Wednesday, June 28, 2023

Robert MacCulloch: The Productivity Commission's Inquiry on "disadvantage" misled the Cabinet (and the Kiwi Public)

The Productivity Commission has just released an "Inquiry" on disadvantage, poverty & inequality. Isn't that mean to be the job of the Ministry of Social Development? Anyhow, the Inquiry is called, "A fair chance for all - Breaking the cycle of persistent disadvantage". The word "productivity" barely rates a mention - about 12 times throughout the body of the 179 page report (aside from appearing in endless repetitions of the name, "Productivity Commission"). By contrast, the word "disadvantage" occurs 545 times.

The Inquiry describes "four barriers as underlying drivers of disadvantage" being power imbalances, discrimination, siloed government & short-termism by politicians. It argues these have hurt Māori & Pacific people's life satisfaction & well-being particularly badly, since "Any experience of disadvantage negatively affects life satisfaction and wellbeing .. As might be expected, we found that people with no temporary or persistent disadvantage have the highest life satisfaction scores of any group. Life satisfaction declines when disadvantage in any domain is experienced, and it decreases further if disadvantage is experienced in multiple domains or over longer time periods".

Raising well-being for disadvantaged groups & indigenous development are two of my fields in economics, so let's look at the assumed stark differences in life satisfaction, depending on ethnicity, that form the foundation of the entire Inquiry. Below are Stats NZ figures (that were never reported by the Commission):

Click to view

Average life satisfaction across all ethnicities is the same, at 7.9 out of 10. A higher proportion of Māori & Pacific peoples report 10 out of 10 compared to any other ethnic group. Amazingly, 22% of Pacific peoples and 21% of Māori rate themselves as a perfect 10 score, compared to 16% of Europeans.

These findings are the opposite to those reported by the Commission. Why did it hide the incredible levels of life satisfaction experienced by most Māori & Pacific peoples? Does the Chair of the Productivity Commission not know about the well-being statistics and important academic articles that have been written in this field?

When we invited the founder of well-being economics, Professor Richard Easterlin, out for a visit he specifically referred to this finding. Why? Since he considers the most disadvantaged folks are those trapped on the hedonic treadmill, which is the quest for more material goods & services in a never-ending struggle to "keep up with the Joneses".


Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.


Peter Young said...

Thank you Robert.

Well, if one ever was wondering who was funding the Disinformation Project, it should now be obvious - their silence is deafening!

The Productivity Commission should be sticking to their knitting -"productivity", which, in NZ, could fairly be said to be almost the antithesis of poverty. Clearly, the Commission have gone off topic into waters they know nothing about, much less the facts. Presumably, these clowns are also paid by us taxpayers and so they should be called to account. They appear to be as useless at their job as the former Race Relations Commissioner and unless they can satisfactorily answer why the discrepancy in their findings with the facts, they too should be gone. NZ is in a dire financial straits, so why are we paying for this disinformation, which is a far cry from being, in anyway, productive?

Robert Arthur said...

jusging from nighbourhood parties, maori neighbours are obtaining far more satisfaction from life than me. And when they get older they will not disqualify for any benefits, or pay high tax, all factors which diminsh from life satisfaction. And no concerns about who will look after them in old age, or inherit their estate. And now will get preferential health care, a further cause for satisfaction.