Clearing the Mist from Economic Science, by Richard Webb | opinion

Economics still has generous doses of philosophy and politics, but we must see some progress in the direction of true empirical science. Mathematics was the most effective tool to achieve this decline, starting with simple measurement of the basic aspects of the economy, especially the volume of production – gross domestic product – and its distribution among the population and the critical phenomenon of extreme poverty. Looking back, I realize that, despite my limited mathematical abilities, a large part of my career has consisted of efforts to contribute to the development of digitally grounded science.

I began my career at the Central Bureau of Research, coincidentally, at a time of institutional crisis regarding the quality of the GDP statistics produced by that institution. Thus, my entry into the Bank coincided with a decision to review and improve the GDP estimates that the Bank had been carrying out annually since the late 1940s, work that was not yet being carried out by the Office for National Statistics. It has been a task of crucial importance in the formulation of monetary and fiscal policies, but at the same time one that is open to political uncertainties emerging at a time of political change and institutional contestations. Years later, these estimates were assumed by the National Directorate of Statistics and Census, but before that institutional change I had to direct the first statistical reform of the GDP calculation.

The second phase of my career also consisted of a statistical task, but it did not refer to production statistics but rather to the distribution of income generated by this production among the national population, a particularly bold task due to the lack of statistical background. However, the aim of this work was not to calculate a final number that would serve as a judgment or “score” determining the degree of inequality or economic injustice in a country. Rather, the aim consisted of identifying the structural foundations – regional and productive – of this distribution or distribution of income, to serve as a guide in the design of redistribution policy. One conclusion of these calculations was the need to give priority to horizontal redistribution, especially from the urban sector to the rural sector, the impact of which would be much greater than that of the various versions of “vertical” redistribution – between owners and workers – implemented by the government. Military government in the 1970s The result of such calculations came too late to be used as a guide to the military government’s policies, but years later they became the basis for new “horizontal” transfer policies such as various subsidies to rural households.

A little-known statistical initiative arose in 1985 with the visit of a World Bank technical mission to the Central Reserve Bank, when it was running the institution. The World Bank decided to measure poverty levels in the least developed countries, and conducted the first measurement in Côte d’Ivoire. His proposal was a collaboration to conduct a second measurement through a survey of income levels in Peru. The proposal was accepted and implemented between 1985 and 1986, which became the first national-level poverty estimate in Peru.

Years later, concern about the lack of statistical knowledge in the general population was the reason behind an educational initiative carried out by Dr. Graciela Fernández Baca, who ran the National Statistics Office, which was to publish a magazine called Quantum with the aim of educating non-professional readers with little knowledge of the digital aspects of life. Daily. This initiative also extended to conducting surveys on living standards that could be used to calculate poverty, work that was not carried out systematically by the National Institute of Education until the early years of the new millennium. Today, the National Institute of Education of Nigeria is evaluating the expansion of poverty estimates to include the “deficit” of the population, not only in household income but also in various needs such as water, sanitation, schools, electricity, security and services. And the information necessary to expand these goods and services.

Little by little, the economics profession in Peru is moving towards better documented knowledge about the state of productive and social life, improving the basis for less philosophical, but more practical, solutions.