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Lifting singles out of poverty in canada

Published by Anonymous (not verified) on Fri, 04/12/2020 - 12:43am in

I’ve written a report for the Institute for Research on Public Policy about social assistance—specifically, about social assistance for employable single adults without dependants.

A ‘top 10’ overview of the report can be found here.

Lifting singles out of poverty in canada

Published by Anonymous (not verified) on Fri, 04/12/2020 - 12:43am in

I’ve written a report for the Institute for Research on Public Policy about social assistance—specifically, about social assistance for employable single adults without dependants.

A ‘top 10’ overview of the report can be found here.

Social assistance: Do higher benefit levels lead to higher caseloads?

Published by Anonymous (not verified) on Mon, 12/10/2020 - 12:58am in

As part of my PhD thesis, I did some statistical analysis in which I asked the question: “Do higher social assistance benefit levels lead to higher caseloads?”

I have recently updated the data and had it published in a journal.

Here’s a short summary of the journal article’s main findings.

Social assistance: Do higher benefit levels lead to higher caseloads?

Published by Anonymous (not verified) on Mon, 12/10/2020 - 12:58am in

As part of my PhD thesis, I did some statistical analysis in which I asked the question: “Do higher social assistance benefit levels lead to higher caseloads?”

I have recently updated the data and had it published in a journal.

Here’s a short summary of the journal article’s main findings.

Homelessness in canada could rise due to recession

Published by Anonymous (not verified) on Sat, 26/09/2020 - 2:50am in

I am currently writing a report for Employment and Social Development Canada looking at the long-term impact of the current recession on homelessness. It should be ready by early November.

In the meantime, a teaser blog post I’ve just written on the same topic is available here.

Homelessness in canada could rise due to recession

Published by Anonymous (not verified) on Sat, 26/09/2020 - 2:50am in

I am currently writing a report for Employment and Social Development Canada looking at the long-term impact of the current recession on homelessness. It should be ready by early November.

In the meantime, a teaser blog post I’ve just written on the same topic is available here.

Consumption in the time of a pandemic: tracking UK consumption in real time

Published by Anonymous (not verified) on Tue, 14/07/2020 - 6:00pm in

Sinem Hacioglu Hoke, Diego Kaenzig and Paolo Surico

The response to the Covid-19 pandemic has included closure of retail outlets and social distancing. How large was the resulting consumption fall in the UK? In a new paper, we try to answer this question using a transaction-level dataset of over 8 million individual transactions. This gives a near-real time read on consumer spending, without the publication lags associated with national accounts consumption data. We find that the bulk of the fall had occurred before legally mandated lockdown started. The largest declines occurred in retail, restaurants and transport, but spending on some items such as online shopping, alcohol and tobacco rose. There is substantial variation in change in consumption across age, income group, housing tenure and local authority.

From individuals to a real time consumption measure

Our starting point is individuals’ transactions. Especially in the times of crisis, spending data present a valuable way of taking a peek at how consumer behaviour changes. We contribute to a burgeoning literature exploiting transaction level data to analyse consumption changes during the pandemic as in Baker et al (2020) for the US, Carvalho et al (2020) for Spain and Andersen et al (2020) for Denmark.

We use an anonymized transaction level dataset provided by Money Dashboard (MDB), a free online personal financial management company operating in the UK. Their main product is an app that gives its users the flexibility to link multiple accounts (current, savings or credit card accounts) and provides them with a set of tools for categorizing and keeping track of their spending. We focus on the time period between 1 January to 26 April 2020. This provides us with over 34,000 users who have consistently used the app over this period and overall more than 8 million transactions. The MDB user base is skewed towards higher income and younger individuals so the sample may not be representative of the whole UK population. Also analyses based on other data sources on the real time effects of pandemic in the UK might lead to different results due to different data coverage.

MDB has developed algorithms to classify transactions into over 280 spending categories. The granularity of the data allows us to construct weekly expenditure measures not only for non-durables, durables and services but also for a number of more detailed categories such as retail, restaurant, travel and transportation.

Our benchmark total expenditure measure combines different spending categories but excludes recurring expenses such as bills, council tax and more importantly rents so in that respect is different than the National Accounts’ consumption measure. Given that bills and rental expenditures are likely to not adjust much in the short run, our measure likely produces a larger fall. The actual total spending measure is almost real time as it is available with a few days lag and is of paramount importance to track household demand in times of crisis.

Abrupt changes in consumption even before lockdown

The UK government announced the nation-wide lockdown on March 23, 2020 although there were softer measures in place starting from March 15. For example: restaurants and pubs were already asked but not required to close before the lockdown, the public was advised to avoid public transportation, embrace social distancing and work from home whenever they can. All these measures affected consumption ahead of the legally mandated lockdown measures. But the effect of the pandemic on different kinds of spending has differed.

We compute the average weekly expenditure, and then normalize this measure relative to the 2nd week of January. The top panel of Figure 1 shows the average total expenditure in 2020 (blue) compared to 2019 (red, in 2020 prices). The second week of March 2020 records a similar relative level of spending to 2019. But in the third week of March total expenditure declines sharply, with a fall of almost 30%. By the end of April the cumulative falls exceeds 40%. Similarly, measures of nondurable and services consumption record significant falls in the course of March 2020. Most of the decline in consumption, however, occurs starting from the second week of March, before the lockdown. So, the bulk of the fall in consumption comes before legally mandated lockdown measures, suggesting voluntary social distancing makes a bigger marginal contribution than lockdown.

Figure 1: Indices of weekly total, nondurable and services expenditures excluding recurring expenses, second week of January is set to 100

Big differences across expenditure types

Figure 2 takes a more detailed look at different expense types. This time we report actual pound spent per week for different spending categories. On the left panel, retail, restaurant and transportation expenses all decline significantly in March. Although the declines stabilize in April, the levels at which these expenses settle are 25% to 30% lower than 2019 levels. Interestingly, travel expenses dip towards the end of March but return to 2019 levels in April perhaps as individuals preserve the hope of ‘going back to normal’ towards the end of the year and start booking holidays.

Figure 2: Average weekly spending by different categories

On the right panel of Figure 2, unsurprisingly, there is a big spike in online shopping in the second half of March and grocery expenses in the second week of March. However, the initial rise in online shopping and groceries purchases have been reverted to levels close to 2019. We also document the increase in alcohol and tobacco consumption, and DYI/home spending. Although the latter is seasonal and also increases around the same time in 2019, there is a stark difference between 2019 and 2020 levels. Overall, the most affected categories seem to be nondurable and services consumptions, spending in restaurants, retail, and transportation.

Variation across local authorities

Finally, the pandemic did not have the same effect across all parts of the UK despite the nation-wide lockdown. Figure 3 shows a heatmap for the percentage decline in total expenditure from the last week of February to the last week of April 2020 across different parts in the UK darker (lighter) shades represent larger (smaller) declines whereas the light grey denotes areas with insufficient observations. The heat map reveals pervasive heterogeneity in the economic costs both across the country and within broader local authorities, ranging in between −16% to −33% in a few locations in the Midlands, Wales, Belfast and the Scottish Highlands, and −56% to −65% in a handful of areas across Greater London, Hampshire, Berkshire, Surrey and Aberdeenshire.

Figure 3: The decline in total expenditure in the UK

Inequality and heterogeneity

The pandemic has not affected consumption uniformly across the income distribution. While the whole nation experienced a dramatic decline in consumption, the changes in consumption are far from unified across individuals. To explore the inequality the pandemic has given rise to, first, we classify individuals in our dataset according to their income and consumption at each point in time. We have three groups: 90th percentile, 50th percentile (median) and 10th percentile. We also condition on individuals’ February 2020 income and calculate the heterogeneity in savings rates in a similar way. Then in Figure 4, we report these groups’ weekly consumption (top left panel), monthly income (top right panel) and saving rates (bottom panel) in 2020.

There are two important points emerging about inequality. First, all three groups exhibit declines in consumption and income (top panel) over the months of March and April 2020. The 90th and 50th percentiles (shown in green and blue) are not as affected as the individuals at the 10th percentile of the distribution (shown in orange) although the overall decline in spending and income is apparent. Second, the percentage fall in consumption and income is far more pronounced among households in the bottom percentiles shown in orange lines. While there is an uptick in the savings of the richer individuals, the decline in the savings of poor is quite stark. So, poorer individuals are getting more constrained, especially in April.

Figure 4: Log weekly consumption (left) and log monthly income (right) and saving rate (bottom)

In the same spirit, we can explore which individuals’ consumption has taken a big hit with respect to their housing tenure (if they are renters or mortgagors); age (young, middle aged or older); income (high, medium and low income). Figure 5 documents a few interesting findings. First, on the top panel, mortgagors appear to have a higher level of consumption than renters during normal times. But they are also the ones experiencing a relatively more pronounced decline in their consumption. Second, in the middle panel, middle-aged and older individuals sustain a higher level of spending than young individuals. For middle-aged and older individuals, however, the fall in consumption is starker in March 2020. Third, at the bottom panel, while low and middle-income individuals (below £50K) sustain almost half of the consumption of the wealthier individuals during normal times, the wealthy reduce their consumption more than others. In summary, mortgagors, middle-aged to older individuals and higher earners exhibit the largest spending drop in terms of pound value.

Figure 5: Heterogeneity of weekly total pound consumption by housing tenure, age and income

A novel machinery to track consumption in real-time in the UK

Even in tranquil times, it is difficult for economists to track what is happening to consumption. In crisis times, timely indicators of consumer spending can be extremely important to policymakers for understanding the fallout from crises. Our headline result is that consumption fell substantially before the onset of formal lockdown measures, suggesting that the effects of voluntary social distancing or advice can be significant. Looking beneath the aggregate- there are substantial differences across income, housing tenure, geography and income level.

Sinem Hacioglu Hoke works in the Bank’s Monetary and Financial Conditions Division, Diego Kaenzig is a PhD student at the London Business School and Paolo Surico is a Professor at the London Business School.

If you want to get in touch, please email us at bankunderground@bankofengland.co.uk or leave a comment below.

Comments will only appear once approved by a moderator, and are only published where a full name is supplied. Bank Underground is a blog for Bank of England staff to share views that challenge – or support – prevailing policy orthodoxies. The views expressed here are those of the authors, and are not necessarily those of the Bank of England, or its policy committees.

To Be or Not to Be: Is the European Degrowth Movement Courting an Identity Crisis?

Published by Anonymous (not verified) on Thu, 02/07/2020 - 3:59am in

By Brian Czech

 

To be or not to be

Shakespeare and degrowth

Shakespeare would have a question for degrowthers. (Image: CC0 1.0, Credit: The Washington Times)

for lowering GDP.

Deciding is the fee

for degrowthers to be free!

(Free of confusion, that is, and degrees of self-defeat.)

 

In the heart of the Cold War, John F. Kennedy proclaimed, “Ich bin ein Berliner.” More than halfway to a century later, my solidarity is with a different European ideology, which traces its roots to the French scholar Serge Latouche. I say, “Je suis pour la décroissance.”

Yes, I am a degrowther, secondarily at least. I prefer to identify primarily as a steady stater, but by now—well into the 21st century—we steady staters realize the global economy is almost certainly beyond its long-term capacity. No one in steady-state economics is advancing the notion of a perpetual, pre-covid $88 trillion economy. In other words, we’re all for “degrowth toward a steady state economy.”

In many ways, steady staters were the original degrowthers, with Herman Daly at the forefront since the 1960s. I joined the pack around 1995, in the midst of my Ph.D. research, which included an interpretation of the Endangered Species Act as an unintended prescription for a steady state economy. As the author of the CASSE position on economic growth (with input from Daly and others), and as alluded in the last two clauses thereof, degrowth was on my radar more than 20 years ago.

In the “old days,” though, the degrowth movement in English-speaking circles often went by another slogan, “contraction and convergence.” Informed by yet other steady staters—notably the ecological footprint trackers Bill Rees and Mathis Wackernagel—scholars started calling for a contraction of the global economy before striving for a steady state. Knowing such contraction wasn’t politically viable globally without the spreading of some wealth from richer to poorer nations, they coupled the concept of contraction with the concept of convergence. A convergence of wealth, income, and opportunity was required if there was to be any hope for “steady statesmanship” in international diplomacy.

Why bother with the mini-history? Because there seems to be a peculiar notion (to be explored shortly) coming out of pockets of the degrowth movement, particularly in Western Europe. In my opinion, it’s a notion that threatens the credibility and effectiveness of the broader non-growth or post-growth movement. Therefore, it becomes important at this stage to wrangle a bit on the identity and future of the movement.

Such wrangling should start with the realization that no one has a monopoly over the word “degrowth.” While the socially constructed Wikipedia might relay the notion that “degrowth” is “a political, economic, and social movement,” in reality, “degrowth” is a word, and a word with a perfectly clear meaning. The political, economic, and social program entailing degrowth can rightly be called a “degrowth movement,” but not “degrowth” per se.

Degrowth: The Meaning vs. the Movement

Hearkening back to our Shakespearian poem, and speaking as an original degrowther, I for one don’t have any doubt. Why of course I’m for lowering GDP! Not recklessly, draconianly, or stupidly. But certainly and significantly. Why deny it?Commoner's dictionary

Yet many degrowthers—or many who identify themselves thusly—seem quite agnostic about GDP degrowth. Some readers are probably wondering, “Seriously? Can there actually be degrowthers—people calling for degrowth—who deny that degrowth entails a declining GDP?” And who could blame the poor reader, as the very first metric that would come to most minds, when thinking of degrowth, would indeed be GDP. From the Cold War to Brundtland Commission win-win rhetoric to Trumpian politics identifying GDP growth as Goal #1, growth has always been about GDP! When growth is all about GDP, why certainly degrowth would be all about GDP, or at a minimum decisively in favor of declining GDP!

Might I be making a mountain of a molehill? I don’t think so. Maybe a knoll from a hummock, but even a hummock is an obstacle, and hummocks have potential for growing into knolls.

As evidence for the hummock, I would like to quote a degrowther (who shall remain anonymous) who replied to a tweet in which CASSE polled the Twittersphere, “What should the priority be in the post-COVID economy?” First, let’s consider the poll results:

Twitter poll

Of course the poll was not conducted with Pew-like research methods and standards. CASSE is followed on Twitter largely by those who get it about limits to growth, so no one would claim the results to be representative of the general public. Furthermore, the difference between steady-state and degrowth votes is statistically insignificant. The key point here, though, is not so much the tally, but rather some verbal responses to the poll and to the covid-caused recession in general, starting with the aforementioned, anonymous degrowther.

The degrowther stated in an email, “What this tweet suggests is that the current situation of economic crisis corresponds to degrowth. The problem is not just that this statement is inaccurate since degrowth does not equal less GDP, but also that it is damaging to the advocacy work that we do here…” (emphasis added).

The full email suggested that the quotee is no muddleheaded green growther, but rather a reputable and scholarly degrowther, and perhaps something of a leader in the field. Therefore, I do not think the quotee was implying, much less believing, that degrowth is congruent with a growing GDP. Rather, I think the quotee was striving to emphasize—and wanted others to strive likewise—that, in the European degrowth movement, “degrowth” is supposed to connote far more than a decreasing GDP, including a thorough political package of social justice. Unfortunately, however, the language used to de-emphasize GDP is often confusing and too inconclusive about the need for lowering GDP.

Giorgos Kallis and the degrowth movement

Giorgos Kallis, European degrowth leader. A Shakespearean steady stater might opine, “Kallis doth protest too much, methinks.”  (Image: CC BY-SA 4.0, Credit: Riccardo Mastini)

One degrowth leader, Giorgos Kallis, doesn’t offer much clarity, at least not in writing, by insisting that “Degrowth is anything but a strategy to reduce the size of GDP.” Similar to the anonymous quotee, he surely doesn’t believe in “green growth,” as the corresponding video (and recent scholarship) helps to clarify. Yet he wants the degrowth movement “to be distinguished from recession or depression” so much that he downplays the need for declining GDP.

A similar lack of enthusiasm for lowering GDP is found in the article, “Their Recession Is Not Our Degrowth!” The author, Federico Demaria, wrote about degrowth, “Our proposal is not necessarily to reduce GDP (an arbitrary indicator), but rather to ask new questions and search for alternatives to today’s society based on a predatory, unjust and unsustainable capitalist economic system.”

The Significance of GDP in Growing, Degrowing, and Steady State Economies

If Mark Twain were a steady stater (which would not be surprising), he might apprise, “The reports of GDP’s arbitrariness are greatly exaggerated.” In fact, GDP is perhaps one of the least “arbitrary” of all the macro indicators on Earth. GDP growth has been soberly and deliberately (albeit unwisely in recent decades) selected as a central economic policy goal for close to a century. The outcomes are far from unclear, either. GDP serves as an indicator of dozens or hundreds of things, and it is a rock-solid indicator of at least five:

  • Energy and material throughput
  • Pollution
  • Biodiversity loss
  • Environmental impact
  • Ecological footprint

Now this isn’t the article for refuting the increasingly irrelevant neoclassical growth economists who believe in perpetual GDP growth. That can be and has been done in many other venues. This is an opportunity, on the other hand, for squaring up degrowth and steady-state messages. Let’s start with the five points noted above.

The trophic structure of the human economy establishes that a growing GDP requires increasing throughput, even with technological progress. Pollution is an inevitable function of the second law of thermodynamics, and increases with GDP. The causes of biodiversity loss are like a Who’s Who of the economy. Biodiversity is in turn the top indicator of ecological integrity and environmental health, which decline as the economy grows. We might even view the economy as an $82 trillion giant, stomping across the landscape, leaving its ecological footprint.

In addition to the five points above, it’s no stretch of common sense—much less sound science—to identify tight linkages between GDP and:

  • Noise
  • Traffic
  • Stress
  • Soil depletion
  • Water shortages
  • Competition for resources
  • International strife
  • War

Then, of course, we have greenhouse gas emissions, climate change, and sea-level rise. While neither Kallis nor myself think there’s a Thanksgiving turkey’s chance of decoupling today’s GDP from greenhouse gas emissions, even a “renewably” energized future is hellish enough, given the relentless efforts to push GDP perpetually upward. 

So, does anyone still feel like ignoring GDP? Or downplaying the importance of degrowing it? Here then is one last try to get us over the hump.

The GDP Question in the Politics of Degrowth: We Can Handle It

Assuming we truly do want a decreasing GDP—which we desperately need for the sake of environmental protection, economic sustainability, national security, and international stability—we must strive for it as politically effectively as possible. For degrowthers in western Europe, apparently this entails assuaging the concerns of those who want “degrowth” to automatically connote goodness, or at least improvement from current badness. Connoting goodness or improvement is a tough sell when the public is accustomed to thinking of improvement (if not goodness) in terms of a growing GDP. But that’s our job!

One subtle approach is Timothée Parrique’s proposal (page 326 of his Ph.D. dissertation) for distinguishing linguistically, and thus connotatively, between “degrowth” and “de-growth.” The unhyphenated “degrowth,” then, would connote the broader degrowth movement and all it stands for. “De-growth,” on the other hand, would be limited to the trend in GDP.

Parrique’s approach resonates with CASSE, as we have long distinguished between the “steady-state economy” of neoclassical economics and the “steady state economy” of ecological economics. In the hyphenated phrase of neoclassical economics, “steady-state economy” connotes simply a stabilized capital:labor ratio, and almost always with growing GDP! In the non-hyphenated phrase favored by CASSE, “steady” modifies “state,” and “state” modifies “economy.” In other words, “steady state economy” connotes a political state in which GDP is stabilized.

Our attempt to distinguish, via hyphen, between neoclassical and sustainable concepts would be well understood in only a tiny corner of academia where political science and ecological economics meet (and where neoclassical economists rarely interlope). Outside of that corner, any effects would be marginal. The hope, though, is that neoclassical growth theory will fade far enough away as to leave the “steady state economy” as the only entry that really matters for purposes of politics and policy, even if “steady state” is occasionally or inadvertently hyphenated.

Similarly, I suspect Parrique’s distinction will be understood only within the tight confines of the academic degrowth literature. Outside those confines, especially all the way into public dialogue, “degrowth” will be used just as it sounds and—pursuant to the “Commoner’s Dictionary”—just as it means: Decreasing and, in particular, decreasing GDP.

The bigger point is, that’s not a bad thing! It is decidedly, decisively a good thing in the 21st century. We want GDP degrowth, all the way back to a sustainable and ideally an optimal steady state economy. Of course, it’s not the ultimate end-all goal, but it’s much more than a trivial means to an arguable end. GDP degrowth is such a necessary condition for sustainable wellbeing, it’s crucial that we strive for it.

So, if degrowthers are worried about the tarnishing of their message with the connotations associated with recession, coronavirus, or a covid-caused recession, my response is: That’s life. It’s not easy. It will take plenty of political prudence, and tireless determination, to advance the steady state economy—or degrowth toward a steady state economy—as the central economic policy of the 21st century. We have to learn how to communicate, with clarity if not flair, what Herman Daly has long emphasized; namely that a failed growth economy is not the same as a successful steady state (or successfully degrowing) economy. I think we can do it, but not if we waffle on the need to degrow GDP, which only confuses observers and allows for the persistence of “green growth” fantasies.

Je suis pour la décroissance. That’s right, I am a degrowther. And I’m all for GDP degrowth!

Brian Czech

Brian Czech is the Executive Director of the Center for the Advancement of the Steady State Economy.

The post To Be or Not to Be: Is the European Degrowth Movement Courting an Identity Crisis? appeared first on Center for the Advancement of the Steady State Economy.