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> So we've gone straight from "minimal price inflation" to "significant increases ... a sizeable change". I'm not sure the fact that a different variable (tota

> So we've gone straight from "minimal price inflation" to "significant increases ... a sizeable change". I'm not sure the fact that a different variable (total wage expenditure) from the one discussed in the abstract (price inflation) recorded a different outcome is a particularly pertinent critique of the paper. Since the paper also records that the increased wage expenditure allowed wage earners to buy more goods because the price of goods inflated minimally, and the enterprises spending more on wages nevertheless experienced a [non-statistically significant] increase in profit, leaving all groups materially better off, this is GDP growth, not inflation. A more pertinent observation is that this is pretty much what you'd expect from injecting additional money into a local economy operating well below capacity and buying most of its consumer goods from areas not receiving cash injections, so it doesn't necessarily work at national scale or if the jurisdiction self-funds its poverty alleviation funding.

origin_path 4y ago
Although I agree with your conclusions that the study doesn't tell us much, I don't think wages should be excluded from claims about price inflation, especially in non industrial economies heavily reliant on cheap labour. The charity advertises the headline 0.1% rate and the abstract makes no mention of the fact that actually some of the most important prices in that society increased significantly. If they'd admitted to this up front of would have seriously reduced the apparent success of their initiative. But there is really a deeper problem here. Every time researchers do this they're training people to assume their claims are deceptive in some way. Large groups of people are just tuning out academic claims because of this sort of thing, they don't care. But this is bad for social cohesion because the people who take academic output on faith then conclude that they must be a superior breed of person: "reality based", "understands the science" etc. We already have this problem and it's getting worse. To wit: you can't afford the time to double check every claim presented as important or that will affect social policy that affects you, so you have to generalize, and increasingly that means assuming that if an academic makes a claim convenient for their prevailing ideology, it's probably a trick or misleading in some way. If caught they tend to blame journalists for "misrepresenting" their work, or they'll point to a footnote on page 67 where they redefine a standard term and use it to claim nobody should have ever assumed the obvious interpretation of what they were saying. It's just so tawdry. Then for people who stop listening, it gets used as a weapon to beat them around the head. So I think academics have a moral obligation to be brutally honest in their claims and abstracts. This sort of word game where they arbitrarily exclude the prices that went up from their definition of price inflation, is ultimately self defeating.
- notahacker 4y ago
  Wage spend literally isn't price inflation though, and real wage increases (or employment increases) due to increased output aren't even likely to cause price inflation. Local enterprises sell more, so the workers get more money, with which they are able to buy more stuff. That is economic growth, not price inflation. If you would like to argue that people earning more money is always and everywhere a negative outcome aid agencies should do everything in their power to avoid, that's a bold argument you're perfectly entitled to make, but it doesn't change the fact that it is not - by itself - price inflation. If the paper has computed price inflation wrongly that's another matter, but it won't be because they haven't created a new definition of price inflation which includes wages (or profits or units sold or unfilled vacancies or speculator activity or anything else which isn't price inflation, no matter how often it correlates with it or causes it). Put another way, academics should continue to use definitions correctly, and not add fake caveats to stuff which is tautological to pander to the sensibilities of people who (i) don't understand the basic definitions (ii) assume that a reasonable starting point is to assume that if their view on what the basic definition should be conflicts with the academic's understanding, it is because the academic is acting in bad faith.
  - origin_path 4y ago
    Inflation is a general rise in prices, and what the paper reports is not merely that people who received money paid their employees more (yay!) but also that employers in villages that didn't receive any money also had to pay more in wages. Literally they experienced an inflationary shock in the labor market. The research is very quiet on this part - in the control villages the little businesses suddenly had a big problem. They couldn't/didn't raise prices because their competitors in the next village over weren't doing so, but they suddenly had to pay more in labor costs. You can say this isn't a problem but the goal of aid is to try and create sustainable increases in wealth that stick around after the money flow stops. That clearly didn't happen here. As to definitions, that's exactly the problem in talking about. The academic definition of inflation is useless and misleading. They say prices didn't go up, as if labor is some magical thing that doesn't have a price. And they neglect to mention that a very important category of prices did inflate unless you read most of the paper.

origin_path 4y ago

Although I agree with your conclusions that the study doesn't tell us much, I don't think wages should be excluded from claims about price inflation, especially in non industrial economies heavily reliant on cheap labour. The charity advertises the headline 0.1% rate and the abstract makes no mention of the fact that actually some of the most important prices in that society increased significantly. If they'd admitted to this up front of would have seriously reduced the apparent success of their initiative. But there is really a deeper problem here. Every time researchers do this they're training people to assume their claims are deceptive in some way. Large groups of people are just tuning out academic claims because of this sort of thing, they don't care. But this is bad for social cohesion because the people who take academic output on faith then conclude that they must be a superior breed of person: "reality based", "understands the science" etc. We already have this problem and it's getting worse. To wit: you can't afford the time to double check every claim presented as important or that will affect social policy that affects you, so you have to generalize, and increasingly that means assuming that if an academic makes a claim convenient for their prevailing ideology, it's probably a trick or misleading in some way. If caught they tend to blame journalists for "misrepresenting" their work, or they'll point to a footnote on page 67 where they redefine a standard term and use it to claim nobody should have ever assumed the obvious interpretation of what they were saying. It's just so tawdry. Then for people who stop listening, it gets used as a weapon to beat them around the head. So I think academics have a moral obligation to be brutally honest in their claims and abstracts. This sort of word game where they arbitrarily exclude the prices that went up from their definition of price inflation, is ultimately self defeating.

notahacker 4y ago
Wage spend literally isn't price inflation though, and real wage increases (or employment increases) due to increased output aren't even likely to cause price inflation. Local enterprises sell more, so the workers get more money, with which they are able to buy more stuff. That is economic growth, not price inflation. If you would like to argue that people earning more money is always and everywhere a negative outcome aid agencies should do everything in their power to avoid, that's a bold argument you're perfectly entitled to make, but it doesn't change the fact that it is not - by itself - price inflation. If the paper has computed price inflation wrongly that's another matter, but it won't be because they haven't created a new definition of price inflation which includes wages (or profits or units sold or unfilled vacancies or speculator activity or anything else which isn't price inflation, no matter how often it correlates with it or causes it). Put another way, academics should continue to use definitions correctly, and not add fake caveats to stuff which is tautological to pander to the sensibilities of people who (i) don't understand the basic definitions (ii) assume that a reasonable starting point is to assume that if their view on what the basic definition should be conflicts with the academic's understanding, it is because the academic is acting in bad faith.
- origin_path 4y ago
  Inflation is a general rise in prices, and what the paper reports is not merely that people who received money paid their employees more (yay!) but also that employers in villages that didn't receive any money also had to pay more in wages. Literally they experienced an inflationary shock in the labor market. The research is very quiet on this part - in the control villages the little businesses suddenly had a big problem. They couldn't/didn't raise prices because their competitors in the next village over weren't doing so, but they suddenly had to pay more in labor costs. You can say this isn't a problem but the goal of aid is to try and create sustainable increases in wealth that stick around after the money flow stops. That clearly didn't happen here. As to definitions, that's exactly the problem in talking about. The academic definition of inflation is useless and misleading. They say prices didn't go up, as if labor is some magical thing that doesn't have a price. And they neglect to mention that a very important category of prices did inflate unless you read most of the paper.