Problems With Venezuelan Numbers
It appears that Mexico is not the only Latin American country for which the media have difficulty with official statistics. Apparently, the media have been anxious to tout high poverty numbers for Venezuela. The problem appears to be that they want to cite poverty data for 2004, which showed a large upturn in the poverty rate in the immediate wake of a strike in the oil sector.
The Venezuelan economy rebounded sharply, beginning in 2004, and the poverty rate predictably fell back below its previous levels. However, even though the 2005 data is now available, the media continues to use the much higher numbers from 2004. My colleagues at CEPR posted a short piece on Venezuelan poverty today.
posted by Dean Baker @ 5:17 PM
9 Comments:
At 7:11 PM,
PGL said…
Cherry picking variations in the data to misrepresent long-term trends so reminds me of the National Review. Oh wait ... I think I have my next Angrybear post!
At 8:00 PM,
Laurent GUERBY said…
Very interesting paper, thanks! Note that there is a presidential election in Venezuela
Today there was a double page on Venezuela in "La Tribune" (french newspaper oriented towards financial reporting), mostly about Total and the pertroleum tax law changes.
One thing I'd like to know is wether these tax changes are setting total oil tax rates (including all tax, royalties, etc.. collected by the state) from low to normal (compared to say other producers) from normal to high, from low to high?
I heard in a conference in Paris that a few years ago (before PDVSA "renationalisation") that venezuela was the oil producer state with the lowest contribution from oil revenue to state budget.
So I suspect the move is from "low" to "normal" but I've no data to back that up :).
At 8:58 PM,
Anonymous said…
It isn't just the media...
Both Krugman and Stiglitz continue to place much of the blame on Argentina's collapse on U.S. led policies as if no turnaround has taken place.
There may be some truth to the poor policy argument, but they knowingly mislead by not mentioning Argentina has a higher GDP/capita in 2006 than when the economy went bust in 2001/02.
If two world class economists willfully use "old data" -- not mentioning the last few years of 8% growth -- we shouldn't be too surprised when journalists do the same thing.
At 10:10 PM,
James Schipper said…
Dear mr Baker
Now that Bolivia has a left-wing president, we can be sure that the poverty rate will go up too according to the establishment press.
One poor country in which poverty is less prevalent than in comparable countries is White Russia, but that country's ruler has refused to privatize everything, so naturally he has been vilified.
Regards. James
At 2:19 AM,
Anonymous said…
Of course the Venezuelan inflation rate is over 10% per year (compare with 4% in Chile, which has GDP growth of 6%).
When oil prices go down, I think we'll see if the Bolivarian Revolution worked or not.
It is interesting to compare GDP per capita in Venezuela, which went from $2640 in 1975 to $6500 in 2005, compared with Chile's which went from $1320 in 1975 to $11,300 in 2005.
At 5:04 AM,
Laurent GUERBY said…
Off topic for this post, you might want to point out to Faini work next time someone talks about the growth differential between Europe and the USA:
http://www.unc.edu/depts/econ/seminars/Faini.pdf
http://www.eurotrib.com/story/2006/5/16/224239/653
At 4:07 PM,
Anonymous said…
Interesting paper...but it didn't explain why so many of the columnists insiste that Chavez changed the methodoloy used to measure poverty rate. Several of them repeated this many times.
Why did they conclude this? The paper says there was no change; if this is true, where did the columnists get the idea that a change was made?
Also, I feel a little dirty have to type 'mstrbtma' to verify I'm human :)
At 8:32 AM,
Dean Baker said…
Anonymous asked why the news reports claim that the Venezuelan government changed its methodology for measuring poverty. This is a good question with no obvious answer. There does not appear to be any authoritative source (e.g. a person in the statistical agency or an economist familiar with its procedures) for this claim. It just started appearing in various news reports and therefore gets repeated in other news reports.
The head of the statistical agency in Venezuela that calculates poverty numbers insists that they are using the same methodology that they have always used.
At 3:08 PM,
sexy bikini said…
The economy began to recover and grew very rapidly– 17.9 percent in 2004, and 9.3 percent in 2005. As a result of this recovery, the poverty rate dropped to 37.9 percent for the second half of 2005, the latest data available.
Thus if we compare the latest available data to the start of the present government, the household poverty rate fell nearly 5 percentage points – from 42.8 percent in the beginning of 1999 to 37.9 percent in the second half of 2005. The household poverty rate was thus reduced by 12.9 percent. Measuring individuals instead of households, the poverty rate decreased by 6.3 percentage points –from 50 percent of the population to 43.7 percent. That was a 14.4 percent reduction in poverty. Since the economy has continued to grow rapidly this year (first quarter growth came in at 9.4 percent), the poverty rate is almost certainly significantly lower today.
How then have so many people reached a different conclusion? The most common mistake has been to use the data from the first half of 2004, which was gathered in the first quarter of that year. The household poverty rate at that time was 53.1 percent, which is of course up enormously from 1999. There are several things wrong with using this measure. Most importantly, this poverty rate is measuring the impact of the oil strike and recession of 2002-2003.
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