Thursday, January 21, 2010

Deaton on Statistics

William Easterley summarizes Angus Deaton's AEA Presidential Address on comparing economic statistics across countries.
What struck me was this passage about India.
The World Bank’s recent 40 percent upward revision of the global poverty number was based on an absurd procedure that led to the paradox in the quote.
To make a long story short, the World Bank decided to boot richer India out of the group of poorest countries used to determine the poverty line, which made the poverty line higher, which made Indian (and global) poverty higher – all because India was richer. This misguided revision of the poverty line, which accounted for virtually all of the upward revision, was not clear to virtually anyone until this new paper by Deaton.

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