Scorecard

The Islamic Scorecard -- A New Approach to Poverty Relief

Index is not a useful measure -- instead a truly multidimensional approach is required.

A useful discussion is given by Malcolm Gladwell -- The Order of Things, Feb 14 2011, New Yorker. He shows how arbitrary college rankings are.. When dimensions are heterogenous, every index reflects personal preferences.

QUESTIONS TO BE ADDRESSED IN A INTERIM METHODOLOGICAL PAPER. 
1: Multi-dimensional criteria cannot usefullly be reduced without specifying objectives -- refer to Gladwell article above, ADD example, which medicine is best?? Try to understand which axiomatics violated by adding stuff but not violated by adding deprivations. (Have asked Sabina for her book, Arif Naveed also mentioned reference)

2: There exist things which are genuinely qualitative and cannot be reduced to numbers. Life Experience for example, built in abilities. Every moment of time is unique.


Moving Beyond Indices – A  Scorecard for Policy Makers

 

The Alkire-Foster MPI has been a useful tool in changing the nature of the debate regarding development. It provides a humane alternative to the single minded focus on growth and money that drove and, to a large extent, continues to drive economic policy. A one dimensional MPI is useful to put in opposition to the one dimensional growth rate.  Nonetheless, for reasons to be discussed, effective policy responses to poverty require moving beyond indices.

Problems/Difficulties/Defects of the IDEA of an MP Index

1: The multi-dimensional nature of poverty is one of the most significant findings of the literature in the past few decades. This is dramatically opposed to one-dimensional measures based on income or calorie intake which were almost universally used in the past. The fundamental insight that poverty cannot be reduced to a single dimension is contradicted by the attempt to do so via the MPI. One might respond that the MPI is decomposable so that we can recover the different dimensions from the data input needed to construct the MPI. However, the question remains – why should we try to produce one number? Why not insist that the multidimensional nature of poverty requires multiple yardsticks? That we should not attempt to reduce to one dimension? That all such efforts are bound to fail? 

2: Creation of a single index is an attempt to solve an impossible problem. How much education can compensate for lack of access to potable water? Should someone buy expensive medicine for his sick child, depriving the rest of the family essential nutrition? Every index actually provides answers to these questions. But these questions should not be answered – instead, we should strive with all our energies to change a world which faces some of us with such cruel choices.

3: One index creates an illusory and useless one dimensional ranking among countries. Hundreds of arbitrary decisions are involved in creating an index, and those with specialized knowledge can create any ranking they want by adjusting these decisions appropriately. Competing for improvements in this ranking can actually be counterproductive.

4: An index creates a crutch for policy makers, who can utilize improvements in one dimension to compensate for failings in others. Note the contrast with the MDG’s where every dimension is treated separately. Good performance in one dimension is not allowed to compensate for failings in others. There is strong empirical evidence that MDG’s have been effective – it seems likely that they would not have been as effective if the performance measure had been reduced to an index.

5: Use of sophisticated mathematics creates an illusion that mathematics can be used to solve moral dilemmas. This supports the idea of technical fixes to human problems. An important part of our efforts to solve the poverty  problem must be the re-introduction of the normative into the sterilized pseudo-scientific discourse characteristic of modern economics. We must be allowed to express our sorrow at the fate of the hungry and malnourished, and we must encourage the development of compassion and sympathy. Polanyi has argued that market economies systematically create indifference to poverty, and we must counteract this to prevail.

6: As I have argued elsewhere, a useful measure must have a target which exists in the real world – that is, it must be trying to measure something real. MPI and other indices CREATE the phenomenon being measured – the target of the measure does not have an independent existence; it is defined by the measure itself.

A listing of defects is of no use unless a superior alternative is available. My suggestion is that a SCORECARD approach would serve our purposes better. A motivation is provided by the “Poor Economics” approach of Duflo-Banerjee. In their view, tackling poverty requires addressing a thousand small problems, rather than a few big problems. The scorecard approach requires us to set out a list of dimensions along which we would like to see improvements. Initially, these could be the dimensions from which the MPI is constructed; later they could be adjusted in light of experience. One part of the scorecard would be the measure of achievement along this dimension, in comparison with the 100% ideal situation – where all needs are met. An additional part would be the score of the target policy making agency, with respect to its capabilities. Thus the scorecard would be different for different groups of agents – initially, it could be government sector, commercial sector, and civil society. Each group would be ranked on its achievement in solving the problem; this achievement would be relative to its capabilities. Worldwide usage would provide us with realistic benchmarks, and also mark out high achievers as models to be followed. Exceptionally poor performance, relative to capabilities, would also be singled out. Thus the scorecard has the potential for providing more effective and sharply focused policy responses.

One might think that we are making a mountain out of a molehill. The MPI is already being used in many of the ways that are proposed for the scorecard. The information required for policy interventions is gathered in the process of construction of the MPI. We can disaggregate and then use this information in the ways suggested. There are a number of responses to this:

1.       The scorecard can be targeted to different groups, with differing capabilities, and might permit a co-ordinate approach to problems requiring public-private partnership, for example.

2.       The scorecard could provide realistic benchmarks, as well as best case and worst case performances. Performance would be judged relative to capabilities, instead of hypothetically ideal, but impossible to achieve goals.

3.       The magic of numbers, and Lord Kelvin’s dictum that superior knowledge is always quantifiable and measurable, has created the illusion that it is always useful to measure.  We must learn to distinguish between problems which require solution, and those which don’t  -- that is, we must not try to measure, in situations where the measure does not provide any information of value for decision making {This would normally be the case with the MPI}. For example, aggregating over all kinds of foods to meet caloric requirements is a feasible exercise. However, if we set different minimal requirements for different types of food groups, then we must REFUSE to aggregate – because aggregated food indices would necessarily lose vital information in this case. Aggregation is NOT always desirable, and can sometimes be harmful. Decisions to create an aggregated measure require a close look at the real world issues under consideration, and cannot be resolved on a purely mathematical & statistical basis.

4.       All of the policy objectives achieved by the MPI can be achieved equally well or in a better way via a suitable scorecard approach. 
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Essie Maasoumi paper on researchgate  Jun 26, 2015, 9:21 PM Asad Zaman
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