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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

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.
  - notahacker 4y ago
    Price inflation is a rise in product prices. Period. This definition is not contested, not even by politicians who currently have very strong incentives to pretend that the headline rate of price inflation is "useless and misleading" and we should use a novel measure which factors in relatively low wage growth instead. The paper is not at all quiet about the spillover effects on other firms. On the contrary, it is quite clear that there is no "problem" because the firms spending more money on labour make more profit from selling more goods [at approximately the same prices as before]. This is what economists call "growth". If ever there was a case to change a definition of a term academics, politicians and headline writers all agree on, I suspect it won't come from somebody whose principal objective is to argue that "everybody has more stuff" is actually an adverse side effect.
    - origin_path 4y ago
      Is your argument for why it's not misleading "but journalists and politicians repeat what academics say"? If so that's not very convincing and exactly the kind of argument I'm talking about. Headline writers are not exactly highly trusted. Anyway, I disagree that's true. I don't recall ever seeing a discussion of "price inflation" on it's own, headlines are always about RPI or CPI, i.e. where adjectives are used to narrow the range of prices being discussed. Even there, the definitions are certainly controversial with many prices that affect ordinary consumers being excluded, and hedonistic adjustment frequently being a source of surprise. It's also the kind of thing that led to catastrophic economics over the past 15 years or so because central banks kept rates very low and then near zero or even negative, printing lots of money that inflated giant bubbles in housing and then the stock market. They did this because "inflation is low", due to definitionally excluding the prices that were going up. Many people have tried to sound the alarm about this and central bankers (who are usually ex academic economists) simply ignored them. But again, really, repeating my wider point, your response is exactly the problem I'm talking about. A normal person will interpret "price inflation" as almost definitionally redundant, because inflation is a general rise in prices. There's no reason to expect anyone to interpret this as excluding wages. Same as how public health researchers define "unvaccinated" as including lots of people who have taken a vaccine, or "COVID death" in such a way as to include traffic accidents. When these people blame the reader for assuming a plain English definition, it's the sort of thing that just leads people to assume nothing academic can be trusted.
Majromax 4y ago
> I don't think wages should be excluded from claims about price inflation, especially in non industrial economies heavily reliant on cheap labour. As I read your quote above, it sounds to me like "increased spending on labour" refers to an increase in the quantity of labour demanded, more than an increase in the hourly wage. That's consistent with both economic improvement and low inflation.
- origin_path 4y ago
  I think they're taking about increases in individual wages. Businesses didn't expand by my reading of the paper.

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.
- notahacker 4y ago
  Price inflation is a rise in product prices. Period. This definition is not contested, not even by politicians who currently have very strong incentives to pretend that the headline rate of price inflation is "useless and misleading" and we should use a novel measure which factors in relatively low wage growth instead. The paper is not at all quiet about the spillover effects on other firms. On the contrary, it is quite clear that there is no "problem" because the firms spending more money on labour make more profit from selling more goods [at approximately the same prices as before]. This is what economists call "growth". If ever there was a case to change a definition of a term academics, politicians and headline writers all agree on, I suspect it won't come from somebody whose principal objective is to argue that "everybody has more stuff" is actually an adverse side effect.
  - origin_path 4y ago
    Is your argument for why it's not misleading "but journalists and politicians repeat what academics say"? If so that's not very convincing and exactly the kind of argument I'm talking about. Headline writers are not exactly highly trusted. Anyway, I disagree that's true. I don't recall ever seeing a discussion of "price inflation" on it's own, headlines are always about RPI or CPI, i.e. where adjectives are used to narrow the range of prices being discussed. Even there, the definitions are certainly controversial with many prices that affect ordinary consumers being excluded, and hedonistic adjustment frequently being a source of surprise. It's also the kind of thing that led to catastrophic economics over the past 15 years or so because central banks kept rates very low and then near zero or even negative, printing lots of money that inflated giant bubbles in housing and then the stock market. They did this because "inflation is low", due to definitionally excluding the prices that were going up. Many people have tried to sound the alarm about this and central bankers (who are usually ex academic economists) simply ignored them. But again, really, repeating my wider point, your response is exactly the problem I'm talking about. A normal person will interpret "price inflation" as almost definitionally redundant, because inflation is a general rise in prices. There's no reason to expect anyone to interpret this as excluding wages. Same as how public health researchers define "unvaccinated" as including lots of people who have taken a vaccine, or "COVID death" in such a way as to include traffic accidents. When these people blame the reader for assuming a plain English definition, it's the sort of thing that just leads people to assume nothing academic can be trusted.

Majromax 4y ago

> I don't think wages should be excluded from claims about price inflation, especially in non industrial economies heavily reliant on cheap labour. As I read your quote above, it sounds to me like "increased spending on labour" refers to an increase in the quantity of labour demanded, more than an increase in the hourly wage. That's consistent with both economic improvement and low inflation.

origin_path 4y ago
I think they're taking about increases in individual wages. Businesses didn't expand by my reading of the paper.