I was just screwing around with some data we collected a bit ago. In a nutshell, I’m working to try to improve the way we measure household wealth in developing countries. For the past 15 years, researchers have relied on a composite index based up easily observable household assets (a la Filmer/Pritchett, 2001).
Enumerators enter a households and quickly note the type of house construction, toilet facilities and the presence of things like radios, TVs, cars, bicycles, etc. Principal Components Analysis (PCA) is then used to create a single continuous measure of household wealth, which is then often broken into quantiles to somewhat appeal to our sense of class and privilege or lack thereof.
It’s a quick and dirty measure that’s almost universally used in large surveys in developing countries. It is the standard for quantifying wealth for Measure DHS, a USAID funded group which does large surveys in developing countries everywhere.
First, I take major issue with the use of PCA to create the composite. PCA assumes that inputs are continuous and normally distributed but the elements of the asset index are often dichotomous (yes/no) or categorical. Further, PCA is extremely sensitive to variations in the level of normality of the elements used, so that results will vary wildly depending on whether you induce normality in your variables or not.
It’s silly to use PCA on this kind of data, but people do it anyway and feel good about it. I’m sure that some of the reason for this is the inclusion of PCA in SPSS (why would anyone ever use SPSS (or PASW or whatever it is now)? a question for another day…)
So… we collected some data. I created a 220 question survey which asked questions typical of the DHS surveys, in addition to non-sensitive questions on household expenditures, income sources, non-observable assets like land and access to banking services and financial activity.
The DHS focuses exclusive on material assets mainly out of convenience, but also of the assumption that assets held today represent purchases in the past, which can act as pretty rough indicators of household income. So I started there and collected what they collect in addition to all my other stuff.
This time, however, I abandoned PCA and opted for Multiple Correspondence Analysis, a technique similar to PCA but intended for categorical data. The end result is similar. You get a set of weights for each item, which (in this case) are then tallied up to create a single continuous measure of wealth (or something like it) for each household in the data set.
Like PCA, the results are somewhat weak. The method only captured about 12% of the variation in the data set, which sort of begs the question as to what is happening with the other 88%. However, we got a cool graph which you can see up on the left. If you look closely, you can see that the variables used tend to follow an intuitive gradient of wealth, running from people who don’t have anything at all and shit in the shrubs to people who have cars and flush toilets.
We surveyed three areas, representing differing levels of development. Looking at how wealth varies by area. we can see that there is one very poor area, which very little variation to the others which have somewhat more spread, and a mean level of wealth that is considerably higher. All of this agreed with intuition.
“Area A” is known to be very rural, isolated and quite poor. Areas B and C are somewhat better though they are somewhat different contextually.
My biggest question, though, was whether a purely asset based index can truly represent a household’s financial status. I wondered if whether large expenditures on things like school fees and health care might actually depress the amount of money available to buy material items.
Thus, we also collected data on common expenditures such schools fees and health care, but also on weekly purchases of cell phone airtime. Interetinngly we found that over all the two were positively correlated with one another, suggesting that higher expenses do not depress the ability for households to make purchases, but found that this relationship does not hold among very poor households.
There is nothing to suggest that high expenses are having a negative effect on material assets among extremely poor households located in Area A at all. It might be the case that there is no relationship at all. This could indicate something else. Though overall there might not be a depressive effect of health care and school costs on material purchases, they might be preventing households from improving their situation. It might only be after a certain point that the two diverge from one another and households are then able to handle paying for both effectively.
Also of interest were the similar patterns found in the three areas.
The KLM Lounge in Schiphol is a great place. There’s decent coffee, free papers that I might read, food and you can take a shower. Then there’s the odd 60’s futurist decor that makes you think you’ve stepped onto the set of 2001: A Space Odyssey.
In trying to suppress my ambivalence about going to Kenya, boarding a domestic flight the next day and then flying to Japan four days later, I’m reading Joe Stiglitz’s new book, “Creating a Learning Society: A New Approach to Growth, Development, and Social Progress (Kenneth J. Arrow Lecture Series).”
Though I’ve just started the book, I’m finding it quite interesting. Stiglitz and others attribute development to the sharing of innovations rather than the mere accumulation of capital. Societies grow because their people learn new things, and some countries do better because they are better at learning how to learn.
Noting that private firms often entrench themselves in particular modes of operation which discourages innovation, Stiglitz argues that government investments in education and R&D and the guarantee of a legal framework which protects property can allow innovations to flourish.
In reading the book, I kept thinking about this 2km stretch of road in Nairobi which has been under construction for the past five years. It’s absolutely pathetic. Buses have to pass through a one lane mud road next to the construction site, while workers move at a snails pace, slowly pouring concrete by hand. Though the reasons for the slow tempo of road construction most certainly include corruption and mismanagement (the contractor is Kenyan), one also has to notice that nearly all roads in Kenya are built by foreign companies.
The Japanese built a masterpiece of a road, complete with cross walks, bike lanes and dedicated pedestrian ways in a tenth of the time. To Japan’s credit, they use local workers, unlike the Chinese.
Building roads isn’t complicated, or, at least, the complications have been worked with over and over and road building is now an established discipline, with text books and training programs available all over the world.
So why hasn’t the knowledge of road building been successfully transferred to Kenya? What the hell is wrong?
Perhaps this is what Stiglitz is talking about. Without beating up on Kenya too hard (but why not?), Kenyan schools are a shambles and the government is only marginally interested in improving the educational fortunes of the country. Schools are designed to train low level clerks for the civil service, and don’t aspire to train kids for science, math or engineering. Though many, many technologies are already established the world over, perhaps the poor state of education hampers technology diffusion.
Back to my coffee.
I was just reading this on the Guardian’s Poverty Matters blog:
First, identify the most important issues. One of the main problems of the MDGs, as noted in countless analyses, was their failure to bring the major structural issues to the table. I know of no one who thinks that aid is the most important contribution that wealthier countries can make to development, but the vague terms of MDG eight allowed politicians to get away with aid promises (which in some cases they didn’t keep) rather than setting a bold agenda for transformational change in global financial governance, dealing with illicit financial flows, for example, taking bold steps towards international tax reform, and introducing fairer mechanisms for working out debt repayments.
Well, yeah, very true, but again this type of reporting skirts the issue of where those illicit flows are coming from and who took out the loans. The problem with the MDGs was that it failed to put any pressure on leaders of developing countries to stop being parasites. Worse yet, they didn’t allow for the provision and protection of basic individual rights to free expression, judicial rights and economic freedom, instead opting for a few vague and unverifiable targets which failed to address structural problems WITHIN developing countries.
In Kenya, at least, the government is bleeding the populace dry. Evidence from countries such as Botswana and Korea has shown that countries who want to develop can. The biggest obstacle (among all the other obstacles) to development is a lack of political will to do it.
To its credit, the article goes on to point out that domestic ag subsidies in wealthy countries are distorting the world market and preventing developing countries from being competitive on the world market. Eliminating these subsidies will be a real challenge, at least in the US. First, subsidies control price and market volatilities. The US electorate would go bonkers if the price of food went up and down like the price of corn does in developing countries. Second, Americans simply like subsidies and enjoy protecting agricultural interests at all levels. The right likes to pander to farmers for the rural vote while the left is somewhat bummed out because their favorite organic farms don’t have access to them. Though the left loves to pay lip service to ending ag subsidies, I can’t imagine they’d be all that sad if they were offered to their local hippie farmers. That’s speculation for another day, however, and I’m no expert on ag matters.
I hate to be pessimistic about development, but the barriers to progress are hobbled by forces both within and without developing countries and no one seems to be tackling the right issues to improve matters.
While I sit here in Nairobi Java House (which now has a branch in Kisumu…. Kisumu Java House?) eating my standard “Chicken and sun dried tomato sandwich with ABSOLUTELY NO MAYONNAISE” I’m thinking about an exchange I just has with a guy in the line for check-in.
The guy was a tall, obviously northern Kenyan who turned out to be from Marsabit, one of the most remote and lawless areas of Kenya. He works at an American university on HIV things in Kenya. We started talking camels and public health and I just couldn’t help but ask.
“How did you….” I was almost ashamed to try and finish the sentence which I kind of interjected since my interest overrode wherever the conversation was going.
“I was sent to boarding school when I was six.” I didn’t even have to finish it. He knew exactly what I was asking.
To be from a place like Marsabit and working for a major American University is no small feat. First, I have never met anyone from Marsabit and the few times I’ve met people from remote places like Pokot and Turkana, I’ve been tempted to just shake that persons hand and congratulate them. Coming up through University in a place where most kids don’t go to school at all deserves a special prize.
“One cell phone is the only piece of technology you’ll see for miles. It’s an oral culture. Communication is absolutely essential and cell phones are the most prized possession a herder will have outside of his camels.”
His brother has 60 camels. I asked if we might go up there and take some blood. I could stand a trip up to Marsabit, even if armed guards have to accompany.
Riding a matatu is one of my favorite activities and without the carbon monoxide and blaring reggae music, the experience is just not complete. Elaborate light shows are just a bonus.
The Kenyan government has partnered with Google to introduce a new Android based transit card system to replace the current cash based “system.” The idea is to standardize price, eliminate volatility in drivers’ incomes (reducing incentives to drive badly) and efficiently tax the ridership.
The NYT did a great write-up on the Kenyan transit card effort, which I won’t rehash here, but one part of the article stuck out to me.
One of the matatu drivers expresses his resistance to the pre-paid digital system by barking “Kenya is a cash based economy!”
Nothing could be further from the truth. Digital payments are common everywhere in Kenya now. People send and receive money regularly through the M-PESA system, with transactions exceeding 6 billion dollars per month in a country where the average person makes less than $5 a day, many much less.
People buy things at the biggest and the smallest stores with M-PESA, as evidenced by a visible placard displaying the shops M-PESA number. I buy groceries with M-PESA, gas and even have paid my rent with M-PESA. Once, I even bought a $.50 bunch of bananas with M-PESA from an informal vendor on the side of the road.
In Nairobi, where it’s always possible to get robbed, M-PESA is great. I don’t have to carry around big wads of cash with me. Even if my phone gets ripped off, I can still access my money digitally.
Cash is a fiction. While it may seem like poor people benefit from using pieces of paper inscribed with pictures of the first president, cash is unwieldy and simply unsafe in many cases. Moreover, the crumpled and worn bank notes are easily lost and change not always available. Try using a 1000 (or even a 500) schilling note to buy bananas. You’ll be waiting a long time.
I’ve been tasked with resurrecting and project that has been languishing in the world of neglect for years. As I was brainstorming some ideas to revitalize and reconnect with communities we work in, I invited the chief of one of them out for choma, to discuss some options. Somewhere in the conversation, the idea of sponsoring a football match came up.
Gembe East is a community of approximately 14,000 people just east of Mbita Point in Homa Bay County, Kenya. It is quite poor and filled with numerous challenges, but it’s a mostly pleasant place to be and the Chief of the area has been incredibly supportive of all of the Nagasaki and JICA activities.
We met a couple of times, had a few discussions as to what should happen and who should do what, set up a budget for the event and proceeded to pull everything together. It was a lot like putting on a rock show, but with considerably more politics.
Gembe East is divided into four sub-locations, each of which has a soccer team. It was decided that the four teams would play and the winner would receive a new set of uniforms, some money and a trophy.
In addition, we’d have a match between Nagasaki U. and some older folks from Gembe East, a band and a few speeches from “opinion leaders.”
For the two days before the match, we strapped a sound system to the top of a Land Cruiser and drove around the area making announcements. I love seeing trucks like this do political speeches. It was great to be in the car driving around in the bush on awful roads announcing a soccer match (over Luo music) to people tending their farms.
The day of the match came yesterday, things fell unsurprisingly behind schedule, there were a few planning problems and some usual chaos, but in the end everything kind of fell into place.
The first of rounds went smoothly, though one of the teams was late. At first, the spectators were just a few old ladies, but soon the place filled up. We probably had about 2,000 people over the course of the day.
The old man team from Gembe East turned out to be guys closer to their late 20’s (though there was one guy who must have been 60). I haven’t ever played soccer in my life. Unfortunately for the team, the ball came into my vicinity a couple of times.
A real highlight was the Omena Jazz Band, a four piece outfit who have been together since 1970 and whose members were all born before 1950.
I did some speeches on the meaning and nature of our research and presented some simple results to the community. It’s incredibly satisfying to present research results to the people who are actually being surveyed. We can’t do this research without these people. They have a right to know.
Overall, it turned out to be a great day. It was great to meet so many people from the area and have the chance to interact with them. There were some challenges, but there always are when putting on big events. I hope we can do it again in the future.
After all of the negative stuff that’s happened recently, this was a welcome change.