Charles Kenny

Revolution in A Box

Revolution in a Box was published in the November issue of Foreign Policy. The article notes the continuing global spread of television sets and an explosion of viewer choice driven by cable, satellite and digital technologies.  It suggests this is a good thing, pointing to evidence that access to competitive television can improve womens' standing in the home, increase girls schooling, reduce fertility rates, lower drug use, improve governance and (possibly) help foster global peace.  I spoke about the piece on NPR.  I didn't speak about the article to the UK's Daily Star --but this didn't stop them making up an inteview.   British journalism at its best!

Think Again: Africa's Crisis

Africa's Crisis is a Think Again piece for Foreign Policy.  It takes some of the ideas from The Success of Development and tries to squeeze them into seven short contrarian arguments...  Meanwhile, I did a few guest posts at A Fistful of Euros on themes from the book, as well.

The Success of Development

The Success of Development is a book I'm working on, that was posted here for a few weeks in the hopes that people would comment on the draft.  It worked --I got many useful responses and suggestions, not least thanks to generous links/discussions by Felix Salmon, Matt Yglesias, Tyler Cowen, Todd Moss, Dennis Whittle and Bill Easterly.  The book should come out next year, published by Basic Books.  I'm working on revising the draft. I'll post about it again nearer the publication date.  Again, many thanks to all who commented.  Below is a summary.

1. INTRODUCTION: ABANDON HOPE?

A lot of people are depressed about the state of global development. And they are particularly miserable about Africa. There is a widespread belief that the region remains mired in a Malthusian trap, home to many of the ‘bottom billion’ who are living in ‘fourteenth century’ conditions. And many argue that aid has been a dead loss in fixing the problem. According to this view of the world, we’re stuck in a serious crisis of development.

This book explores the bad news and the good news about development. It lays out the evidence on growing income disparities between the global rich and the global poor that are at the heart of a narrative of crisis. And it chronicles the failed search for a silver bullet to overcome economic malaise.

But it also discusses the considerable successes of development. Not least, the evidence for any country being stuck in a Malthusian nightmare is threadbare. The book points to global progress in health, education, civil and political rights, access to infrastructure and even access to beer. This progress is historically unprecedented and has been faster in the developing world than in the developed.

The book argues that ideas and technologies are the driving forces behind progress. And it suggests what the success of development and the importance of innovation to that success mean for policies in and policies towards the developing world.

2. THE BAD NEWS: DIVERGING INCOMES

Despite declining global levels of poverty, poor countries have grown more slowly than rich ones since the Second World War. Harvard Economist Lant Pritchett titles his analysis of the long term global evidence on income trends ‘Divergence, Big Time.’ These trends have left global income considerably skewed in favor of a lucky few. Today, the top tenth of the World’s population is about 100 times richer than the bottom tenth.

The evidence regarding large parts of Africa is particularly stark –stagnant incomes since time immemorial, leaving the continent ever further behind. For example, the United States had a GDP per capita a little more than seven times larger than Senegal in 1960. By 2004, the United States was around twenty-six times richer.

3. THE WORSE NEWS: IT’S HARD TO RAISE GROWTH RATES

East Asia is the one developing region that has managed to sustain economic growth rates higher than rich countries over the last fifty years. This East Asian ‘miracle’ is a topic in numerous academic papers –over 6,500 by one rough measure-- and a subject of lively debate as to causes and policy pointers. Sadly, no consensus has emerged. Those who believe that investment is fundamental to economic growth war against technologists as to the role of capital versus ideas in East Asia’s performance. Dirigistes battle free marketeers as to lessons regarding the state in development. We don’t even know for certain if government policies of any type were central to the process at all. While in East Asia we don’t know who to praise, in Africa we don’t know what’s to blame. And millions of calculations run by thousands of economists haven’t brought us any firm policy conclusions in either case.

But recent analyses of relative economic performance have suggested a central role for history in determining who is rich and who is poor. Scholars now link wealth with influences such as the mortality rate of colonial settlers in the Eighteenth and Nineteenth Centuries, climate natural resource abundance, and the extent of human losses to the slave trade. The impact of such ‘initial conditions’ on long term income performance acts through the strength of government institutions such as legal systems and parliaments. But such institutions are slow to change. So a growing mound of research papers adds to the conclusion that we know much more about the histories that rich countries or poor countries share than we do about the policies that will make poor countries rich.

4. THE GOOD NEWS: THE END OF THE MALTHUSIAN TRAP

Malthus was concerned with what he felt were the excessive breeding habits of the unwashed masses. Populations, he suggested, expanded until a lack of food and resources meant that as many people died each year as were born. Paul Ehrlich’s The Population Bomb updated the same argument for the late Twentieth Century: “the battle to feed all of humanity is over. In the 1970s and 1980s hundreds of millions of people will starve to death,” he argued. Many people suggest that parts of the developing world remain stuck in such a ‘Malthusian trap’ to this day.

The first bit of good news in this book is that there is little evidence from anywhere that growing populations condemn a country to a declining standard of living. Looking at Africa in particular, while populations continue to expand, there is no link from population growth to declining income and mortality rates are falling, not rising. Even if the institutions which are central to per capita growth develop slowly, the technologies required for greater output –GDP increases-- spread fast. And this is enough to prevent widespread and recurring famine.

Meanwhile, ‘neo-Malthusian’ threats at the global level regarding the use of finite natural resources like fossil fuels or water are a real concern, but responses (should) involve policies that focus on sustainable consumption, not population control. Overall, the jeremiad of a long-dead English parson has little relevance to the developing world in the Twenty First Century.

5. THE BETTER NEWS: THE GREAT CONVERGENCE IN QUALITY OF LIFE

The next bit of good news regarding development is that looking at almost any measure of the quality of life except for income suggests rapid and ubiquitous global improvement. Since 1960, global average infant mortality has more than halved, for example. Nine million children born in 2005 were alive to celebrate their first birthday in 2006 who would have died if global mortality rates had remained unchanged since 1960. And the vast majority of those children lived in developing countries.

Countries in every region of the World, from the poorest to the richest, with stagnant or vibrant economies, have all seen improvements in average levels of health and education over the past half century. Most countries, regardless of economic performance, have seen forward strides in gender equality, civil and political rights. And progress in quality of life has been particularly rapid in countries previously the furthest behind. There are concerns –the picture regarding global violence is mixed, the quality of education in particular remains extremely low in many developing countries, and recent progress on health has slowed, not least due to the crisis of AIDS. Nonetheless, the overall picture from the last fifty years is of a planet with a growing number of people living a better quality of life.

6. THE GREAT NEWS: THE BEST THINGS IN LIFE ARE CHEAP

As suggested by the global reach of improvements in the quality of life, income growth has not been a requirement for improvements in health or education or civil rights. Even most countries that have seen per capita income decline over the past thirty years have seen health, education and civil rights observance considerably improve. This is the greatest success of development. The last century has seen a dramatic (and literal) decline in the cost of living.

Take child health, for example. No country in the World saw much more than ninety percent of children survive their first year of life in 1900. The United States saw an infant mortality rate of nearly fifteen percent. This was despite an income per capita that was one of the highest in the World at the time --a little above $4,000 measured in today’s dollars. It did not matter how rich a child’s parents, the state of health technology placed a significant upper limit on an infant’s chance of survival. Today, the country with the highest recorded infant mortality in the World is Sierra Leone. That mortality rate is seventeen percent --only two percent higher than the rate in the US a century earlier. Yet income per person in Sierra Leone has dipped as low as $404 in the recent past – or one tenth the level of the United States a century ago. Countries as poor and wretched as Haiti, Burma and the Congo have infant mortality rates today that are lower than any country in the World achieved in 1900.

And rapid income growth doesn’t guarantee faster progress. Two things that do increase in line with GDP per capita are consumption and pollution. But across countries, there is little or no relationship between rates of GDP per capita growth and progress in health, education or human rights.

7. DRIVERS OF THE BETTER LIFE: INNOVATION, IDEAS AND INSTITUTIONS

If not money, then what? Global improvements in quality of life have been fostered by the spread of technology and ideas. Very cheap health technologies that can dramatically reduce mortality have spread rapidly across the world. The proportion of the world’s infants vaccinated against diphtheria, pertussis and tetanus –the DPT shot—climbed from one fifth to nearly four fifths between 1970 and 2006. And ideas that save lives –wash your hands, don’t defecate in the fields you eat from—are increasingly accepted.

People around the world are also more ‘informed consumers’ than they used to be. They demand not only soap to wash their hands, they want schools to educate their girls, and they want governments which respect their rights. The increasing demand for education in particular is an important part of the story behind climbing primary enrollments –less than half of primary-age kids worldwide were enrolled in school in 1950, by the end of the century the figure was closer to nine out of ten. Valuing ABCs and getting DPTs –these are the forces behind global improvements in quality of life.

The spread of technologies and ideas explain a strong global pattern to quality of life improvements with countries rich and poor, tropical and temperate, seeing similar rates of progress over time. The shocks of AIDS and state collapse explain most of the (limited) variation from that global pattern in the case of health. And a similar story applies to measures of education –if less so to human rights.

At the same time, a country’s relative standing in terms of quality of life appears to be connected to the same historical factors that explain present-day relative income performance. Even if global inequality in quality of life has fallen, countries that started earlier in the provision of health and education services, or began with a greater respect for human rights, remain ahead to this day.

8. POLICIES FOR THE QUALITY OF LIFE

The fact that income appears to be a poor proxy for overall changes in the quality of life suggests the need for a broad focus –a broad definition of development—for policymakers. Given that it is not clear exactly which policies at which times will promote growth, and the tenuous nature of the connection between income growth and quality of life, the first rule for economic policymaking should be ‘do no harm.’ The grail of economic growth does not justify the degradation of health, education or civil rights.

Regarding support for improvements in the broader quality of life, policies might include aiding the spread of ideas through approaches that increase demand for good health and education. Communications programs and payments for school attendance or clinic visits have a role here. In addition, with the quality of service provision increasingly important to outcomes, reform of the institutions of health and education should also be a central concern.

9. THE GLOBAL AGENDA

There is a moral case for attempting to provide minimum levels of health or education across countries, based on the same principles that push for a minimum quality of life within countries. But that moral principal only applies if rich countries can actually help improve quality of life outcomes in poor countries. This chapter argues that they can.

A range of rich country policies could help. Not least, more generous immigration quotas focused on the poorest countries and more equitable trading regimes that protect the transfer of the technologies of the quality of life would both have significant impacts. And even if the record of aid in fostering economic growth or the development of institutions is mixed, it has played a part in improving quality of life outcomes. Aid might be an even more powerful tool if it focused more on global technology development and the spread of ideas. One option would be the creation of a global technology bank that directly funded research, or put up prizes for advances in technology that would particularly benefit the World’s poor.

10. CONCLUSION: REALISTIC OPTIMISM

Realistic optimism is the right attitude with which to face the issue of development. This is based on a recognition of the challenges still facing the world –significant progress to be made, limits to the likely speed of that progress, and concerns with sustainability. But we should also acknowledge that the rapid and unprecedented improvement in global quality of life over the past fifty years provides some significant grounds for hope about the future. Understanding the causes of this success, and building on existing progress, is a vital part of ensuring that it is sustained.

A Cheaper Way to Better Healthcare

A Cheaper Way to Better Healthcare is a short article written for the McKinsey publication What Matters.  The article concludes that strong health outcomes don't take a lot of money --they take targeted interventions in prevention and some very cheap cures.

Why do people die in earthquakes ? the costs, benefits and institutions of disaster risk reduction in developing countries

Why do people die in earthquakes? is a working paper issued in January 2009. Every year, around 60,000 people die worldwide in natural disasters. The majority of the deaths are caused by building collapse in earthquakes, and the great majority occurs in the developing world. This is despite the fact that engineering solutions exist that can almost completely eliminate the risk of such deaths. Why is this? The engineering solutions are both expensive and technically demanding, so that the benefit-cost ratio of such solutions is often unfavorable compared with other interventions designed to save lives in developing countries. Nonetheless, a range of public disaster risk-reduction interventions (including construction activities) are highly cost effective. The fact that such interventions often remain unimplemented or ineffectively executed points to a role for issues of political economy. Building regulations in developing countries appear to have limited impact in many cases, perhaps because of limited capacity and the impact of corruption. Public construction is often of low quality - perhaps for similar reasons. This suggests approaches that emphasize simple and limited disaster risk regulation covering only the most at-risk structures and that (preferably) can be monitored by non-experts. It also suggests a range of transparency and oversight mechanisms for public construction projects.

The Next Decade of ICT Development

The Next Decade of ICT Development: Access, Applications, and the Forces of Convergence was co-authored with Mohsen Khalil.  It was published in Information Technology for International Development 4,3. Developing countries are already driving global innovation in technologies and business models related to information and communications. Ongoing technological change may give new life to business and regulatory models adopted and then abandoned in the era of the dot-com boom in developed countries, and developing countries may take the lead in such changes. As networks and applications spread, catalyzing the impact of ICTs for development will become a challenge of the broader environment for their exploitation

Grand Corruption in Utilities

Grand Corruption in Utilities, co-authored with Tina Soreide, was issued as a working paper in December 2008.  The paper discusses mechanisms of grand corruption in private sector utility provision in developing countries. The paper focuses on decisions made at the government level involving private sector management, ownership, and provision of utility services.  Corruption at that level may influence the pace and nature of private sector involvement and competition in utilities, as well as the level and form of investments, subsidies, and prices.  On the basis of a literature review and interviews with firms and regulating authorities in two countries, Tanzania and the Philippines, this paper discusses the levels and determinants of grand corruption in utilities.  The paper concludes by discussing a research program to extend this knowledge through a cross-country survey instrument.

The Global Spread of Liberty and Democracy

The Global Spread of Liberty and Democracy: A Brief Discussion is a short paper looking at the evidence regarding the level and change in access to liberties and democratic systems worldwide. It briefly discusses the history of the ideas of liberties and rights, long-term evidence regarding their extent, and two centuries of evidence regarding their spread as measured by the Polity dataset.  In particular it looks at potential causes for the spread of liberties and democracy over that time period and suggests an important role for changes in the demand for such liberties which is weakly related to income change. 

What’s Not Converging? East Asia’s Relative Performance in Income, Health and Education

What’s Not Converging? East Asia’s Relative Performance in Income, Health and Education is forthcoming in the Asian Economic Policy Review.  The paper examines East Asia’s performance in terms of per capita GDP growth rates over the past forty years and compares that performance to progress primarily on measures of health.  It also compares the region to the rest of the World on a set of broader development measures.  It looks at the evidence of East Asian regional and global convergence in health and education, alongside evidence from the region matching global evidence of a comparatively weak link between income growth and health and education growth.  This finding is echoed by available within-country evidence from the region.  The paper discusses what might be behind these results, suggesting the importance of a few simple supply-side interventions coupled with the spread of demand for health and education services as sufficient to drive quality of life convergence.

What Does the Eastern European Growth Experience Tell Us About the Policy and Convergence Debates?

What Does the Eastern European Growth Experience Tell Us About the Policy and Convergence Debates? is an unpublished paper. While the human costs of communism in Eastern Europe were incalculably large, the impact on regional income growth may have been comparatively minor. Despite common perceptions of the efficacy of communism as a system for promoting growth, it appears that the region’s performance was better than any developing country group with the exception of the Asian miracle countries. The region would have grown faster if it had been part of a broader European ‘convergence club,’ however, and the paper discusses how much communism is to be blamed for Eastern Europe not being part of such a grouping –suggesting that this depends on the country.  The paper concludes with a look at what these results might mean for the growth and convergence debates.

Crisis? What Crisis?

Crisis? What Crisis? is an unpublished short paper. It asks if a sense of despair regarding the state of development worldwide can be justified, or if the record suggests grounds for greater optimism.

A Century of the Infant Mortality Revolution

A Century of the Infant Mortality Revolution is an unpublished paper.  There has been rapid and widespread progress in reducing infant mortality over the last 100 years. In 1900, there was only one country worldwide where we know that infant mortality was below ten percent. A century later, out of the 187 countries for which we have data, only nineteen had an infant mortality rate of above ten percent.  Better health outcomes have been achieved at lower incomes to the extent that income growth appears to be a minor factor in determining the course of the infant health transition.  Instead, factors related to global progress appear to have been key –probably related to the spread of knowledge and cheap technologies.  Only state collapse or health shocks as dramatic as the AIDS epidemic appear powerful enough to considerably slow this rate of progress.

There’s More to Life than Money

There’s More to Life than Money: Exploring the Levels/Growth Paradox in Income and Health is forthcoming in the Journal of International Development.  It discusses historical and recent cross-country evidence relating income to measures of health.  After a review of the literature on income and the quality of life, the paper looks at long-term historical evidence on the link between income change and health indicators.  Using data on life expectancy, infant mortality and income for a small subset of largely wealthy countries over the 1913-1999 period, the paper examines correlations between income and health at period start and end as well as using the growth of the variables.  Using a larger set of data over the period 1975-2000, the paper repeats these tests, as well as looking for any evidence of a larger impact of income when entered in conjunction with other potential determinants of quality of life improvement, when different data is used or the sample is split.  Results suggest a strong cross-country link between income and health and considerable evidence of global improvements over time, but a comparatively weak relationship between improvements in income and improvements in health, even over the very long term.  The paper discusses a model based on technology and institutions that might account for such results as well as some preliminary evidence in favor of such a model.

The Global Expansion of Primary Education

The Global Expansion of Primary Education is an unpublished short paper.  In 1830, near-universal primary education was limited to a few states in the United States, and the great majority of the World’s children received no formal education at all. By 1870, somewhere between 12 and 23 percent of the World’s children aged 5-14 were enrolled in a school, and by 1950 this figure had increased to 47 percent. By 2002, global net primary enrollment was around 87 percent, with a gross enrollment ratio of around 100 percent. For countries in Western Europe and Western offshoots including the US and Canada, the period of rapid growth began as early as the 1800s, while for much of the rest of the World, it would take at least another 100-150 years to see the takeoff towards universal primary education. This paper discusses the timing and speed of the transition around the World and discusses the causal mechanisms behind the growth to global ubiquity of basic education.

ICT: Promises, Opportunities and Dangers for the Rural Future

ICT: Promises, Opportunities and Dangers for the Rural Future is for the Rural Futures conference in Plymouth, UK in March.  The paper briefly reviews the evidence regarding the rapid rollout of rural ICT access worldwide, and the powerful tools that access can unleash.  At the same time, it suggests the limits to the ICT revolution in rural areas especially in poor countries, and points to the limited evidence that ICT will reverse forces of agglomeration favouring the concentration of people and productivity in urban areas.  It concludes by suggesting the marginal role for ICT-based policymaking in regional development strategies.

Is There an Anti-Corruption Agenda in Utilities?

Is There an Anti-corruption Agenda in Utilities? is forthcoming in Utilities Policy. In a networked utility setting (few, predominantly monopoly providers), it is very hard to measure the extent of grand corruption using perceptions or surveys. It is even harder to measure the extent of damage done specifically by corruption, petty or grand. As a result, it will be hard to develop 'actionable indicators' of, or to develop empirically tested responses to, corruption in utilities. How much does this matter? Corruption is the result of a failure of governance (poor sector structure, weak management and so on). We can measure the impact of poor governance at the level of the utility looking at measures such as transmission and distribution losses or the construction of inoperable power plants. And we have a number of tools to improve utility governance (including sector structure reform and SOE corporate governance mechanisms). It is not clear that, at the sectoral or company level, there is a significant anti-corruption agenda not encompassed by this broader agenda of improved governance. To that extent, the 'new' anticorruption agenda provides renewed justification for the 'old' focus on institutions at the level of utilities management, but does not require a radically different approach.

What Do We Know About Economic Growth, Redux

What Do We Know About Economic Growth, Redux is an unpublished short paper.  It revisits the cross-country growth literature six years after What Do We Know About Economic Growth Or, Why Don't we Know Very Much?  Since then, even more evidence has piled up that growth is a complex, context-dependent process difficult to explain using linear growth models.  We do know that the best way to be rich today is to have been rich yesterday, however. That result has led some researchers to revisit Nineteenth Century explanations including God and superior breeding as the ultimate determinants of wealth.  But the 'truly ultimate' answer may as well turn out to be geography.

Baywatch: Bigger than Aid?

Baywatch: Bigger than Aid? is an unpublished short paper.  It ponders the economic impact of the television program Baywatch --an everyday tale of lifesaving folk-- on people in the developing world.  It concludes that, without considerably greater academic attention to the subject, we may never know the coefficient of Baywatch episodes on per capita income growth.

Ending Global Poverty Through Tax Breaks to Bill Gates

Ending Global Poverty Through Tax Breaks to Bill Gates is an unpublished short paper. Many developing countries have enacted or are considering subsidies and tax breaks for the ICT industry.  This paper argues that the economic justification for such favoritism is very weak.  It is based in part on material from Overselling the Web.  A version was published in The Globalist.

Why Globalizers Should be Depressed by Regional Economics

Why Globalizers Should be Depressed by Regional Economics is an unpublished short paper.  Most countries have (internal) free movement of goods, money and people --they are microcosms of a perfectly globalized world.  But within-country regional inequality remains very large.  Furthermore, the most powerful force for within-country income convergence is the ability of people to move from declining regions to prosperous areas --and this is the part of globalization which is least advanced.  These twin facts suggest the world remains anything but flat. 

Infrastructure Governance and Corruption: Where Next?

Infrastructure Governance and Corruption: Where Next? was issued as a working paper in August, 2007. Governance is central to development outcomes in infrastructure, not least because corruption (a symptom of failed governance) can have significantly negative impact on returns to infrastructure investment. This conclusion holds whether infrastructure is in private or public hands. This paper looks at what has been learned about the role of governance in infrastructure, provides some recent examples of reform efforts and project approaches, and suggests an agenda for greater engagement - primarily at the sector level - to improve governance and reduce the development impact of corruption. The discussion covers market structure, regulation, state-owned enterprise reform, planning and budgeting, and project design. The paper was the subject of an Economic Times op-ed.

ICTs Enterprise and Development

ICTs Enterprise and Development  is a draft chapter for ICT4D edited by Tim Unwin. It was written with Mike Best. There is no doubting that ICTs have had a significant development impact. Micro- and macroeconomic approaches alike suggest that the rollout of ICTs has improved livelihoods and increased the productivity of businesses. At the same time, the ICT industry itself has been a significant source of profitable investment and employment. This is not to suggest that ICTs are a silver bullet for underdevelopment, however. Successful utilization of communications technologies –and perhaps in particular the Internet—takes a broader economic environment that is conducive to their exploitation. Similarly, ICT industries and ICT-enabled businesses need an investment climate that includes an educated workforce with appropriate technical skills, access to entrepreneurial finance and business talent, reliable infrastructure, a robust but reasonable regulatory environment, and so on. Information and Communications Technologies have a role to play in the development process, but they are one player in a large ensemble cast.

I wrote an earlier collaborative paper on the impact of ICTs on development with Richard Heeks. The Economics of ICTs and Global Inequality: Convergence or Divergence for Developing Countries? was published as an IDPM Working Paper.  If debate on ICTs and development has drawn from any discipline, it has tended to be sociology. This paper attempts to broaden the debate by drawing on economic evidence to ask: will ICTs support economic convergence or divergence between developing and industrialised countries?  In an overall sense, technology is fundamental to development. However, ICTs – while having an uncertain impact on growth – are currently a force for global economic divergence rather than convergence. They diffuse more slowly in developing countries than industrialised countries, and they bring fewer benefits and greater costs to developing countries than industrialised countries.  This does not present an argument against adoption of ICTs by developing countries. Rather, it presents an argument for focus on particular applications and investment priorities.

Review of the Challenge of Affluence

This is a review of Avner Offer's The Challenge of Affluence: Self Control and Well-Being in the United States and Britain Since 1950.  It appeared in the Business History Review vol. 81 no. 2.  The book is well worth a read.

Is Anywhere Stuck in a Malthusian Trap?

Is Anywhere Stuck in a Malthusian Trap? is an unpublished short paper.  The key features of the Malthusian model are that (i) income determines population growth, with rising wages increasing survival rates and (ii) there is a vital factor of production (land) which is fixed, implying decreased returns to scale for all other factors. The equilibrium state in such a model is a population living on subsistence incomes. The analysis in this paper suggests that (i) the link between income and population growth is (almost) everywhere broken and (ii) there is little evidence of declining returns to scale because of constraints imposed by land carrying capacity at the macro level anywhere. Population dynamics are being driven by non-income factors in a manner that is reducing population growth rates everywhere. At the same time, output is increasing everywhere, in a manner inconsistent with significantly declining returns to scale based on land being a vital factor of production.

Construction, Corruption and Developing Countries

Construction, Corruption and Developing Countries was published as a working paper in June, 2007.  The construction industry accounts for about one-third of gross capital formation. Governments have major roles as clients, regulators, and owners of construction companies. The industry is consistently ranked as one of the most corrupt: large payments to gain or alter contracts and circumvent regulations are common. The impact of corruption goes beyond bribe payments to poor quality construction of infrastructure with low economic returns alongside low funding for maintenance-and this is where the major impact of corruption is felt. Regulation of the sector is necessary, but simplicity, transparency, enforcement, and a focus on the outcomes of poor construction are likely to have a larger impact than voluminous but poorly enforced regulation of the construction process. Where government is the client, attempts to counter corruption need to begin at the level of planning and budgeting. Output-based and community-driven approaches show some promise as tools to reduce corruption. At the same time they will need to be complimented by a range of other interventions including publication of procurement documents, independent and community oversight, physical audit, and public-private anticorruption partnerships.

Internet Governance on a Dollar a Day

Internet Governance on a Dollar a Day  is forthcoming in Information Polity.  Globally, around one billion people live on a dollar a day. About 44 percent –nearly half-- of the World’s population lives on less than two dollars a day. This paper examines the importance of "Internet governance" to such people. Arguments over generic top-level domain names might seem of somewhat esoteric interest to the subsistence farmer. Indeed, if Internet governance is defined in the narrow sense of the management of TLDs (Top Level Domains) and root zone files, it is surely of little importance to poor people. However, given the nature both of technology and of poor people’s demands for information and communication, a broader definition of Internet governance does spill over into issues of importance to all, including the world’s poorest. Furthermore, thinking in terms of "information governance" may make more sense in an increasingly converged sector, and issues of information governance are of undoubted importance to poor people. In turn, this suggests priorities for governments attempting to improve the lives of the poor through increasing information flows.

Young People and ICTs in Developing Countries

Young People and ICTs in Developing Countries  is forthcoming in Information Technology for Development.  The paper is co-authored with Naomi Halewood.  Young people are often ‘first adopters’ of new technologies, and this appears to be the case with ICTs.  Evidence from the developing world suggests that young people have widespread access to broadcast technologies and the telephone, but more limited access to the Internet.  And even amongst young people, Internet use lags considerably behind Internet access.  ICTs, and in particular the Internet, provide opportunities for employment, but it should be noted that there are limits to the economic impact of the Internet in developing countries.  Broadcast technologies can be particularly useful tool in both formal and continuing education, the Internet may have a significant role in vocational and further education.  There are potential social costs of ICT use amongst young people, but these can be mitigated.  Youth-specific policy recommendations focus on the greater use of ICTs in education and content control.

Putting Life Back into Miracles

Putting Life Back into Miracles is an unpublished short paper.  If you type "Middle East Miracle" into Google, you get a paltry 151 hits, compared to 29,000 for "East Asian Miracle." And yet despite a grim economic performance, between 1962 and 2002 life expectancy in the Middle East and North Africa increased from around 48 years to 69 years –the strongest growth in any region's health in history. It might, then, be worth questioning the assumption that economic growth is the only development grail we need quest after, and examining a wider range of miracles (and tragedies) might help uncover a range of different causal factors for success in a broader development effort.

Toward Universal Telephone Access

Toward Universal Telephone Access Market progress and progress beyond the market was published in Telecommunications Policy vol. 31. It was written with Rym Keremane.  The last 10 years have seen an explosion in access to telephone services worldwide based on rapid technology advance in increasingly competitive markets. The mobile phone has driven expansion in subscribers and access, especially in the developing world. This paper estimates global mobile footprint coverage based on 2002 data and calculates that as much as 77 percent of the world’s population may live in an area covered by a mobile signal. Nonetheless, many people remain without access to telephony. The paper estimates the maximum likely cost in terms of cross subsidy within the industry and outside financing for achieving universal access using competitively awarded subsidies to private providers in a reformed market. This upper-end cost is estimated at $5.7 billion, with costs that could not be supplied by a reasonable tax on existing providers (and so required from outside the sector) estimated at $1.8 billion.

Is Africa a Failure?

Is Africa a Failure? is an unpublished short paper. The usual way to refer to the performance of African countries over the forty or so years since independence is as a ‘crisis,’ or even a ‘rot.’ In these versions of Africa’s recent history, there is but one thing to argue over –who is to blame. This does, however, raise the question, ‘at what has Africa failed?' The answer for parts of the continent is clear –but these cases do not make up the majority (or even a sizeable minority) of the region. In many important respects --not least health-- Africa’s post-colonial record remains one of considerable success.

Caribbean Telecommunications Reform

The OECS and Regional Telecommunications Reform, co-authered with Donnie DeFreitas and Robert Schware, was published in info, Vol. 3, No.3. The Impact of Reform on Telecommunications Prices and Services in the Countries of the OECS, co-authored with Robert Schware and Eliud Williams, is forthcoming in the Journal of Information Technology for Development. Five member countries of the Organization of East Caribbean States (OECS) — St Lucia, Dominica, Grenada, St Vincent and the Grenadines, and St Kitts and Nevis — are undergoing a unique experiment in telecommunications liberalization. The reform has two interesting features. First, the reform effort was dramatically enhanced because of a legal ruling in one of the member countries that monopoly telecommunications provision is unconstitutional; and, second, the islands hope that a large part of the functions of a telecommunications regulator will be carried out at the regional rather than the national level. Reforms began to show results when the current monopoly service provider slashing the prices of international calls.  Prices have fallen considerably further after the introduction of a regulated price cap.

A Note on the Ethical Implications of the Stern Review

A Note on the Ethical Implications of the Stern Review is an unpublished short paper.  The Stern Review adopts two interesting elements in its calculation of the costs and benefits of climate change mitigation.  First is a ‘global welfarist’ approach that values the utility of the World’s people (now and into the future) equally, and sets global utility maximization as the correct goal for policy.  Second is an assumption of a declining marginal utility to income.  Consistent application of the ‘global welfarist’ approach and the declining marginal utility of income together would demand an urgent process of global income redistribution.  Over the long term, this might see the richest ten percent of the World’s population facing an average redistributive tax rate in the region of 82 percent.  A version will be published in the Journal of Environment and Development.

Measuring and Reducing the Impact of Corruption in Infrastructure

Measuring and Reducing the Impact of Corruption in Infrastructure was issued as a working paper in December 2006.  The paper examines what we can say about the extent and impact of corruption in infrastructure in developing countries using existing evidence. It looks at different approaches to estimating the extent of corruption and reports on the results of such studies. It suggests that there is considerable evidence that most existing perceptions measures appear to be very weak proxies for the actual extent of corruption in the infrastructure sector, largely (but inaccurately) measuring petty rather than grand corruption. Existing survey evidence is more reliable, but limited in extent and still subject to sufficient uncertainty that it should not be used as a tool for differentiating countries in terms of access to infrastructure finance or appropriate policy models. The paper discusses evidence for the relative costs of corruption impacts and suggests that a focus on bribe payments as the indicator of the costs of corruption in infrastructure may be misplaced. It draws some conclusions regarding priorities for infrastructure anti-corruption research and activities in projects, in particular regarding disaggregated and actionable indicators of weak governance and corruption.  A revised version will be published in the Journal of Development Studies.

Life, Liberty and the Pursuit of Utility

Life, Liberty and the Pursuit of Utility: Happiness in Philosophical and Economic Thought is being published in October, 2006. The book is co-authored with my father, Anthony Kenny.

Life, Liberty and the Pursuit of Utility relates age-old philosophical discussions of the nature of a worth-while life to the recent growth of interest among economists in criteria for quality of life. Reflection on the philosophical tradition suggests that there are three key elements in the notion of a good life: welfare, contentment, and dignity. Welfare is capable of objective measurement in terms of such elements as food intake, disease level, expectation of life and so on. Contentment is also measurable, to a more controversial degree, by means of questionnaires eliciting self-ascriptions of subjective well being. Dignity is the most difficult of all the elements of well-being to determine and quantify, but it is related to measures of civil rights, economic and gender equality and measures of the quality of employment. The book discusses what philosophers and economists have had to say about the nature and causes of welfare, dignity and contentment.  On the basis of this analysis we draw conclusions for national and international policies.

Here are the front matter, Chapter One and Chapter Four. Here is the publisher’s blurb. Chapter summaries follow below. Chapters one, three, five and seven are philosophical in nature and were written by Anthony Kenny, even-numbered chapters are empirical and were written by Charles Kenny.  Anthony Kenny wrote an article about the book in the Scotsman, November 30th and Samual Brittan discussed it in the Financial Times, December 15th.  It was reviewed online here and here, in the Journal of Economic Issues (September 2007) and the Journal of Law, Philosophy and Culture (Spring, 2007).

Life, Liberty and the Pursuit of Utility Chapter One: The Philosophy of Happiness

Chapter One of Life, Liberty and the Pursuit of Utility discusses the history of the philosophy of happiness. 

In the light of what Aristotle says, we might offer ‘worthwhile life’ as the most appropriate translation of his word ‘eudaimonia’. For Aristotle, this ‘happiness’ must be an end rather than a means and it must be some good, or set of goods, that in itself makes life worth living. Aristotle suggests that there are three lives that might be classified as happy: a life of pleasure, a life of politics, and a life of study. In his lesser known, but more professional treatise, the Eudemian Ethics, he claims that the happy life must combine the features of all three of these elements.

Nature, training, learning, luck and divine favour all play a part in the acquisition of happiness according to Aristotle. In the centuries following Aristotle’s life, each of these elements has been seized upon by one or other later thinker as crucial.

All the thinkers considered in this chapter regard happiness both as a motive in advance of action, and as a benefit resulting from action, but from there opinions diverge.  Different philosophers link these two features of happiness in different directions. Bentham and his followers start from utility as a satisfactory goal, and seek the means to achieve it. Aristotelians start from our desire to have a good life, and ask what kind of end state will possess the features that are built into our desire.

For many centuries the dominant account was that supreme happiness was a gift of God, obtainable only through divine grace. For Augustine and Aquinas, happiness demanded, in addition to moral virtues like courage and temperance and intellectual excellences such as knowledge and understanding, the theological virtues of faith, hope, and love, and these were gifts of God that might be freely given or denied. The happiness that was the reward of these virtues could be fully enjoyed only in the next life; on the other hand the imperfect happiness that attached to a life of virtue in this world was compatible with an almost complete lack of worldly goods. By comparison with Aristotle, Augustine and Aquinas, the utilitarians were much more optimistic about the possibility of achieving true happiness in the present life (which, for most of them, was the only life).

Again, while everyone agrees that happiness can motivate action, there are some who think that happiness is a necessary goal (every action is consciously or unconsciously aimed at happiness) while others think of it only as a possible motive, and not necessarily an ultimate goal. Related to this, Aristotle, Augustine and Aquinas all founded morality on a basis that is ultimately self-centred. To be sure, Aristotle admitted that a happy man would need friends, and that even a philosopher could philosophise better in company. Again, Augustine and Aquinas taught that we must love our neighbour, as we are commanded to do by the God whose vision we seek. But in each case the concern for the welfare of others is presented as a means to an ultimate goal of self-fulfilment. The first philosopher in the Christian tradition to break with this eudaimonism was the fourteenth century Oxford Franciscan, John Duns Scotus.

The disagreement between Aquinas and Scotus on the link between happiness and morality was replayed, in a different key, at the end of the eighteenth century between Bentham and Kant. Bentham, like Aquinas, made happiness the central concept of morality. Kant, like Scotus, thought that morality needed a different basis: he called it the sense of duty.

'The greatest happiness of the greatest number’ is an impressive slogan: but when probed it turns out to be riddled with ambiguity. The first question to be raised is ‘greatest number of what?’ A second question about the principle of utility is this: should individuals, or politicians, in following the greatest happiness principle attempt to exercise control over the number of candidates for happiness we have to strike a difficult balance between quantity of happiness and quantity of people. Third, if I am, in fact, predetermined in every action to aim at maximising my own pleasure, what point is there in telling me that I am obliged to maximise the common good? Happiness, Kant argues in his Groundwork of the Metaphysic of Morals, cannot be the ultimate purpose of morality:

Suppose now that for a being possessed of reason and will the real purpose of nature were his preservation, his welfare, or in a word his happiness. In that case nature would have hit on a very bad arrangement by choosing reason in the creature to carry out this purpose. For all the actions he has to perform with this end in view, and the whole rule of his behaviour, would have been mapped out for him far more accurately by instinct; and the end in question could have been maintained far more surely by instinct than it ever can be by reason .

Because of the overwhelming influence of Kant, many moral philosophers in the nineteenth and twentieth centuries lost interest in the study of happiness. The utilitarians, of course, continued to pay homage to the concept, but their interests began to diverge in two different directions. The philosophers among them were mainly interested in the relationship between utilitarianism and other moral intuitions, while the economists sought to explore what methods were available to measure utility.

In the Twentieth Century, the behaviourist account of emotions and feelings was a crude oversimplification that did not long remain popular with philosophers and psychologists. It lasted long enough, however, to infect the thought of economists who wished to offer an operational definition of utility. They sought for measurable behaviour that would constitute happiness in the way that, for Watson, crying, cooing, and gurgling constituted more basic emotions. Surely, in economic terms, the behaviour most indicative of satisfaction is the set of actual choices that a person makes in his market transactions. So economists such as Robbins and Samuelson developed the theory that utility was nothing other than the revealed preferences of those who purchased goods or services.

If we reflect upon the different accounts of happiness given in philosophical, psychological, and economic tradition, we may conclude that there are three distinct elements to be identified in human well-being. We may call them welfare, dignity and contentment. Welfare, in the most obvious sense of material welfare, consists in the satisfaction of one’s animal needs, for food, drink, shelter and the other things that conduce to bodily flourishing. Welfare is the least controversial element in well-being. Almost all philosophers who have considered the topic have considered it either a constituent or a necessary condition of happiness.

Dignity is a much more complicated notion to define. We may say initially that it involves the control of one’s own destiny and the ability to live a life of one’s choice. But in addition, it seems to be necessary for total well-being that one’s chosen way of life should have worth in itself, and should enjoy the respect of others. Contentment is what is expressed by self-ascriptions of happiness. It is not so much a feeling or a sensation as an attitude or state of mind; but of the elements of well-being it is the one that is closest to the utilitarian idea of happiness.

The three items that we have identified correspond to the unalienable human rights whose existence the American Declaration of Independence regarded as a self-evident truth: life, liberty, and the pursuit of happiness. ‘Life’, broadly interpreted, includes the necessities that we have entitled ‘welfare’. ‘Liberty’ is the foundation of a career of dignity. And the ‘happiness’ that was to be pursed was conceived of by the founding fathers as a state of contentment, such as was soon to be given the name of ‘utility’.

Life, Liberty and the Pursuit of Utility Chapter Two: Happiness in History

Chapter Two of Life, Liberty and the Pursuit of Utility looks at what writers have said in the past about the links between the good life, income and institutions.

There was a widespread concern in the seventeenth century Dutch Republic that the country had too much wealth, and was having too jolly a time, for its own good. ‘It too often happens that riches bring self-indulgence, and superfluity of pleasures produces flabbiness as we can see in wealthy regions and cities,’ warned Calvin. The Dutch Republic was the richest country in the World at the time. Nonetheless, this fear of excess might seem strange to observers today given that the average income in the Republic was around $2,100 –approximately the same income as modern-day Lesotho, or somewhere around one thirteenth the average income per capita of the US in 2000.  This is but one example of concerns about an excess of plenty, an embarrassment of riches, that considerably predates modern economic growth.

While adequate food, shelter and health followed by a peaceful death has long been an element of the good life, from early in Western writing it appears that such problems were considered significant for only a minority of people, and more income was not seen as the answer to those problems. Indeed, poverty has long been described in terms of a social condition rather than a lack of animal needs. By the eighteenth century, when annual UK income per capita was somewhere around $2,000, Adam Smith argued that the rich, by employing the poor ‘for their own vain and insatiable desires…make nearly the same distribution of the necessities of life … had the earth been divided into equal portions among all its inhabitants.’ And necessities for Smith meant ‘not only those things which nature, but those things which the established rules of decency have rendered necessary.’ Indeed, he argued for the creation of a minimum wage set at a level considerably above brute subsistence to ensure that the poor could afford social necessities required to avoid social stigma. For example, in England, one could not go out in public barefoot without embarrassment, so the minimum wage should be set high enough to allow for the purchase of shoes. (In Scotland, where wandering around barefoot was common, the minimum wage could be set lower, argued Smith.)

Partly as a result of the fact that low average incomes were not seen as a barrier to the good life, the idea that all could be happy on this earth considerably predates the Industrial Revolution. Darrin McMahon notes an explosion of works on the subject of achieving earthly happiness in the final two decades of the seventeenth century which suggested a wide range of different approaches (including, on the side of the rock, temperance and, on the side of the hard place, the consumption of ‘wine of English grapes’). By the eighteenth century, Diderot’s Encyclopedia was suggesting all people had a right to happiness.

It was institutional, not economic change that was considered the key to greater happiness. Thomas More’s Utopia is one example. The country was free from the ills of poverty, war and crime. This was not because of considerable advances in economic or technological knowledge, which were limited to certain elements of animal husbandry. It was instead because of a considerably improved social and political model which allowed, amongst other things, for women priests.

Life, Liberty and the Pursuit of Utility Chapter Three: The Goods of the Body

Chapter Three of Life, Liberty and the Pursuit of Utility discusses the role of health in philosophical discussions of the good life. 

Throughout most of the history of thought, philosophers have underplayed the importance of physical health as a constituent of happiness. Aristotle, for example, appears to have believed that the enjoyment of health throughout life depended greatly on one’s exercise of virtue and avoidance of vice—in other words, on the goods of the soul. But we can only deduce his position on the role of health in the good life by looking at his opinion regarding intentional suffering.  Aristotle suggests that a man cannot be happy under torture.  However, a person may be racked with pain through disease no less than through the malevolence of a tyrant, so that in consistency Aristotle should agree that a modicum of good health is a necessary condition for the good life.

As with Aristotle, most philosophers prior to the Industrial Revolution were more concerned with the possibility of human life being threatened by other human beings than by disease. Locke and Hobbes provide two examples of the centrality of such concerns.  But as the period of modern economic growth picked up, so did concern with the impact of progress on levels of health and violence. Thomas Carlyle maintained that the pursuit of utility by capitalists, instead of bringing great happiness to great numbers, had enriched the few by reducing the masses to a condition resembling Hobbes’s original state of nature. ‘Our life is not a mutual helpfulness’ he wrote ‘but rather, cloaked under due laws of war, named ‘fair competition’ and so forth, it is mutual hostility.’ Similarly, and acutely aware of how ill their poorer contemporaries were faring in newly industrialised societies, both Mill and Marx gave a prominent place to welfare in the centre of their notion of happiness.

Life, Liberty and the Pursuit of Utility Chapter Four: The Determinants of Welfare

Chapter Four of Life, Liberty and the Pursuit of Utility examines the determinants of welfare --the causal factors behind changes in levels of health and violence worldwide. 

Global average life expectancy was 24 years in 1000 AD, 31 years in 1900 and reached 66 years in 1999.  It is widely assumed that, because at any one time 'wealthier is healthier', income growth must be the most important causal factor in worldwide health improvements.  In fact, there is plentiful evidence suggesting otherwise.  Income may have a role, but it is not the major factor behind improved levels of global health.  For example, modern Vietnam has the same income per capita as the UK early in the Nineteenth Century.  Yet life expectancy at birth in Vietnam today is 69 years as opposed to 41 years in the UK in the 1800s. And Infant mortality is less than one quarter of the level of the UK two hundred years ago.  Furthermore, life expectancy has seen dramatic improvements even in countries that have seen zero or negative income growth over the past few deacades --Angola, Cuba and Nicaragua all followed this pattern, for example.

Instead, the history of health suggests that technological and institutional change has been key to advance.  The British Industrial Revolution was associate with lower levels of health until massive public water and sanitation projects in the second half of the Nineteenth Century.  Filtration and chlorination then played a large role.  The spread of vaccination has proven vital in wiping out a number of major killers.  Such interventions can be achieved at low (and dropping) levels of income, with the cost of a basic package of primary health care costing less than one percent of GDP even in the poorest countries. It is primarily institutional, rather than financial, barriers that stand in the way of improved health. 

A similar conclusion applies to levels of violence --both warfare and individual acts of murder.  Technology has been a factor beheind the growing power of the state to kill, but institutions rather than incomes appear to be more important in restraining acts of state violence.  Institutional and social change also appears to have played the larger role in increasing the efficacy of state attempts to reduce unsanctioned violence.

Life, Liberty and the Pursuit of Utility Chapter Five: Choice, Worth and Prestige

Chapter Five of Life, Liberty and the Pursuit of Utility discusses the components of dignity.  To possess dignity you must have a degree of choice and control over your life, the life that you lead must be a worthwhile one, and it must carry with it a degree of prestige.

To preserve choice, key elements of one’s cultural identity—such as one’s religion or one’s language— should not be forced on one unwillingly from outside. There is greater dignity in marriage to a partner of one’s choice and in working at a job that one has freely contracted to perform.  Dignity is conferred by one’s degree of participation in the political arrangements under which one lives. Regarding job types, the ideal life is one in which there is no clear boundary between work and recreation and which does not require considerable physical or human apparatus to conduct. 

Prestige is not an essential constituent of well-being; but it can undoubtedly contribute to and augment it. Prestige is based on one’s possession of goods that arouse the respect and envy of others. These need not be material goods but they are bound to be positional goods; goods that relate to one’s position in society and which of their nature cannot be universally shared, since—in the words of W.S. Gilbert—when everyone is somebody, then no one’s anybody.

Regarding the market, the great inequalities which its free operation builds up may cause great discontent among those at the lower end of the scale, even if in absolute terms their income is enough to provide adequate welfare. Some philosophers regard inequality of wealth as being in and of itself an affront to human dignity. There is no reason, however, why someone with average wealth should feel degraded simply because some other people are very much richer. If the existence of billionaires is the price to be paid for an economic system that is the most efficient method of reducing absolute poverty, we should not oppose it simply because it may mean that a man with only two yachts will be unhappy because his neighbour possesses three.

Life, Liberty and the Pursuit of Utility Chapter Six: The Economics of Dignity

Chapter Six of Life, Liberty and the Pursuit of Utility explores the role that income plays in dignity but also about the broader relationship between economic development and dignity.  Over the long term, for example, measures of civil and political rights have gone up on average worldwide.  So has income.  This has led some to suggest a link between the two.  But you don't need high incomes to preserve rights:

...many writers throughout history have believed that greatly increased incomes were not required in order to ensure the dignity of choice for peoples.  During the English Civil War, when incomes per capita averaged only a little above $1,000, Lilburn called for a republic with universal suffrage and equality before the law.  John Stuart Mill called for a full range of liberties including women’s equality, and was building on Mary [Wollstonecraft’s] Vindication of the Rights of Women written in the previous century.  Outside of Europe, Akhbar, the Mughal emperor in power at the turn of the Sixteenth century, issued edicts codifying rights including religious freedom from his capital at Agra.  Gandhi felt that India was quite capable of guaranteeing a full range of rights at a point when India’s GDP per capita was around $600.  More recently, a number of developing countries have developed and preserved systems that guarantee widespread civil rights at low levels of average income including Costa Rica, Botswana, South Africa and India itself.

Perhaps because of this, the link between growth in rights and growth in incomes is statistically insignificant, with the causal link from measures of democracy to measures of economic growth turning out to be stronger.  Institutional development which leads to stable democracies that protect rights appears to be a long-term process, perhaps linked in part to colonial histories.  Similar findings pertain to education --when the process of expanding education began is a key determinant of current rollout levels, it is possible to roll out universal access to basic education at very low levels of income, rapid income growth does not appear to speed this process and, if anything, education is more strongly linked to economic performance than vice-verca.

Regarding the quality of jobs, Adam Smith was worried that industrialization would significantly reduce it. "The man whose whole life is spent in performing a few simple operations… generally becomes as stupid and ignorant as it is possible for a human creature to become," he warned.  With the application of assembly-line techniques in services as well as manufacturing, many of today's jobs are simple and highly repetitive.  And the new economy has done little to banish  mind-numbing employment, or reduce unemployment. 

Finally, looking at the role of income itself as a status measure, efforts to control its impact date back at least as far as sumptuary laws, and the primacy of status over welfare concerns in the chase for money was noted (once again) by Adam Smith, who noted that the pursuit of riches was primarily driven by “regard to the sentiment of mankind… to be observed, to be attended to, to be taken notice of..." Given income is a status good, it is unsurprising that definitions of an 'inadequate income' rise in lock-step with average incomes in a community. As such, in all but the poorest countries, our concern with poverty should center around questions of income distribution, not absolute levels of income.

Life, Liberty and the Pursuit of Utility Chapter Seven: Mental States and Their Measurement

Chapter Seven of Life, Liberty and the Pursuit of Utility asks "do people know if they are happy?":

If the most important elements in happiness are welfare and dignity, then individuals are not necessarily the best authorities on their own condition. We may be mistaken about the state of our bodily health,and our acquiescence in our social status may be the result of ignorance and lack of imagination. But surely each person is in the best position to say whether he or she is contented or not?

It is wrong to suppose that each of us has access to a private realm of consciousness, from which we have to think our way out to a public world. Even in our most secret thoughts we are using a language that only makes sense in the context of social activities shared with other beings like ourselves. This applies to emotions, too --the intelligibility of their expression depends upon their behavioural and environmental context. This must be particularly borne in mind when we are considering the role of mental states in the good life, and the value to be placed on self-ascriptions of them.

Contentment is not so much a feeling as a belief or judgement; a judgement that one’s life, considered overall, as a whole, is going well, and that one’s major desires are either satisfied or on the way to satisfaction. It is a judgement on these issues that the pollster wishes to elicit when he asks ‘taking your life as a whole, would you consider yourself very happy, somewhat happy, or not happy at all?’ The first person is certainly in a position of greater authority on the topic of contentment than she is on either the topics of welfare or of dignity. On the other hand, because an expression of contentment is a judgement about a long-term state, a person uttering it does not have the overriding authority that she would have if she were reporting a pain or narrating a dream. It is possible for a claim to contentment to be mistaken, and a person may well come to revise her own past estimates of her contentment. ‘In those days I thought I was happy. Now I know better.’ Or ‘I wish I had realised how happy I was’. Again, if someone gives a positive answer to an inquiry about his contentment, but is regularly irritable, frequently quarrels with family and friends, is constantly trying to change his job, and often exhibits symptoms of psychosomatic illness, it may not be unreasonable to discount his evidence even if given in good faith.

Of course, not all evidence is given in good faith.  Furthermore, a positive or negative response to a standard subjective wellbeing question will depend on imagination, ambition, and character. The problem is compounded when respondents are asked not just whether they are happy or not, but where they would place themselves upon a scale of happiness from one to five, or give themselves marks out of ten for well-being. Accuracy in answering here depends not just on unbiased introspection, but some estimate of an overall standard.

Questions regarding the accuracy of subjective wellbeing polls as a measure of contentment aside, surely the secret of contentment lies somewhere between the frenzied pursuit of every passing want and the total renunciation of desire.

Life, Liberty and the Pursuit of Utility Chapter Eight: Subjective Wellbeing and its Correlates

Chapter Eight of Life, Liberty and the Pursuit of Utility explores subjective wellbeing polls ("taking your life as a whole, would you rate yourself very happy, somewhat happy, or not happy at all?"). Those who say they are happy smile more than the average person, appear happier to friends and family, have higher self-esteem, are comparatively infrequent visitors to psychotherapists and are less likely to commit suicide. They have higher than average levels of activity in the left prefrontal region in the brain,which is rich in receptors for the neurotransmitter dopamine, and they register considerably lower levels of cortisol, an adrenal hormone related to the risk of obesity, hypertension and autoimmune conditions. 

At the same time, subjectively happy people tend (weakly) to share a set of life circumstances: they are more likely to be married, employed, religious and relatively rich.  They are also more likely to be found in countries where people trust the police and their governments. On the other hand, absolute (as opposed to relative) income doesn't seem to matter much at all.  This finding appears to hold in middle income countries, but not amongst poorer people in poor countries. 

When people face a lack of income sufficient to support the basics of welfare, then, they are less content.  But once income becomes a status marker, the income that matters is relative, not absolute.  And this happens pretty early on in the process of development. For example, real incomes per capita in China increased by a factor of 2.5 between 1994-2005, and this was associated with rapid increases in the ownership of goods—color television ownership increased from 40 to 82 percent of households, telephones from 10 to 63 percent, for example. Incomes started at a very low level, averaging $2,604 per capita. Nonetheless, the percentage of people satisfied with life declined.

The subjective happiness literature suggests that nonpecunary goods such as insurance and leisure are not viewed purely in relative terms, so that we should focus on increasing the supply of these goods rather than income. 

At the same time, there are limits to the policy relevance of subjective wellbeing.  The majority of variation in subjective wellbeing between people appears to be related to genetic factors rather than objective circumstances. Because of this, people lose little long-term contentment even as a result of catastrophic events that we may still want to minimize (accidents that lead to paraplegia, for example).  Furthermore, what little varaition we can correlate with factors such as unemployment and poverty may be related to reverse-causation.  Finally, the finding that having children has no impact on subjective happiness suggests that contentment lacks (even) as a overarching motivational force.

Life, Liberty and the Pursuit of Utility Chapter Nine: Happiness and Morality

Chapter Nine of Life, Liberty and the Pursuit of Utility suggests that there are three elements essential to a moral system. There must be a moral community, a set of moral values, and a moral code.  Just as philosophers have disagreed about the nature of happiness, so they have disagreed about each of these elements of morality.  Are animals part of the moral community?  Is the supreme moral value happiness?  Does the code include absolute prohibitions?  On the second and third issues, we disagree with Benthamite philosophy. We believe that there are some actions, such as rape and torture, which should be ruled out without consideration of consequences. Furthermore:

The pursuit of happiness is a right, not a compulsion or an obligation. We disagree with those who maintain that every human being, in every action, pursues his own well-being willy-nilly. We also disagree with those who believe that there is an obligation to pursue one’s own well-being that overrides all other considerations. We believe that it is possible, and may often be admirable, to cease from the quest for one’s own happiness in favour of the pursuit of some altruistic goal.

As to the shape of that moral community, an undifferentiated concern for the general good is implausible. At the same time, it is not clear how sensible it is to defined levels of obligation of care by civic and national boundaries, many of which are accidents of history. 

Finally, at both the national and global level, there can be no simple recipe for the maximization of happiness because of its disparate elements.  Indeed, such maximization is a chimerical goal for moral or political policy. But this does not mean that we cannot seek ever better systems of trade-offs to protect and promote the well-being of the inhabitants of the planet.

Life, Liberty and the Pursuit of Utility Chapter Ten: Policies for Happiness

Chapter Ten of Life, Liberty and the Pursuit of Utility discusses policies at the national and international level that might increase welfare, dignity and contentment.  The chapter suggests that:

The ‘self evident truth’ contained in the US Declaration of Independence that all men have the unalienable right to life, liberty and the pursuit of happiness is perhaps as good a guide to the role of the state as any. The state has a primary duty to ensure that absolutely necessary to life (peace, shelter, food, sufficient measures for public health), it has a secondary duty to ensure freedom from captivity and extortion as well as sufficient means to be free to take part in society as an equal and, as a tertiary responsibility, it should put in place other conditions that allow all the possibility for achieving individual happiness (broadly defined).

Given the limited role for GDP growth in furthering welfare, dignity and contentment in most countries, the justification for corporate welfare programs including subsidies, tax breaks and defense of private monopoly is even weaker than usually assumed.  Furthermore, actions which redistribute a fixed stock of prestige while creating significant negative externalities should be taxed.  Robert Frank provides the example of large houses sitting on larger plots which increase commute times for all.  A declining marginal utility of income suggests progressive taxation can increase average contentment as well as providing resources for improved levels of welfare and dignity. The general finding that non-rival goods such as insurance and time off may be under-supplied compared to rival goods suggests a further rationale for state sponsorship of insurance mechanisms covering events such as unemployment and health.  Regarding dignity:

Because the evidence is against a strong tradeoff between basic human rights and economic growth or welfare there is no justification for such a tradeoff (even were it a good one to make). Indeed, because what evidence we have points the other way—civil rights improving the state’s provision of welfare—we should encourage development of such rights most particularly in the poorest countriesBecause of the importance of institutions in determining levels welfare, dignity and contentment, the role for international support might appear limited.  Having said that, we broadly accept Pogge's argument for a globalization of Rawls' difference principle (that to the extent social institutions create social or economic inequalities, they should be designed to the maximum benefit to those at the bottom of these inequalities).  Our moral obligation to individuals in the developing world is to promote some basic, sustainable, minimum level of well-being.  his suggests a role for reduced barriers to trade and migration, but also increased, and far better designed, aid flows.

What Is Effective Aid? How Would Donors Allocate it?

What Is Effective Aid? How Would Donors Allocate It? was issued as a World Bank Policy Research Working Paper in September, 2006.  There are significant weaknesses in some of the traditional justifications for assuming that aid will foster development. This paper looks at what the cross-country aid effectiveness literature and World Bank Operations Evaluation Department (OED) reviews have suggested about effective aid, first in terms of promoting income growth and then for promoting other goals. This review forms the basis for a discussion of recommendations to improve aid effectiveness and a discussion of effective aid allocation. Given the multiple potential objectives for aid, there is no one right answer. However, it appears that there are a number of reforms to aid practices and distribution that might help to deliver a more significant return to aid resources. We should provide aid where institutions are already strong, where they can be strengthened with the help of donor resources, or where they can be bypassed with limited damage to existing institutional capacity. The importance of institutions to aid outcomes, as well as the fungibility of aid flows, suggests that programmatic aid should be expanded in countries with strong institutions, while project aid should be supported based on its ability to transfer knowledge and test new practices and/or support global public good provision rather than (merely) as a tool of financial resource transfer. The importance of institutions also suggests that we should be cautious in our expectations regarding the results of increased aid flows.

Overselling the Web: Development and the Internet

Overselling the Web? Development and the Internet is being published in September 2006.  The book discusses the role of the Internet in development, and policies designed to increase its impact.  The widespread and rapid adoption of the Internet in the developing world suggests that there are real opportunities presented by the new technology.  At the same time, Overselling the Web suggests that the overall impact may be smaller than commonly thought and that policymakers should be wary of large-scale subsidies, tax breaks and rollout programs.

Here are the preface and Chapter One.  Here's the publisher's blurb, a couple of reviews and a link to the Library Journal's 50 best business books of 2006, where it appears.  And here is a short summary article in ITID based on the book.  Chapter summaries are below.

Overselling the Web Chapter One: Will the Internet Change the World?

Chapter One of Overselling the Web? looks at some predictions regarding the impact of the Internet on development.  George Gilder chose December 31st, 1999 most suitably to suggest the change might be millenarian:

With any technology that will change the world so radically as the Internet… religious wars are important and inescapable….The twentieth century has been an era when an atheistic belief in the ultimacy of matter and the triviality of man led to the horrors of Nazism, Communism, and an epoch of total war. Now sweeping through the global economy, the overthrow of matter will unleash an undertow of religious belief that will make the new millennium a time of awakening to the oceanic grandeur and goodness of the universe...

Thomas Friedman hasn't gone quite as far, but he, too, has been pretty optimistic:   “We are now in a period of radical change, possibly more sweeping and complex than any period since 1776-1789.”  Technology, he argues, “is shrinking the world from a size medium to a size small.”  At the same time, it “turns out that the real secret of success in the information age is what it always was: fundamentals -- reading, writing and arithmetic, church, synagogue and mosque, the rule of law and good governance.”  Indeed, these basics have got even more important.  “Just when the developing world is coming to really grasp that it has no choice but to get itself ready to climb aboard this train… the train is going to get faster -- not slower -- as the developing world moves toward Internet-based commerce, communication and learning systems. What's worse, no one can slow the train down, because the world economy today is just like that Internet: everybody is connected but nobody is in charge.”

The potential of the Internet as a force for development was the focus of a G-8 meeting as well as a UN Summit (in two parts).  It has catalyzed aid programs and any number of "e-readiness assessments."  All of this activity is based on what might be termed the "Okinawa Consensus":

The Internet and related technologies present a significant opportunity for developing countries to improve their growth prospects.  Indeed, the Internet may be a ‘leapfrog’ technology –one that creates an opportunity for developing countries to catch up economically with the industrial world.  The technology is a powerful tool to improve government service delivery, education, and income-earning opportunities even for the world’s poorest people.  Given that, poor country governments (in partnership with the private sector and with the help of donors) need to dedicate significant resources to expanding the use of the Internet, especially in government and education and especially to reach the poor.  There is also a role to promote Internet industries through technology parks, and Internet use through public access programs such as putting computers in libraries and building stand-alone Internet access points. 

Overselling the Web? is about the policies suggested, the rationale behind them, and which ones might make sense.   

Overselling the Web Chapter Two: The Link Between Technology and Growth

Chapter Two of Overselling the Web? discusses the role of technology in growth.  It begins by defining technology in economic terms.  Technology is everything that isn't capital and labor.  As such, it covers new inventions such as the steam engine or the transistor, but also includes ‘business technology’ (management techniques and systems) ‘political technology’ (forms of government and institutions) and ‘social technology’ (modes of human interaction). 

Given such a broad definition, it is perhaps unsurprising that technology is the key to economic growth.  But that, in turn, means that rich countries must have more technology than poor countries and that technology is hard to move around.  One reason for this might be that the nature of institutions is key to determining technology adoption:

Jared Diamond, in Guns, Germs and Steel, points out that the history of invention suggests that the use, if any, to which a new technology is put does indeed depend very much on the nature of a society into which it emerges.  Ancient native Mexicans never used the wheel for anything but toys because they had no suitable animals to draw carts, the Japanese continue to use the (cumbersome) kanji in addition to the (far simpler) kana alphabet because of prestige, QWERTY dominates global keyboards because everyone (bar this author) has already learned how to type on them.  The ‘nature of a society’, in economic terms, is in fact a set of technologies itself.  How great an impact an impact a technology has, then, might depend crucially on what technology is already there.

This suggests that the broader environment is likely to be a key determinant of the impact of the Internet on economic growth in developing countries, a conclusion strongly supported by later chapters.

Overselling the Web Chapter Three: ICT in the Industrialized World

Chapter Three of Overselling the Web? looks at the impact of ICTs in wealthy countries, with a focus on the US.  It opens with a discussion of the evidence regarding the total factor productivity (TFP) impact of ICTs.  ICT using sectors have seen considerable investments in computing and communications --they accounted for as much as 25 percent of total investment by the end of the 1990s.  This investment produced solid returns.  At the same time, ICT investment did not produce especially high returns of the type that would show up in TFP statistics.  The only sector to see particularly dramatic TFP growth was the ICT producing sector.  And this was in large part connected to a new way of calculating output in the sector based on 'hedonic measures.'  These measures adjusted industry output statistics to account for the rapid increase in quality for price in the sector.  Such measures assume that if a computer had twice the power, it was worth twice as much even if it sells for the same price.  That is a questionable assumption, and the chapter demonstrates why with the example of word processing:

        In 1964, IBM brought out the MT/ST (Magnetic Tape/Selectric Typewriter) which allowed entered material to be edited without being typed onto paper, and provided electronic storage and replay, correction, and multiple re-printing… By the mid-1980s, the standard word processor already featured justification, alignment, insertion/overstrike, search and replace, copy/cutting, pagination, headers and footers, footnoting, table of contents and index generation, form letter merging and automatic spell check.  Progress did not stop there, however…   In 1995, Microsoft introduced what was already the eighth version of its world-processing software, Word 95. It had considerably higher requirements than its forebears.  A 386 processor, six megabytes of RAM, 8 megabytes of hard drive and a 3.5 inch disk drive.  But for this extra capacity, users were given a range of new features including an ‘answer wizard’ help system, auto-formatting and designer templates. 

        It should be noted that a study of 16 people using one version of this software found that of 642 commands available on the program, just 20 accounted for 90 percent of use.  The average person used just 57 commands in six months, and all of the users together used only 152 commands in eighteen months –or less than one quarter of all those available.

        Nonetheless, this did not stop Microsoft issuing new versions with more commands.  Within two years, the company had issued Word 97 –it required a faster processor (a 486, with nearly 1,000,000 transistors on the chip), more memory (eight megabytes), a larger hard drive (20 megabytes) and a CD-ROM.  In return, users now had access to a letter wizard with layouts and styles, 3-D effects and animated text, and the animated smiling paper-clip office assistant. 

        Word 2000 came next.  Again, system requirements increased –a Pentium 75 processor, 20 megabytes of memory, 147 megabytes of hard drive.  But users now had access to WYSIWYG (‘what you see is what you get’) font menus and improved hyper-link functions.  This was also the version that replaced the animated paper clip office assistant with an animated Einstein office assistant.

        The next version –Word 2002 (or Word 11.0) required a Pentium 133, 32 megabytes of memory and 375 megabytes on the hard drive.  For which users were rewarded with content-sensitive smart keys, faster organization of mass-mailings (for which we can all be grateful), “a new auto-correct smart tag” that “lets you control how Word corrects text” –presumably allowing you to un-correct all of the mis-auto-corrected text from the Word 2000 version— and an auto save function that activates when the excessively baroque program crashes the computer.   

Since then, we have had Word 2003, and Word 2007 is just around the corner.  The latest version will use 42 times more RAM and 250 times more disk-space than Word 95.  Assuming that the retail price of the computer on which Word 2007 runs is similar to Word 95, it might be arguable that the 'real' value of the computer is 250 times larger because it can run software with auto-correct smart tags and other unused features.  Indeed, the excessively baroque nature of the programs that it runs might actually have reduced its value to the average user.

Worse, Word is in fact part of a 'baroque network.'  The value of the program is in large part attached to the fact that everyone uses it.  The utility of my word-processing software is considerably reduced if I cannot share files with collaborators.  And if they have Word 2010 while I have Word Jurassic, I will not be able to read their files.  Even if I am happy with the dancing paper clip mis-auto-correcting my text, if my collaborators will settle for nothing less than the dancing Einstein, I had better upgrade.  This might be a particularly significant drain on the productivity of ICT investments in the developing world, where use of advanced applications requiring significant computing power is rare.   But, along with the high failure rates associated with IT projects, the impact of baroque networks may help to account for no-more-than-normal returns to ICT investment in rich countries as well.

Looking at the impact of Internet use in particular, it appears that wholesale e-commerce enabled by the Internet is only a small improvement over the much older technology of Electronic Data Interchange, while retail e-commerce is not a significant improvement over off-line purchasing.  This might help to explain why it is difficult to pick up any impact of e-commerce on macroeconomic indicators.  Meanwhile, the Internet can be a powerful force for productivity at work, but it is also a powerful tool for wasting time.  Internet use at home and at work looks very similar (eBay is the fifth most popular site at home and sixth at work, for example), and this suggests a lot about the major uses of the web at work (at one point in 2005, the top three search terms were "sex", "porn" and "Paris Hilton").  Perhaps 172 million hours a week are wasted in recreational surfing at work in the US.

What does this mean for developing countries?  If the economic impact of the Internet and ICTs more broadly has been muted in the US, this is likely to be even more the case in countries with far lower usage rates.  It appears that wealthy areas with skilled workforces and strong institutions are garnering most of the benefits from new ICT technologies to date.  Overall, rich country evidence is not reassuring for those hoping for an ICT-enabled economic revolution in the developing World.

Overselling the Web Chapter Four: ICT in the Developing World

Chapter Four of Overselling the Web? reports on the rapidly shrinking digital divide.  Already, access in terms of Internet use per dollar of GDP is higher in the developing than the developed world.  Business use in particular is reaching global ubiquity --even in Kenya, 78 percent of firms use email. This is a strong sign of the significant utility of the new technology to business in the developing world. A gap remains, however, in the use of advanced applications --e-commerce, for example.  Some developing country firms are making good money through e-commerce applications.  Most, however, limit Internet use to email, seeing little benefit in a more aggressive Internet strategy.  The most significant problem isn't infrastructure but the broader climate for exploiting advanced applications, well illustrated by Mike Dertouzos' experience in Nepal:

...a few of us techies got together with a colleague from Nepal, fully expecting to boost his nation's economy by 20 percent through clever use of the information marketplace. Unfortunately, we quickly found out that even if we got the communications, hardware, software and training for free, we would still fall short of our goal: Only 27 percent of the Nepalese are literate. And of these, only a small fraction speak English. When we asked what services that smaller group could offer, we hit a brick wall. Many are not skilled, and those who are are already busy running their nation's businesses. Maybe we were too ambitious when we envisioned a future workforce in Nepal selling office services to New York and London via the Web. What if we focused instead on selling Nepal's famous crafts, like custom-made rugs, on the Web? That got us into all sorts of other concerns about establishing trust among distant buyers and distributing the goods. The potential of the modern information age seemed overshadowed at every turn by the ancient forces that separate the rich from the poor.

These broader concerns raise the possibility that the Internet could be a force for economic divergence.  Developing countries are in a weaker position to garner returns from advanced Internet use than rich countries.  This problem is exacerbated by the spread of baroque networks discussed in Chapter Three.  The need to preserve their computers' capacities to network with developed country client and supplier IT systems requires developing country firms to update computer capital stocks even though they do not themselves need the additional computing power.  Developing country firms are forced into investment decisions which will garner lower returns in poor countries than in rich because of a broader economic environment.

On the plus side, the spread of the Internet may create forces for covergence through the online equivalents of the Spanish Prisoner scam (Mr. Oluwa's strictly confidential email regarding funds hidden by former president Abacha).  In 2004, such emails raised a third of a million or more from US victims alone.  And overall, it is likely that the scale of convergence or divergence produced by the technology of the Internet will be comparatively small either way, with a total economic impact of the Internet estimated at between one to ten percent of developing country GDP, or about 0.1 to 1 percent of the gap between Sudanese and US incomes, for example.