We must know how many are suffering, so let’s make up numbers

As major world leaders jet from the UN General Assembly yesterday to the Pittsburgh G-20 today, the UN and World Bank have bombarded them with messages and statistics about the effect of the crisis on the global poor:

(1) We need to know how many are suffering where, so that help can be targeted to those in most need,

(2) Here are our precise numbers of how many additional poor have been created by the crisis,

(3) Since we based the numbers in (2) on thin evidence or no evidence whatsoever, you should also give us more money to expand our abuse of statistics.

Here are some examples to illustrate these three points:

(1) Secretary General Ban Ki-Moon announced yesterday, “We need to know who is being hurt, and where, so we can best respond.” He handed out a new UN report, “Voices of the Vulnerable” with lots of these numbers.

The need to know precise numbers is not so obvious, since the international aid system lacks any central authority that has the skill or power to redeploy aid resources from areas of less poverty to areas of increased poverty. Even in normal times, the relationship between level of poverty by country and aid given to that country (even correcting for quality of government) is not that strong.

(2) “Voices of the Vulnerable” says “in 2009 about 100 million more people will be trapped in extreme poverty ... than was anticipated before the ...crisis.” This figure is based on a World Bank paper prepared for the G20, which actually said “the crisis will leave an additional 89 million people in extreme poverty ... at the end of 2010.” This number is similar to the number in today’s FT oped by WB President Zoellick, except that he said that 90 million had already been pushed into poverty by “food, fuel and now financial crises” (i.e. 2007-2009)

The Bank’s 89 million claim, in turn, is based on a paper by Chen and Ravallion, which actually predicted “the crisis will add 53 million people to the 2009 count of the number of people living below $1.25 a day.” “Voices of the Vulnerable” report also cites figures from the ILO that “as many as 222 million additional workers worldwide run the risk of joining the ranks of the extreme working poor over the period 2007–2009.”

So precise estimates guide us to redeploy resources to the 100 million, or 89 million, or 53 million, or 222 million that were driven into poverty either in 2009, or 2009-2010, or 2007-2009, or 2008-2009.

There is an obscure piece of theoretical statistics called “garbage in, garbage out.” Calculating “additional poor in poverty due to crisis” requires (a) knowing what growth would have been in absence of crisis in every country, (b) knowing what growth will actually turn out to be in 2009 or 2010 in every country, not to mention in 2008, since the World Bank’s World Development Indicators do not yet have estimates for that year, (c) having good data on the current level of world poverty, (d) knowing the effect of growth on poverty, (e) projecting the effect of food and fuel prices on poverty, not to mention projecting food and fuel prices.

The reality: (a) is impossible, (b) is almost impossible, (c) Voices of the Vulnerable says the last real global poverty numbers were in 2005, which themselves reflected an upward revision of 40 percent ,(d) is unreliable and volatile, and (e) is impossible.

Economists can do useful projections sometimes, but the castles in the air implied by (a) through (e) should have caused a responsible analyst to NOT invent such a number.

Unfortunately, the made-up poverty numbers look positively respectable compared to other claims in the UN Voices of the Vulnerable that are based on no known statistics whatsoever:

“Women and children are likely to bear the brunt of the crisis…depression and drug and alcohol abuse could be on the rise….{including} consumption of strong local brews….{There are} rises in domestic violence…{There are} increased social tensions within communities.”

(3) In the same report, the Secretary-General admits: “More than a year in, what we do not know overshadows what we know.” But he offers to produce: “a networked 21st Century global system for real-time monitoring of the impacts of this and future global crises on the most vulnerable and poor: a Global Impact and Vulnerability Alert System (GIVAS). This system will require … resources.”

So ... give more “resources” to serial inventers of numbers to invent more numbers.

Why does all this matter? Because serious numbers are useful in analyzing how best to help alleviate poverty. The onslaught of imaginary numbers weakens that cause while accomplishing nothing for the poor.