The Rationale Behind the Numbers
Often, numbers take on a life of their own. They exist in a nebulous space where 2 or .75 is supposed to mean something in and of itself. But numbers tell a story. And the key to the story is often in the calculation.
I have seen countless equations. As an engineer, you learn that the equations behind one process share remarkable similarity to the equations behind another process. It is easy to get lost in the math such that you lose the story in the process. Frequently, it seems economic models lose track of the story. It does not help that statistics can lessen the overall impact of a story.
Poverty, as presently defined by organizations such as the World Bank, tends to be wrapped up in equations. The package has been together so long that people forget to untie the package and discern its meaning. A country’s poverty profile can be reduced to 0.30, 0.50, and 0.70 all sitting in a column without much regard for where the numbers come from or their limitations. For the curious, these three numbers indicate various factors as to how the population interacts with a technically-defined poverty line. As the first number, 0.30 means that 30% of the population is at or below the poverty line. As the second number, 0.50 means that the average income of all of the people below the poverty line is 50% of that of the poverty line [so if you have a poverty line of $500/year, the average poor person makes $250/year]. And as the third number, the 0.70 indicates that the relative distribution of people below the poverty line is significantly uneven [ie you have a lot of people making a lot less than $250/year]. But it is a lot easier to throw these numbers into another equation than to stop and think about their meaning.
After all, thinking about what they actually mean might just lead you to ask the question, “How am I an actor in this story?”