A lot of public policy research in low-income countries tries to understand the habits of the poor. How much money do they spend, how often do they visit a health center, how many days a week do their kids go to school, how often and where do they use the bathroom and what is the precise consistency of their deposits?
Answers to these questions help program implementers and social scientists know whether programs to help the poor are working, and how to design new or more efficient programs. Data collected on spending patterns can also help nudge people to adopt behaviors that help society as a whole, such as buying insurance, paying taxes and saving for retirement. However, an equally if not even more valuable set of behaviors to observe are those of the super-wealthy.
Instead of a poverty action lab, I have this long-term dream of creating a Wealth Action Lab. Its mission would be to look at behaviors of the super wealthy and estimate their impact on the outcomes of the poor. The underlying goal is to nudge the rich into more pro-social behaviors such as donating to foundations or buying carbon neutral yachts.
The dream may be coming true in the form of amateur observers of the super-rich. Like twitchers sitting in the hide for days to spot rare birds, this new class of watchers finds joy observing private jets and mega yachts. Instead of keeping this as a niche hobby, perhaps we should help these amateurs to go pro. Could it be in the interest of international development organisations seeking to eliminate poverty to collect data on the most wealthy?
The Trump presidency has sent the international development sector into a swirl of uncertainty. Small organisations and large foundations have begun developing contingency plans for the proposed 37% cuts to the State Department and USAID’s $50.1 billion aid budget. Instead of just responding to changes such as these cuts and innovating on the programs, why isn’t more effort aimed at understanding individuals whose decisions may profoundly impact the lives of the poor?
Data collection and evaluation of programs that reduce poverty is incredibly valuable work that is also expensive to undertake. Innovations for Poverty Action –who exclusively evaluates programs to reduce poverty– spent $42.6 million in 2015. If every dollar spent yielded $10 in return, IPA would generate $426 million in value. If this happened it would be heralded as the greatest anti-poverty effort of all time. Yet, Trump’s cuts are 40 times larger than these very unlikely returns.
Instead of only studying the poor, what programs could be designed from a dataset recording the habits of the super wealthy?
If the most wealthy’s political bargains and other consumption patterns are generating increased poverty, it’s in the interest of researchers to understand these habits. How much does Russian fertiliser magnate Dmitry Rybolovlev spend on generating political favors? Will his consumption of political goods generate negative externalities for the poor? If it does, then it would be good to know the size of these externalities and find policies to reduce them. For that, we need data.
While Thomas Piketty’s work has yielded a mountain of information on the spending habits of the wealthy using tax returns, there are so many other data sources out there. This NYT article made me think of all of the data available from private jet tracking data to super-yacht enthusiasts snapping pictures. One criticism of my quest to create a wealth action lab is, “Cool idea Zach, but how are you going to get a Russian oligarch to sit down for a 4 hour survey?”.
It seems we don’t have to. A few intrepid researchers could secure a small amount of funding to start painting financial portraits of influential billionaires in a systematic way. Maybe it would lead nowhere: loads of evaluations spend $1 million to find no outcome. Or perhaps it would force pro-social spending from individuals who want to be known for more than their rank on the Forbes list.
The exciting part is the amount of data available and currently being collected by a small army of amateur enthusiasts of super-wealthy-data. What if this were done more formally? The Marshall Institute at the LSE is dedicated to the study of philanthropy: perhaps this research could be part of their mandate. Angus Deaton’s Nobel prize was awarded partly due to his pioneering work in household surveys to understand the consumption habits of the poor. As global inequality grows ever greater, maybe a future prize will be awarded to the one who deeply understands the consumption habits of the most wealthy, that in many cases, determine the outcomes of the most poor.
Zach Clemence is a second year MPA candidate at the London School of Economics. He is the Web Editor of the Public Sphere Journal. Prior to the MPA he was a Research Coordinator for Innovations for Poverty Action. For hate-mail and offers of employment, he can be contacted at Z.W.firstname.lastname@example.org.