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Dev2 (Subject) / Chapter 4 (Lesson)

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• 1.) How many people live on less than 1$ a day? 2.) What are the consequences? 3.) How to measure poverty? 4.) Cantril's ladder 1.)1.37 billion 2.) Poor health (Children dying from preventable diseases each year), poor education, quality of life, nutrition  3.) Treshold first : $1 and 2$ (PPP) Poverty lines (by WB) - minimum to participate in society 4.) Scale 0 to 10: how satisfied are you with your life? (Pos. relationship of Cantril's ladder and log GDP p.c.
• 1.)Head Count ratio - weakness? 2.) Poverty Gap ratio? 3.) Weakness of Poverty and Income gap ratio (in common) 1.) Fails to capture how far from the poverty line someone is. Hard to allocate new money then. 2.) Ratio of the av.of income needed to get all people to the poverty line divided by mean income 3.) Ignore the issue of inequality among the poor  
• 1.) International Comparison Project and PPP Indices, what for? 2.) Jeff Sachs about poverty trap: 3.) Bill Easterly about poverty trap: 4.)When would a PT exist? 1.)to make comparisons across countries/time, need a common denominator, i.e. compare countries using a single price index (1990 and 2003 based e.g.) 2.) Yes does exist! Poor countries won't be able to escape from poverty by themselves, need more aid.  3.)No poverty not permanent. Many countries managed to develop 4.) When potential to for increasing income limited to those who have little to invest, but large for those who already have a lot (i.e. non-convex technology coupled with failing credit markets). No poverty trap if returns to investment are high at low levels of investment.
• 1.) Nutrition based poverty trap: 2.) Relationship between nutrition based poverty trap and S-curve 1.)1 billion people are undernourished. Symptoms: anemia, low BMI, small/stunted and thin children (i.e. low height for age, low weight for age/height). Diminished cognitive ability. 2.)First few calories are just enough to survice, don't give you extra strength. Above a certain level you can go out and work. Income --> possibility to buy food ---> possibility to go and work and generate more income --->  (circle!)Relationship between income today and tomorrow.
• 1.) What to do if there is a poverty trap? 2.) Aid when no poverty trap? 3.) If there would exist a PT - and relationship between nutrition and productivity? Evidence? 1.)we should denitely give more aid. Small changes in income can get people from the convex part of the capacity curve to the concave part and from there on they manage to climb out of poverty themselves. 2.)If there is no poverty trap, then aid is just a substitute for reinvesting prots, no eciency gains, but redistribution. 3.) Then the poor should eat as much as they can to get out of the trap zone.  No! Not what is going on empirically! Poor countries (below poverty line) 50% to 70%. (On education or health only up to 5%)
• 1.) Policy implications ? Evidence? Margins on improvement? 2.) Some food items might be Giffen goods, that is ... 1.)Deaton and Subramanian (1983) find that for a 10% increase in household income, the household increases spending on food by 7%. Half of this is spent on more calories and half of this is spent on more expensive calories (meat instead of veg).  2.)a good whose consumption decreases as price falls, which can only happen if the income effect outweighs the substitution effect. Unlikely for goods that make up a small share of the household budget. 
• 1.) Jensen/Miller (2010): 2.) Jensen/Miller results 3.) Food subsidies, a good idea? 1.) Randomized experiment in China: hand out vouchers for rice in Hunan and vouchers for wheat in Gangsu 2.) Decrease in price of rice of 10% leads to a 2.5% decrease in consumption of rice. Increase seafood consumption. If seafood less nutritious and caloric than rice, then income elasticity of calorie consumption might even be negative. Positive Engel curves we see in cross-section are just associations: People who eat more are more productive and have higher income People with higher income have a taste for eating more (i.e.taking away some money from them does not mean they reduce their food intake), i.e. poor and rich are not good counterfactuals for each other. 3.)Many countries use food subsidies to improve nutrition, in the case of Hanun, this would have been completely counterproductive.
• 1.)Engel curve: Dreaze and Dreaton (2009): 2.) Development of Engel curves over time and reason for that 1.)Indians are eating less and less over time.  2.) With increasing expenditure calories doesn't increase 2009 to the same proportion they did in 1983. Perhaps need for calories is falling over time as manual labour less prevalent.People spend on items other than food.
• 1.) Nutrition based poverty trap? Poor never able to eat enough? 2.) L-shape? Strauss 1986 3.) Deaton: instead of calories/weight use.. 4.) So long-term more S-shape? (based on Deaton's idea - evidence?) 1.) unlikely: cost of 2,400 calories/day in Philippines for example is 21 cents PPP. More than aordable for someone on 99 cents/day. 2.)Case of Sierra Leonian self-employed farmers. Calorie intake of 10% leads to increase in productivity of 4%. Concave relationship 3.) height! No genetic dierences in height between dierent races. Early childhood disease and nutrition plays a large role, and heights do not change (much) in adulthood. So adult heights provide a long term measure of hunger and disease.  4.) Taller people earn more. It is high related to IQ. What matters: good nutrition in childhood.
• 1.) How to improve nutrition? (besides food) 2.) Why don't ppl take advantage of these nutrients? 3.) Conlusion - food based PT 1.) Deworming pills, iodized salt, iron supplements. 2.) No information about its benefits? Rather good taste than beneficial? Other desires might compete with food? 3.) Little evidence about it. But long-term there could be a relationship. Investments in children's mother's nutrition very likely to be beneficial. 

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