Burgess COMMENTARY

Peter Burgess
Founder/CEO at TrueValueMetrics developing Multi Dimension Impact Accounting

Oxfam has created some good media by presenting their perspective on inequality at the World Economic Forum. I am rather disappointed at the rather dangerous superficiality of some of the assertions that make in their media briefing paper, something that highlights the problem there is with the metrics used in economic analysis and the broader conversation.

Let us take the idea that the increase in wealth of the richest 100 billionaires in 2013 was $240 billion, and that this is enough to end world poverty 4 times over.

Since this increase in wealth is mainly because assets they owned had a different valuation at the beginning of the year from the valuation at the end of the year ... it becomes necessary to understand how and why there was a change in valuation. The role of the 'market' in valuing investment holdings is not something that is particularly easy to understand and explain ... but it does confuse the landscape of metrics.

How $240 billion would end world poverty 4 times over seems to me to be a 'throw-away' line that has little meaning and very hard to translate into practice. According to note 28 in the Oxfam press release, Brookings estimates that it will cost $65 billion a year to bring everyone above a poverty threshhold of $1.25 a day.

I like metrics ... and I like numbers ... but they should be treated with respect and with understanding. The starting point for this discussion has some numbers that are attention getting without having much substance. Very disappointing!

Peter Burgess - TrueValueMetrics
Multi Dimension Impact Accounting

Open PDF ... Oxfam-Cost-of-Inequality-WEF_2014