2) What do you think of having a new statistical tool whereby the wealth of a country would be measured not by GDP per capita but by GDP per capita of the lowest 10% (or 25%) of the population?
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March 10, 2005
Useless Statistical Almanac n°4
Comments
1) It is not taking into account the elevated standard of living created by an elevated GDP.
2)I love stats
Posted by: Scape | Mar 10 2005 11:05 utc | 2
Well, the first one is too easy. It’s not that bad if you manage to get in vacation to Bolivia or if you just can cash in the money and go live in Zambia, because the cost of living is far lower there, but it’s quite high in the US – though on par or lower than many European countries.
For the 2nd one, I would think Gini coefficient is a pretty accurate way of seeing how the global wealth is shared inside the country. This thing is 90 years old, I mean, and it’s pretty easily understood and intuitive. It pisses me off to no end that people only stick to averages without even considering medians, or other simple artefacts. I don’t know if it’s the sheer mathematical incompetence of media people or if I should see some conspiracy of bankers and have-mores who definitely would lose big time if people were aware of the real stats about income and fortune distribution.
Posted by: CluelessJoe | Mar 10 2005 12:36 utc | 4
I started to hate averages, too. More power to the medians!
Posted by: MarcinGomulka | Mar 10 2005 12:45 utc | 5
CJ: People do know, they’re not completely stupid. The problem is that many of them either don’t care or believe it has to be that way.
Technically, I believe the median is an average. You should feel free to use a mean, a median or some other measure as suits your aim when you say average. The bad guys will.
I like the Gini coefficient: hadn’t seen that one before. Mind you, it would probably cover up the income disparities in Ireland quite nicely, since the explanation suggests it overemphasises middle class income.
As for mathematical incompetence: most people in business and government have fuck-all mathematical expertise, never mind the media. In fact, they don’t even have any arithmetical expertise: they don’t know the basic rules of these things as arithmetic (in the sense of rote learning vs true understanding: if you can’t follow the derivation from first principles, you don’t understand it).
ad 1) my retort would be that almost everywhere prices of things are calculated in such a way that you can afford stuff if you earn the median or more, not if you earn under the median. you just need to put your income in relation to the median of your country, make a basket of the stuff you consume in a month and ask yerself if a person earning 1/2 the median would be able to afford exactly those items. the “is not so bad” slur probably comes from somebody who thinks that if the poor can supplement their diets with dog food things cant be that bad.
ad 2) i vaguely suspect that measuring the GDP of the strata with the lowest 10% or 25% of the income in any given country would probably show that these people are the ones who generate p’haps 2/3 or so of GDP of that country. somehow the definition of capitalism: exploit the poor.
@Colman 09:59
one word about math incompetence – i have seen firsthand people with a MSc who were not able to explain what percentage of cpu power is consumed in a 16-cpu machine when 3,5 cpus are busy – what i want to say is that it is far more widespread than most people suspect.
Posted by: name | Mar 10 2005 16:47 utc | 7
I know name, I know. I deleted a long rant about it from my post because it wasn’t funny enough to keep.
The easiest way to stop people from arguing with this statistic would be to calculate how much money per day is being spent, total, rather than phrasing it with all these meta-words. As it is, this statistic is only useful for showing that wages are not distributed along a bell curve.
Suppose that wages were arranged in a bell curve (which I don’t think has ever been the case, any time in history, but just imagine it for a minute). Then the median will be in the middle of the curve, so the median wage = the mean wage. Then 50% of the median wage will be halfway from the left end of the curve to the middle, meaning that it will be exactly 25%. Since the bell curve gets small at the ends, the area of the left quadrant will be much, much less than 25%. (I can’t say the exact amount, because I don’t remember the formulas and don’t have a calculator to hand, but a quick web search indicates around 2 or 3%.) So if wages were distributed along a bell curve (and—one more assumption which is not necessarily true—children were randomly distributed throughout the population), this statistic would be around 2 or 3%. (Well done, Denmark!)
Unfortunately, without more information, you can’t say much about the distribution in reality which gives a statistic like the U.S. one. It could be (and actually is) shaped like a capital “L,” with lots of low wages offset by a few high ones, but it could also be nearly flat, or it could be “M”-shaped, or “W”-shaped, or an infinite number of others… any of these could lead to 20% of the households having less than half the median wage. (What would be useful is to know the mean and the median; if the median is significantly lower than the mean—which it is”it means that the “L” is the way things are. And the mode—the most common number, corresponding to the highest point on the curve”would be nice, too, although it can be misleading.)
Posted by: Blind Misery | Mar 10 2005 17:52 utc | 9
Poverty is not an absolute description, but a relative one as presently defined in Western countries (x below the average, bottom quartile or decentile. etc. as based on income on dollars or francs or whatever.)
The yardstick is no good. Being ‘poor’ (standard definition) camouflages both extreme suffering and acceptable lives. Poverty (W countries) has the effect of rendering people helpless and submissive, angry and puzzled, criminally inclined, particularly because of the lack of stability associated with poverty. No plans can be made, no adjustements or sacrifices will work, one is at the mercy of unchartable forces, unexpected events (many negative, such as illness, a break down of a car essential to go to work, lay offs, lowering of minimum wage, landlord who goes bananas, etc.), condemned to be powerless and looked down upon, incapable or attaining the status of a proper person.
Poverty is looking at tiny toys for children in the supermarket, and knowing that even these are beyond reach. Or thinking about steak, sizzling and covered in BBQ sauce, hovering up there in hypothetical heaven. Or hiding tears, turning away, so they will not drip on a loved one and alarm, as it is a given that competent medical care will not be possible. Or worse – but common – submitting to sex to keep that small income coming in. Poverty is a daily grind, made of endless worry, second hand shoes, fear and hate, insults and agression. And pretending you are fine, you can manage.
It has little to with income, dollars, but concerns the overall organisation of society, the solidarity and community (spontaneous or state enforced) present, or not, in the environment.
Posted by: Blackie | Mar 10 2005 18:57 utc | 10
Poverty is not an absolute description, but a relative one as presently defined in Western countries (x below the average, bottom quartile or decentile. etc. as based on income on dollars or francs or whatever.)
The yardstick is no good. Being ‘poor’ (standard definition) camouflages both extreme suffering and acceptable lives. Poverty (W countries) has the effect of rendering people helpless and submissive, angry and puzzled, criminally inclined, particularly because of the lack of stability associated with poverty. No plans can be made, no adjustements or sacrifices will work, one is at the mercy of unchartable forces, unexpected events (many negative, such as illness, a break down of a car essential to go to work, lay offs, lowering of minimum wage, landlord who goes bananas, etc.), condemned to be powerless and looked down upon, incapable or attaining the status of a proper person.
Poverty is looking at tiny toys for children in the supermarket, and knowing that even these are beyond reach. Or thinking about steak, sizzling and covered in BBQ sauce, hovering up there in hypothetical heaven. Or hiding tears, turning away, so they will not drip on a loved one and alarm, as it is a given that competent medical care will not be possible. Or worse – but common – submitting to sex to keep that small income coming in. Poverty is a daily grind, made of endless worry, second hand shoes, fear and hate, insults and agression. And pretending you are fine, you can manage.
It has little to with income, dollars, but concerns the overall organisation of society, the solidarity and community (spontaneous or state enforced) present, or not, in the environment.
Posted by: Blackie | Mar 10 2005 19:00 utc | 11
Blackie – very moving post. Thanks for posting twice!
Posted by: Jérôme | Mar 10 2005 21:48 utc | 14
To question #1: Poverty is a relative concept. It is a far different experience being poor in a poor culture than being poor in a rich culture, as anyone whose cozy IT job has ever been outsourced to India can attest.
Posted by: Sandra | Mar 11 2005 5:36 utc | 16
Poverty with self-sufficiency — as a peasant farmer or fisher, let’s say — is quite different I think from poverty in a metropolitan setting where all labour has been commodified and controlled by capital. The metropolitan labourer is essentially dependent on others — on the Boss or on the State — for the necessities of daily life, and without a monetary wage is unable to provide for self or family. The poor farmer in some rural “noplace” in India — until kicked off his/her land by corporate agribiz — is at least able to provide food and sometimes basic clothing for the extended family. Even gleaning the fields of others may yield enough greens or grain to keep body and soul together. The urban poor cannot even glean or graze — everything in their environment is private property, and any foraging which is not purchase is theft.
Poverty in a country where healthcare is affordable by policy, where a minimum level of nutrition is guaranteed, where education is free — Cuba anyone? — is imho a different proposition from poverty in a country where poor people don’t get any medical care, where poor people can only afford crappy factory food with lousy nutrition, where poor people’s children go to broken-down, overcrowded, violent factory schools. I’m not saying that the poverty in Cuba is not real or that it doesn’t depress and often humiliate people — but not so many people per capita watch their kids grow up malnourished (or not grow up at all) as in the US (or Iraq today).
If you can’t afford a basic education for your children, or decent nutritious food, or medical care when you/they need it — then you are poor — and feeling the shame and frustration of poverty, which is the inability to provide for and protect those we love — regardless of the number of dollars involved. In the US the luxuries (consumer goods, sweatshop loot) are “affordable” and the necessities are damned expensive. In the US it has at times been cheaper to buy a gallon of gasoline than a gallon of milk… I don’t buy either so am not sure whether this is the case at present.
Women account for 70% of world’s poor
Not $70, 70%, I was always bad with statistics.
Posted by: Cherchez la femme | Mar 11 2005 8:46 utc | 19
As a person who is lucky o have the chance to travel all around the world(I visited 26 countries from 4 continents including SA,Mexico,France,Germany,Spain,Far East,Africa,some other European countries)I can easily tell you that Rich does not mean rich or poor does not mean poor.All of us consider countries richness or poorness according to GDP rates or national income per capita rates.But in my opiion we must make the classification according to living standarts.In Turkey having a dinner in a medium class fish restaurant costs around 40 YTL(approximately 30 US Dollars)including salad,a few beer or a few glasses of Raki per person.I already know that I mst pay at least 70 Euros for this kind of meal in Europe or USA but I can have this meal much more cheaper in Egypt or Far East.
At the same time 1 lt of milk,one egg,1 kg of meat,1 kg of cheese,1 kg of olive,1 lt of sun flower oil and olive oil,all kinds of vegetables and nearly all kinds of fruits are at least 2-3 times for some of these items 8 times cheaper than Europe and USA.Even 1 box of cigarette or 1 can of Coca Cola is 2-3 times more expensive in Europe or USA.The entertainment is at least 2-3 times cheaper than USA or Europe.The rent cost of a luxury house in Turkey especially in Istanbul is between 1000 YTL to 10000 YTL(approximately 800 USD to 8000 USD)while similar houses cost at least 2-3 times much more in USA or Europe.In Turkey if a person earns 1000 YTL per month(800 USD) and he is single then it does not mean that he will hae a high living standard but he can easily survive and entertain himself with this amount of money.But I already know that with 800 USD per month in USA or Europe you are almost nothing.
But all of you may know that GPD per capita is approximately 4000 USD in Turkey which is 5-6 may be 7 times less than USA and many European countries.So,there is a mistake in the classification.I beieve the statisticians must have a bag and i this bag they must have the standard foods for a person to survive per month.Then they can add 2 books,2 tickets,4 bar-disco entrances to this bag.Of course there may be some other details to add but in the end they can make a calculation.Then statisticians can calculate these for each country.After that they can divide GPD per capita to these calculations and as small as the result then as rich as the country.5000 USD per month is a very good salary in Turkey.People can easily save 60% of this money in a month but it is imossible for an American to save this mount in USA.Waiting your positive-negative opinions.Regards.
Posted by: CETIN | Mar 12 2005 16:18 utc | 21