Inequality, Growth, Poverty and Lunar Eclipses: Policy and Arithmetic

ABSTRACT Alleviating poverty, mitigating inequality and achieving growth are all acknowledged goals of development, whatever the degree of success with which these goals might have been addressed in various economies of the world. Apart from questions of resolve and genuine commitment, what makes it hard to engage with these goals is that the pursuit of any one of them does not necessarily secure the ends of either or both of the other two. Such engagement requires a measure of conceptual clarity, an identification of normative priorities, and the deployment of carefully crafted policies that accommodate trade‐offs among competing goals. In particular, policies such as the single‐minded pursuit of growth as a panacea for all the difficulties of development appear to be misguided, and based on a faulty application of deductive reasoning to past experience. These issues are addressed here by attending to some elementary arithmetic revolving around the measurement of money‐metric poverty and inequality, and the decomposition of poverty changes into effects attributable to growth and distributional changes.