicant as a potential criminal.
But they could also be the reverse. People with complex needs find that the guy who helps them get one type of benefit is also the person who can help them with a different problem- e.g. domestic abuse suffered at the hands of a bearded hobo who stole all my stuff.
There are, furthermore, social costs of asymmetric power.
There may be social benefits.
Minor potentates can enjoy great authority over the suppliant applicants.
Or they might be a great source of empathy and emotional support
There are plenty of actual examples of the exercise of official authoritarianism that frequently accompanies informational investigations.
And the reverse.
The possibility of corruption is, of course, also present whenever some officials have significant control over the process of dispensing favors in the form of targeted benefits.
This is curbed if you get the targeting right.
Political Sustainability and Quality The beneficiaries of thoroughly targeted poverty-alleviation programs are often quite weak politically and may lack the clout to sustain the programs and maintain the quality of the services offered.
No. The problem is fiscal in nature. If revenue falls, belts have to be tightened. Even if all the unemployed and the pensioners go on strike, resources won't suddenly drop down from Heaven.
Benefits meant exclusively for the poor often end up being poor benefits.
If there is no money to spare for them- sure.
In the context of the richer countries, such as the United States, this consideration has been the basis of some well-known arguments for having “universal” programs rather than heavily targeted ones confined only to the poorest.
There is an argument that Governments should give lots of money to everybody. However, it is equally important that everybody gains a butler and a valet and a skilled chef and sommelier so as to be able to live with dignity.
Something of this argument certainly does apply to the poorer countries as well.
If the governments of poor countries gave everybody a million dollars a month, then the question arises as to why it is not enabling pigs to gain the capability to fly.
These different considerations relate in different ways to actions, thoughts, choices, and feelings of the subjects of targeting. There is nothing necessarily complex about recognizing the legitimacy of these concerns, but it is important that they are brought into the policy choices in an explicit and scrutinized way.
In which case there will be no policy choices. You'd have to listen to all sorts of nutters explaining why all senior citizens should be provided with training in sodomy.
Seeing the people affected by targeting as agents rather than as patients does have far-reaching implications.
No it doesn't. One may as well look at cats as hats.
The Need for Selection The immediate question is whether the questioning of the merits of targeting indicates a case for dropping it altogether.
You shouldn't set yourself any goals or targets. You should explicitly scrutinize stupid shit instead
It would be amazing if that were so.
Just as amazing as if cats turned out to be excellent hats. Why mention anything so absurd?
Economic policies–those aimed at poverty removal as well as others–try to achieve some results. And any such attempt must involve some targeting. If the aim is to increase female literacy or to vaccinate children, surely the policies must somehow concentrate on the illiterate females or the unvaccinated kids. Like Monsieur Jourdain in Moliére’s Le bourgeois gentilhomme, who spoke prose “without knowing it,” we are all targeting all the time if any selection of beneficiaries counts as that.
D'uh, Captain Obvious! What an economist should be saying is it is cheaper and better to identify the target though publicly available costly to disguise signals. Also do 'targeting within targeting' following the Pareto law. Also, remember poverty is about productivity. Boost the latter and you have a virtuous circle such that transfers can rise in absolute terms while falling in relative terms.
Coherence of poverty-relief policies would require some obvious selections–regions, classes, occupation groups, and so on.
Sen started off by talking about poverty eradication which is about boosting productivity but he has only mentioned transfers which are about ameliorating poverty. But those transfers disappear when the country goes off a fiscal cliff.
That is the “prose” we speak, and there is no question of doing without those selections. In most contexts, these elementary distinctions are well understood and can be fruitfully used in policymaking. Cogency of policy requires a concern with the identification of beneficiaries and some discrimination. The important issues lie elsewhere–to wit, in how far to push the discrimination and where to stop.
The thing stops when the Government runs out of money or you get stagflation
Poverty as Capability Deprivation
is meaningless. Capability continues to exists even if you suddenly lose all your money.
In answering these questions, there is a case for raising a fairly foundational issue about the nature of poverty: what is the shape of the beast we are trying to tackle with variable amounts of targeting?
Low productivity. Why can't Sen get this into his thick skull. The answer is that he assumes all poor countries are like India whose poor people, he thinks, are utterly shit ; while all rich countries have a magic money tree which they stole from Bengal in the eighteenth century.
The policy literature on poverty removal has been deeply concerned with the perspective of income deprivation.
No. It has been concerned with low real income which is linked to low productivity
I would even argue that it has been obsessed by this one, undoubtedly important but partial, aspect of deprivation. Here too we may need to take a more activity-oriented view of human beings.
Which requires us to look at productivity.
I have tried to argue elsewhere for seeing poverty as the failure of some basic capabilities to function–a person lacking the opportunity to achieve some minimally acceptable levels of these functionings.
But capabilities failure is the result of poverty. There is no point seeing cats as felines if the word feline means cat.
The functionings relevant to this analysis can vary from such elementary physical ones as being well nourished, being adequately clothed and sheltered, avoiding preventable morbidity, and so forth,
which may be wholly independent of poverty which is low productivity.
to more complex social achievements such as taking part in the life of the community, being able to appear in public without shame, and so on.
which have to do with the nature of society, not with poverty. A wealthy woman may not be able to 'appear in public without shame' in a 'purdah' observing society. Equally, the thing may be ideographic. I can't appear without shame in public because I'm generally drunk and often forget to put on my trousers before popping down to the offie.
The opportunity of converting personal incomes into capabilities to function depends on
capabilities. Either you have it or you don't.
a variety of personal circumstances (including age,
which is why I'm incapable of being voted Prom Queen
gender,
that used to be a bar, but is no longer
proneness to illness, disabilities,
which make you less capable.
and so on) and social surroundings (including epidemiological characteristics, physical and social environments, public services of health and education, and so on).
So all we have here is bullshit. What you can do depends on your capabilities because capability means the ability to do stuff.
If we insist on seeing poverty in the income space
we are sane. Poverty means having low income
(rather than directly in terms of capability failure),
but capability failure affects the rich, the poor and cats and dogs and plants and so forth
the relevant concept of poverty has to be inadequacy (for generating minimally acceptable capabilities) rather than lowness (independent of personal and social characteristics;
NO! We should not say that a ninety year old billionaire is poor even if he lacks the ten trillion dollars needed to keep him alive for the next five hundred years. So what if his Doctors only manage to keep him alive for another century? Compared to others of his age, he is as wealthy as fuck.
the extensive implications of this distinction are discussed in Sen 1992).
There were no fucking implications. Sen was always as stupid as shit.
Technically, this is “the inverse function” to that relating capabilities to incomes,
there is no function which relates capabilities to income. A poor man may be capable of singing beautifully. A rich man may be incapable of fucking his own wife. So what?
but I shall not go into the formal representations here.
The formal representation is mathematically unsound- not to say as stupid as shit.
The more general issue is that a concept of poverty that ignores the relevant variations in individual and social characteristics cannot do justice to our real concerns about poverty and deprivation, namely, inadequate capabilities.
Nobody can do justice to a crazy concern. I may be concerned that my cat gets tasty treats. I'm not concerned with the fact that my cat has inadequate capabilities needful for a successful career in Actuarial Science. Why pretend otherwise?
We are genuinely concerned with people like ourselves who don't have enough money to enjoy things we take for granted. We may also be concerned to raise the productivity of people at the bottom of the heap because that way everybody is better off. But we not concerned at all by the crazy notion that not having money changes what you are capable of. True, I may say that if only I received a check for a million dollars every month from the Government, I would become as witty as Oscar Wilde and as handsome as Roger Moore. But you don't believe me. However, you may express concern about my mental health.
It might be thought that to go beyond the low-income view of poverty must have the effect of making practical decisions much more complex than they already are. Even though the primary argument for seeking a better idea of poverty is not simplicity but cogency, 1 do not believe it does, in fact, make the practical problems more difficult. Indeed, in many ways, it does quite the contrary. The failure of some basic functionings (for example, having a disease or being illiterate) may be more directly observable than the actual income level of a person, so that the problem of informational distortions can be less acute.
But these are targeted not by poverty programs but public health or literacy programs. I happen to know that in my borough there are some poor women who are illiterate. But there are also some very rich women who are illiterate. My local mosque has an outreach program where both rich and poor women of a particular background are taught by devout and caring young women who were born and brought up here. It may be that this program attracts funding from the Government's adult literacy program. I'm certain it would happen regardless because the thing is good in itself.
Arguments for income-based targeting
This is for 'transfers' ameliorating poverty rather than eradicating it by raising productivity
have tended to rely, typically implicitly, on two assumed advantages: (1) measurement opportunities and (2) relevance. Neither ground is very secure.
They are good enough for their stated purpose which is why they still exist.
Income estimates call for appropriate price and quantity data, and sometimes they are hard to get and easy to hide.
They may be but again they may not.
Certainly, it is by no means clear that it is easier to get a firm view of personal income
which is easily done from bank statements
than to observe morbidity,
which requires the trained eye of a medical professional
disability, undernourishment, or illiteracy.
Illiterate people tend to be very good at hiding this fact. They are constantly complaining that they misplaced their reading glasses or that they have something else, very urgent, to do.
And as far as relevance is concerned, since income is at best one of the means to other ends, there is some lack of directness in concentrating on incomes, rather than on the valued functionings that income promotes (along with other means).
But those valued functionings may exist absent any income. If I were witty or nice to look at or didn't have a fucking horrible personality, I'd get invited out to plenty of excellent dinners.
Not all functioning achievements or failures are, of course, easy to observe. But some of the more basic and elementary ones are more amenable to direct observation
Only if we live in an Orwellian world where TV screens are watching you.
and frequently enough provide useful informational bases for antideprivation policies. The informational bases for seeing the need for literacy campaigns, hospital service programs, and nutritional supplementation need not be particularly obscure.
Sen needn't be particularly obtuse. But, since he is a brown monkey on an Ivy League campus, it is in his interest to be as stupid as fuck.
To rely entirely on the income space would be, in such cases, quite counterproductive both on the grounds of relevance and that of observability.
Check the claimant is legally domiciled by all means.
This is not to deny that sometimes it will turn out that the functionings in question are really quite complex and are not so easily measurable, and there might well then be, in some cases, good pragmatic grounds for using income as the contingent criterion of discrimination (see Sen 1992).
The only grounds which matter are pragmatic ones. Inviting Sen to gas on about something which smart people have been doing for decades is a mistake.
The measurement errors in assessing functionings
No such measurement has ever been made. Sampling errors- okay. But sampling is not measurement. It is estimation.
can well be large enough in some cases to make it more sensible to rely on income information (despite the indirectness of its relevance and its own measurement problems). In practice, there is much to be said for using functioning information as well as income data after critically scrutinizing the appropriateness of each. The case for combining the two types of information is strong.
Critical scrutiny can be outsourced to a brown monkey, a crazy feminist and some gay dude of colour so as to tick the relevant boxes. They will write meaningless Sen-tentious shite.
No matter which particular indicator is chosen in a specific case, the general approach of poverty removal
which can only be done by raising productivity
has to take adequate note of the purely instrumental nature of the importance of income, in contrast with the more intrinsic relevance of functionings, in assessing deprivation
Nonsense! Only income matters when it comes to poverty. A billionaire may be malnourished because he is very old and can no longer digest food. Also, he is illiterate because his father- the Emir- thought it infra dig for an aristocrat to read and write.
(I have discussed the relationship between income and the capability to function in assessing deprivation in Sen 1992, chaps. 6 and 7). It is important to see human beings not merely as recipients of income but as people attempting to live satisfactory lives
Sen discovered that other economists did not know that human beings can lead satisfactory lives. Ken Arrow famously told Samuelson that Disco dancing isn't a real thing. Human beings only receive income. They don't dance or sing or have sex. Samuelson replied that he had proved this long ago. Also, my wife tells me that your wife says you have a tiny dick which is fine because as a human being you merely receive income. You don't put your pee pee into wife's chee chee place. No doubt there are people who receive an income for doing gross stuff of that sort.
and to see poverty not simply as low income but as the lack of real opportunities to have minimally adequate lives.
Ninety year old billionaires may lack those opportunities. That is why they should receive hand-outs from the Government.
Even when income turns out to be a good enough indicator of capability deprivation,
e.g a corpse which is no longer receiving any income
that connection with the capability perspective has to be brought out clearly.
Corpse is suffering from capability deprivation because of cruel Neo-Liberal policies of Manmohan Singh!
Information and Incentive Compatibility I turn now to a more specific discussion of the informational and incentive aspects of targeting. The informational aspect of targeting relates to the identifiability of the characteristics associated with deprivation. If the object of the exercise is to eliminate low incomes, then the income level of the person is the appropriate focal variable. If, however, the object is to eliminate, say, preventable morbidity or severe undernourishment or illiteracy, then
we aren't speaking of anti-poverty policies. Similarly, though waging war on an enemy who is trying to conquer our territory is a way of staving off destitution and slavery, still, it comes under the rubric of Defence.
those conditions, instead, must be the relevant focal variables. The main argument against taking income as the focal variable is that it is just a means–and only one of several means–to the type of life we have reasons to want to live. If, for example, we are talking about poverty in, say, Harlem in New York, the calculation of the lowness of income there is, I believe, a less telling indicator of poverty than the fact that a man born in Harlem has a lower expectation of living to any age above forty than the corresponding Bangladeshi has (and of course a much lower life expectancy than that enjoyed by the residents of China or Sri Lanka or the Indian state of Kerala).
Very true. There was no crack problem in Harlem. However, people from China or Kerala who managed to get to Harlem did very well for themselves.
In fact, the chances of surviving to higher age groups are systematically lower for the African American population as a whole (not just in Harlem) than for the Chinese or the Sri Lankan or the Keralan (even though the latter populations are immensely poorer, in terms of real income per person; see Sen 1993).
There are even lower for drug addicted criminals in Kerala or China
What about incentives? It is, in general, quite hopeless to look for some indicators that are both (1) relevant for identifying deprivation and (2) immune to incentive effects.
But you can look at income or the lack of it. Still, there are plenty of indicators which can't be gamed for identifying deprivation- e.g. attendance at soup kitchens, sleeping on the street, starving to death etc.
This applies, I am afraid, to basic human functionings as well. But the picture is not entirely bleak for at least four distinct reasons. First, people may typically be reluctant to refuse education, foster illnesses, or cultivate undernourishment on purely tactical grounds.
They may also be reluctant to die. Death is a big cause of deprivation and functioning collapse. To effectively target poverty, we must abolish death.
Theory and Method The priorities of reasoning and choice tend to militate against deliberately promoting these elementary deprivations. There are, of course, exceptions. Among the most distressing accounts of famine relief experiences are occasional reports of some parents keeping one child in the family thoroughly famished so that the family qualifies to get nutritional support (for example, in the form of take-home food rations)– treating the child, as it were, as a “meal ticket” (see the discussion of this issue in Dréze and Sen 1989, chap. 7, particularly pp. 109–13; the empirical observations come from Nash 1986 and Borton and Shoham 1989).
Why not kidnap a child for this purpose? The obvious problem here is that the child may be confiscated.
But in general such incentive effects in keeping people undernourished or untreated or illiterate are relatively rare, for reasons that are not astonishing. Second, the causal factors underlying some functional deprivations can go much deeper than income deprivation and may be very hard to adjust. For example, physical disabilities, old age, and gender characteristics are particularly serious sources of capability handicap because they are beyond the control of the persons involved.
Like death. Abolish death! Sen isn't getting any younger you know.
And for much the same reason, they are not open to incentive effects in the way the adjustable features are. This limits the incentive distortions of subsidies targeted on these features.
Did you know, in some countries, poor people are given a 'Death benefit' to help them with funeral costs of loved ones? This amounts to subsidizing death!
Third, there is a particular connection between the use of selfselection as a method of targeting and the valuational perspective to be used. If the selection can be left to the potential recipients themselves (for example, through offering employment at a basic wage to anyone who seeks such employment), the actual choices made will depend on all the values that influence the choices of the potential recipients. The result will not be based on income maximization only. A potential recipient may calculate the wage level associated with this employment offer, take note of any income forgone elsewhere, consider the levels of activity and toil involved in the respective alternatives, consider such nonwage benefits of employment as the promotion of self-respect and independence, and so on. Thus, through the choices made, the self-selecting potential recipient will tend to reflect a wider class of values than simply income maximization.
Which is why economists focus on 'real income maximization' which however is closely related to nominal wages or the 'replacement ratio'.
Since the rationale of the capability perspective relates closely to this wider class of values, there is a clear connection between the move toward self-selection and the rationale of the capability perspective.
Is Sen saying 'work-fare is good, welfare is bad'? That would be cool. Sadly, he isn't saying anything at all.
Policymaking has to take note of the fact that the case for going beyond income considerations into the type of life led–including the various functionings performed– is relevant for the recipients themselves and will thus influence their decisions and choices (see Dréze and Sen 1989; Besley and Coate 1992; in addition, the chapters in this volume include enlightening explorations of the opportunities and costs of such programs–see, for example, Ravallion and Datt in chapter 15).
All these nutters were utterly useless. China showed how to do poverty eradication. It involved raising productivity not listening to Bengali bores.
This type of self-selective targeting has been very successfully used in providing famine relief
save under elected Bengali Muslim politicians in 1943 and 1974
and can have a wider role in enhancing the economic opportunities of the able-bodied deprived population.
Only if productivity is permitted to rise.
Concluding Remarks First, the elementary case for targeting has to be qualified by taking adequate note of the various costs of targeting, including informational manipulation, incentive distortion, disutility and stigma, administrative and invasive losses, and problems of political sustainability.
No. The case for targeting is based only on one consideration- productivity. If it rises, the thing may more than 'pay for itself'. If not, there is a fiscal cliff and the thing withers on the vine.
I do not doubt that some expert in modern economics would find it helpful to say that targeting should be pushed exactly to the point at which the marginal benefit from it equals its marginal cost. Anyone who is enlightened by that wonderful formula fully deserves that enlightenment.
Anyone who finds Sen enlightening deserves to be shat upon.
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