Podcast Summary

Episode Overview

Podcast: The CGD Podcast
Episode Title: Whether and How to Measure Inequality Post-2015 – Alex Cobham
Date: September 24, 2013
Host: Lawrence MacDonald (A)
Guest: Alex Cobham (B), Senior Fellow, Center for Global Development

This episode explores the rising prominence of inequality as a core issue in global development debates, particularly within the framework of the post-2015 UN development agenda. Lawrence MacDonald and Alex Cobham, reflecting on a recent CGD conference, discuss why measuring inequality matters, the politics surrounding terminology, proposed metrics (such as the Palma ratio and the median), and the technical as well as political challenges ahead.

Main Discussion Points & Insights

Why Inequality Is Suddenly in Focus (01:04–01:59)

• Alex Cobham suggests that the focus on inequality isn't as sudden as it appears; it has steadily become a consensus issue in the wake of the Millennium Development Goals (MDGs), which notably lacked an explicit focus on inequality outside of gender (B, 01:04).
• In the run-up to the 2015 Sustainable Development Goals (SDGs), broad international consultations (with Cobham as an advisor) identified inequality as a priority, culminating in a well-engaged global network (B, 02:12; 03:07).

The Process: Global Consultations & Moving Toward Post-2015 (01:59–03:55)

• Description of how a thematic consultation on inequality was embedded in the broader global process, leading to a rich activist and expert network, which is likely to further influence the political process (B, 02:12–03:07).
• Upcoming conferences and a growing infrastructure for ongoing advocacy and policy discussion around inequality were highlighted (B, 03:07).

The Politics of Inequality—A Value-Laden Term? (03:55–06:08)

• Debate about whether “inequality” is a loaded term versus “income distribution.” Cobham argues that the debate is itself value-laden, and that the development community now views inequality as integral—not just a sideshow—to development (B, 04:35; 05:04).
• Memorable quote:

  “If ever a comment was value laden, it’s that one.” (B, 04:35)

• Memorable moment: MacDonald quips about a blog comment dismissing "inequality" and another commenter calling it “the dumbest comment I have ever read” (A, 04:58).

Policy Tensions—Equality of Opportunity vs. Equality of Outcome (06:08–07:32)

• Rebecca Greenspan (UNDP, keynote) highlighted tensions between including inequality as a distinct goal versus focusing on equality of opportunity in the SDGs, and how UN system processes mediated this tension (A, 06:08).
• The conversation notes the ongoing debate: Are we at the “end of the beginning” for whether inequality should become an explicit goal, target, or indicator? (A, 06:08–07:32).

Importance of Disaggregated Data & "No Target Met Unless..." (07:32–08:40)

• Cobham explains the High-Level Panel’s focus on disaggregated data:

  “No target can be considered met unless it is also met separately for the most marginalized group...” (B, 07:32)

• This backdoor approach attempts to ensure marginalized groups aren’t left out even if outright inequality goals are politically fraught (A, 08:40).

Where to Focus: Absolute Needs vs. Relative Inequality (08:40–10:43)

• Discussion of Paul O'Brien’s argument (Oxfam) that the issue isn’t just deprivation at the bottom but also “accumulation of wealth at the very tippy top” (A, 08:40).
• Cobham describes the division: Some want to focus on the bottom’s needs, others on reducing inequality as a structural problem influencing health, economic growth, and societal conflict (B, 09:25).

Measuring Inequality: Median, Gini, and Palma (10:43–21:50)

• James Foster (measurement guru) provocatively says that worrying about inequality “means you have to be in favor of burning the money of the rich” (A, 10:43; B, 11:24)—a playful but pointed way to illustrate that some common measures, like the Palma, can be improved by lowering the rich’s incomes as much as by raising the poor’s.
• Memorable quote:

  “If you burn the cash of the rich, you make this indicator perform better.” (B, 11:24)

• Cobham and MacDonald clarify this isn’t serious policy, but does raise the issue of redistribution's role (A, 12:31–12:57).

Comparing Measures

• Median:
  Nancy Birdsall advocated using the median as a simple, intuitive measure that resonates especially in the U.S. context (A, 15:04; B, 15:04–15:46).
• Palma Ratio:
  • Defined as the income share of the top 10% divided by the bottom 40%.
  • Cobham explains its empirical robustness across countries and time, based on work with Andy Sumner (B, 16:09–18:00).
  • The “middle 50%” holds a stable share, meaning the real action is in the tails (top 10%, bottom 40%).
  • Relates closely to the Gini, but is easier to communicate.
  • Memorable quote:

    “If it’s a measure that needs to be explained to somebody before they can understand ... the chances of that being effective for accountability are pretty small.” (B, 19:15)

• Gini Coefficient:
  A technical economists’ favorite, but widely unintelligible to the public. MacDonald jokes most people would think of “magical spirits inside a bottle” before considering it an inequality measure (A, 18:28).

The Need for Simplicity and Accountability (19:15–21:50)

• Discussion about the necessity for accountability measures to be understandable by everyone, including those with limited education, given foundational literacy and numeracy issues in many developing countries (A, 20:10; B, 21:12).
• Memorable quote:

  “Measures that people can grasp quickly, which are intuitively clear, are the type of measures we need...” (B, 21:12)

The Call for Better Data and International Commitment (21:50–24:59)

• Broad consensus at the conference for institutionalizing the measurement and reporting of inequality. Andrew Berg (IMF) suggested reporting three simple stats: top 10% income share, median, and one of Gini/Palma (A, 21:50).
• Cobham argues international commitment to data collection will pressure reluctant countries to catch up (B, 22:47).
• The “data revolution” proposed by the High-Level Panel refers to major upgrades in household survey frequency and quality, enabling disaggregated tracking (A, 23:14; B, 23:16).
• MacDonald and Cobham agree household surveys alone aren’t enough—tax return and bank account data, especially about the top 1%, is critical (A, 24:07; B, 24:28).

Notable Quotes & Memorable Moments

| Timestamp | Quote / Moment | Speaker | |-----------|-------------------------------|---------| | 04:35 | “If ever a comment was value laden, it’s that one.” | Cobham | | 04:58 | “The next comment on that blog was, this is the dumbest comment I have ever read.” | MacDonald | | 07:32 | “No target can be considered met unless it is also met separately for the most marginalized group...” | Cobham | | 11:24 | “If you burn the cash of the rich, you make this indicator perform better.” | Cobham (paraphrasing Foster)| | 15:04 | “The median captures all the difference between the median and the mean ... it's a very powerful measure.” | Cobham | | 19:15 | “If it’s a measure that needs to be explained to somebody before they can understand ... the chances of that being effective for accountability are pretty small.” | Cobham | | 21:12 | “Measures that people can grasp quickly, which are intuitively clear, are the type of measures we need for inequality in post2015.” | Cobham | | 25:42 | “In the panel presenting the Palma, I referred to the tyranny of the Gini.” | Cobham |

Key Segment Timestamps

• Why is inequality in focus? – 01:04–01:59
• How consultations worked & global engagement – 01:59–03:55
• Inequality as a value-laden term – 03:55–06:08
• Opportunity vs. Outcomes debate & where the politics stand – 06:08–08:40
• Focusing on the bottom, the top, or both? – 08:40–10:43
• Measurement panel: technical vs. intuitive (median, Palma, Gini) – 10:43–21:50
• The call for simple, accessible measures – 19:15–21:50
• Consensus for more and better data, “data revolution” – 21:50–24:59
• Limits of household surveys, call for more transparency at the top – 24:07–24:59
• Closing thoughts—tyranny of the Gini, new opportunities – 25:42–26:47

Conclusion and Takeaways

The episode frames inequality as an issue now central to development policy, not merely an external concern. There is agreement on the need for stronger, simpler measures (with the Palma ratio and median income proposed as accessible alternatives to the Gini), and for greater data collection—possibly culminating in a “data revolution.” The politics of measurement and the choice of indicators remain contentious, but the push for clarity and inclusivity in measurement and accountability is firmly underway.

Cobham’s parting thought (25:42):
“In the panel presenting the Palmer, I referred to the tyranny of the Gini... It’s also led to the exclusion of people from the discussion about inequality... The data revolution... could actually be a real revolution in how we see and understand inequality.”