What is the impact of Olympic Games on Poverty?

At a first glance, the benefits of the Olympic Games and other mega sporting events seem to outweigh the drawbacks. Economic growth, infrastructure legacies, and image promotion are among the top benefits of hosting the Games.

For instance, as seen in this article, from October 1986 to July 1992, the general rate of unemployment fell from 18.4% to 9.6% in the host city of the 1992 Olympic Games, Barcelona.

In South Africa, Poverty reduction strategies associated with the 2010 FIFA World Cup included a commitment to construct facilities in disadvantaged areas, job creation, provision of affordable housing, small business support, provision of an integrated transport system and community consultation.

An investment of $2 billion was made in Olympic-related projects between the 1990 Olympic announcement and spring 1996 to Atlanta, the host city of the 1996 Olympic Games, a region where 30% of the population lived below the poverty line according to this study. As a result, over 580 000 new jobs were created in the region between 1991 and 1997.

Nevertheless, the existing literature does not offer much evidence that hosting mega events has a direct effect on poverty reduction; on the contrary, the use of mega sporting events to achieve social goals for socially excluded groups is heavily contested, as this article demonstrates.

The 1996 Atlanta Games serve as an illuminating case of the negative social impacts of a mega-sporting event. Between 1990 and 1995, 9500 units of affordable housing were lost, and $350 million in public funds was diverted from low-income housing, social services, and other support services for homeless and poor people to Olympic preparation during the same period.

In Sydney, in 1998, when the Olympic-related infrastructure was at its peak, house prices rose 7% above inflation, compared to the usual 2%, according to studies. Moreover, in Sydney’s Olympic corridor, an area which was primarily occupied by low-income tenants and where unemployment was as high as 38%, rents increased up to 23% in the period 1997-1998, as shown in this PDF.

The book “Inside the Olympic Industry: Power, Politics, and Activism”, available at this link, gives further details regarding the Australian situation.

Brazil hosted the Summer Olympic Games in 2016 and, with the Games over, Brazilians were asking “what now?“. “The Olympics were fun, but it was a sideshow” said Flavio Mattos, a 37-year-old fitness instructor from Rio who was interviewed by Fortune. “We now have real problems to fix“.

There is plenty of evidence for critics to say that the mega-event caused more harm than good: massive spending on stadiums at a time when the government could barely afford wages for doctors and teachers, a huge security presence that protected rich foreigners at the expense of poor residents and massive inequality between the £700 a day payments to International Olympic Committee executives and the £10 a day earnings of cleaners in the Olympic village, as this article shows.

Students say the Games could have led to investment in poor communities, but they instead exhausted Brazil’s development reserves. Lucas Rodrigues Alves, from Escola Superior de Marketing e Propaganda in Rio de Janeiro, said in an interview: “I see the millions and billions spent on overpriced Olympics construction, which should be spent on education, health and projects for people of the favelas to have opportunities to grow and participate in the development of the whole city”.

Michel Silva, a journalist from Rocinha, Brazil’s largest favela, has the same opinion: “A huge amount of public money was spent on the 2014 World Cup in Brazil, and although sport can be a tool for social inclusion, what we really need is investment in education, health, security and many other things”, said in an interview with The Guardian.

In addition to the missed investments for poor people, the latter also experienced intimidation, violence and lighting evictions from local police agents.
“The modernist city doesn’t have space for the poor”, affirmed Clarisse Cunha Linke, Brazil Country Director of the Institute for Transportation and Development Policy (ITDP), in an interview.
As people from the favelas said in an interview conducted by Al Jazeera, “One of the times they tried to remove us, long before the Olympics, we were given the justification that we are a visual aggression. We are ugly. Poverty is an ‘aesthetic damage’ to the area“.

When asked whether the Olympic games were having an impact on poor communities, Simon Worrall, National Geographic said: “The change I was seeing was superficial. The face of the city was changing but not the faces of the people who gained from these processes. Time and time again, when I looked at big infrastructure projects, what I saw was that the people who had always benefitted in Brazil – the wealthy parts of town, the big development companies – were the ones who would benefit from what was being put in place. The Olympic plans were laid out in such a way that the people who were already wealthy became wealthier and the people who were already on the margins, like the favelas, were pushed further to the margins“. More information can be found at this link.

Moreover, as we can see from an article of The Economist about a Book written by Andrew Zimbalist, the revenue from the summer Olympics was not equally distributed between the International Olympic Committee and the Local Organizing Committee.

In conclusion, it appears that Olympic games are negatively correlated with Poverty Reduction and positively correlated with Inequality within the city which hosts the Games.
It seems right to wonder, then, how a well-grounded programme of urban development (initiated well before the event) could take root and be sustained well into the future, with multiple spin-offs for all city dwellers, in particular the poor and marginalised.

People rising out of poverty need more than short-term economic gains to truly leave poverty behind.
Cities can adopt an equitable development model for urban planning, which ensures that all city residents have a chance to benefit from major sporting events.
For example, the 2012 London Olympic Games included a proposal to turn the Olympic Village into 6,000 units of affordable housing.
According to this article by Stanford University, if we change the approach to development, large sporting events like the Olympics can reduce, rather than drive, inequality.

Matteo Grosso, 3610

Master in Management

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Poverty in the Czech Republic Compared to the European Union

Due to I am only Czech student in our course Poverty: Concepts and Challenges I would like to focus this blog post on level of poverty in the Czech Republic. In the second part I would like to compare results of research made in the Czech Republic with results of same research on level of poverty in the European Union. I will use the latest data from the Czech Statistical Office and data published on the European Commission website.

Research on poverty in the Czech Republic is made every year. Data I will show in this post are from the end of 2015. Data from 2016 will be published in the end of this month. Results of this yearly research show us percentage of people at risk of poverty due to insufficient income and at risk of social exclusion.

In 2015 there were 14% of total population in the Czech Republic at risk of poverty or social exclusion. If we divide society according to gender, women (15.6%) are more in danger of risk of poverty than men (12.3%). Children (18.5%) are more endangered than population in productive age or population older than 65 years (10.9%). Population in productive age can be divided according to their employment or unemployment. It is not surprise that 57% of unemployed people are at risk of poverty or social exclusion and “only” 6.3% of employed people are in the same situation. It is important to say that unemployment in the Czech Republic is constantly on very low level. In March 2017 it was slightly under the 5% of the Czech population. Important indicator of risk of poverty is household structure. Families with more children (15%) are more at risk of poverty that household without children (13%). But difference between households with children and without children is not so striking.

Let´s compare the Czech Republic with the whole European Union. The Czech Republic is on the long-term basis one of the countries with the lowest percentage of population under the level of poverty. There is 23.7% of total European Union population at risk of poverty or social exclusion. Percentages according to gender, age or employment are growing depending on percentage of total population at risk of poverty. 24.4% of women and 23% of men, 26.9% of children and 17.4% of people older than 65 years and 66.6% of unemployed and 12.5% of employed people are at risk of poverty.

In the course of approaching to conclusion I would like to briefly comment on material deprivation. There live close to 9% of population in severe material deprivation in the European Union. In 2015 it was 5.6% of population in the Czech Republic. Those people cannot afford to own washing machine, telephone, car or other things and cannot face unexpected expenses.

In this short article I tried to show the situation of poverty in the Czech Republic and compare it to the European Union. The Czech Republic has one of the lowest percentages of population under the level or at risk of poverty in the European Union as I mentioned and we can also see on the attached picture. It is positive these percentages in the Czech Republic are lower every year even though level of poverty is growing every year (means you need earn more to be over level of poverty). On the other hand we can´t say the European Union is not fighting against poverty. There exists the 2020 target which is being achieved by wide range of policies covered by The European Platform against Poverty and Social Exclusion.

Anna

Source of attached picture: http://ec.europa.eu/eurostat/news/themes-in-the-spotlight/poverty-day-2016

What were the impacts of Bolsa Família?

Context

In order to tackle major issues in the access to education, in the mid-nineties, the Federal Government of President Henrique Cardoso launches Bolsa Escola. Later on, President Lula expanded the domains of the program and gave it a wider range of impact.

Bolsa Família Program (BFP) was, thus, created as a major public policy to reduce the levels of extreme poverty, inequality and foster the access to education and health care.

The Program

The program is a Conditional Cash Transfer (CCT) which means that beneficiaries only receive the public cash transfer upon fulfillment of specific conditions.

The CCT in Mexico Oportunidades was the first CCT and, like BFP, aims to alleviate extreme-poverty in a short-term dimension. Moreover, according to Skoufias, there’s a wider impact in human capital because CCTs block intergenerational vicious cycles of poverty.

The beneficiaries need to fulfill conditionatilies that, according to Lindert, make all Government institutions to coordinate local solutions and cross-cut through different levels of Government.

Impacts of the Program

According to the World Bank from 2003 to 2009, poverty rates dropped from 25% to 15%, representing approximately 30 million people that jumped out from poverty. In 2014, those levels decreased to 7.4%. The Gini coefficient declined from 0.60 to 0.53. The Financial Times stated that this signified that 40 million people moved up from poverty to the middle-class.

Furthermore, Bither-Terry argues that measuring impact on poverty alleviation based on income may not include further information to reflect on the intensity of the program. Moreover, the analysis must take into account the main concept of poverty and until which extent each family meets basic human needs.

These impacts on income and poverty alleviation were aligned with economic returns (2013), whereas the program represented low impact in the national budget with less than 0.5 of the GDP (2007). From each real spent in Bolsa Família, there is a generation of R$1.60 to the economy as a result of increasing consumption by the beneficiaries in goods and services.

When it comes to particular impacts in education, the outcome are correlated with the conditionalities imposed to the beneficiaries in the first place. It’s also possible to state that the outcomes are not equivalent across all regions. In rural areas, the program appears to boost school participation levels by 8 percent in children aged 6–17 years and grade progression by 10 percent between girls.

 On another hand, in urban areas, this result just appears in girls aged 15–17 years. Furthermore, there’s a 21% increase in school attendance in girls aged above 15 year old beneficiating from BFP (2013).

According the School Census of 2012 (2014), the North and Northeast states express deep impact of BFP, as beneficiary students lower the rate of dropout (8.7% and 7.7%, respectively) when compared with those who don’t beneficiate from it (17.1% and 17.5%, respectively). We can see similar analysis in the high school pass rate in the public system between students with BFP with 79.8% compared with other students with 71.1%, in the North region. The same result happens in the Northeast, comparing an 82.6% from students beneficiating from BFP against 72% to other students.

As Craveiro & De Aquin stated that there’s contradictory dynamic, in rural areas when it comes to Child labor. In fact, boys between 15-17 years old beneficiating from BFP have more 10% chance of working in agriculture at the same time they are in school, that those who don’t beneficiate.

Conditionaties may not result in desirable outcomes, since families still rely on revenues from child labor, particularly in rural areas. A part from that, relying on these two sources of income lead some authors stated that children are still exposed to situations of violence.

Women were a society sector in which BFP had particular impacts, when it comes to contraception, particularly in urban areas. Brauw and Gilligan stated conditionalities beyond potential paternalism on how money should and should not be spent by families, it may also create a debate on societal roles of men and women in traditional concepts of family.

Some critics affirmed that BFP was similar to a helicopter launching money to the poor and its utility was debatable. Although more criticism, regarding paternalistic attitude by the Government and political convenience (2016) of BFP, the program still needs to evolve towards more developed concepts of conditionalities and productive incentives to find jobs and to include labor income incentives, through earnings disregards.

José Afonso

Taking a look at Poverty evolution in Portugal

Portugal, one of the tourists’ favorite destination, known, among other reasons, for its good weather, nice food and caring people, is a country with 10.5 million people, 11% of unemployment (more than 55% of which corresponding to long-term unemployment) and whose household and Government debt surpass 134% and 149%, respectively. In fact, despite being one of the countries where people work more, the labor compensation per hour worked is among the lowest in Europe, being this a crucial factor when analyzing the overall country’s condition.

If one looks at the most recent data, it is possible to confirm that, among the European Union, Portugal appears as a leading country regarding both the poverty rate (corresponding to a 0.18 ratio) and the poverty gap (0.355 ratio), solemnly behind Estonia, Spain, Greece and Latvia. In order to tackle this and other issues on the society spectrum, the Portuguese Government allocates more than 24% of the national GDP to social purposes.

Poverty is considered a precarious situation of scarcity, which most of the times arises due to economic and financial circumstances. Has this concept been impacting the Portuguese society the same way in the past decades?

Taking a look at the national history data, one can see that, during the conservative dictatorship period (Estado Novo), which lasted from 1933 to 1974, although poverty was widespread, affecting almost 40% of the Portuguese population, it was not a great reason for policy concern. However, with the democratic Revolution of 1974, a modern welfare state was introduced, creating a set of important social rights. In 1980, more than 15 million of European households and 49 million individuals lived under the poverty line – the majority were elderly people and children. At the time, all European Union countries presented some degree of poverty and social exclusion, according to the European Commission criterion used (household that had a monthly income correspondent to 50% or less than the average monthly national household income, weighted for the household size). The Southern countries were the worst in terms of poverty rates and, from 1980 to 1985, some showed no poverty reduction – one of these was Portugal, that had almost one third of the national citizens and households living in such circumstances. After Portugal’s entry to the European Union (1986), the country assisted to a boost in anti-poverty measures, aimed at specific groups. In 1991, a shift in the poverty risk occurred, aimed at large families, isolated people and poorly qualified individuals. Despite the efforts, in 1993, Portugal was still remaining above the EU poverty rate average.

From 1980 to 2000, a great increase in the level of social spending was verified and, during the nineties, with the introduction of more significant measures and policies on integration (mainly aimed at employment, income redistribution, professional training), the country assisted to a decrease in poverty. This topic was put at the center of the national agenda, having been created the Rendimento Mínimo Garantido, a minimum income scheme, in order to ensure an acceptable living standard. Still, Portugal was considered, in 2002, the country with the highest poverty rate among EU countries (with 23% of poor people), at a time when the Eastern countries were not yet part of the EU.

Nowadays, traditional forms of poverty, associated to isolation and aging, have been stabilizing and decreasing in Portugal, due, among other reasons, to the decline of retired people without any career contributions to Social Security – who used to receive little pensions. A relevant indicator of the social changes that occurred in the last few decades is the decrease in elderly poverty (with more than 65 years old), which dropped by 31%, between 2003 and 2010. However, a new poverty phenomenon has been challenging the society, associated to labor market changes, such as temporary work, and demographic and social changes, from which the longer life expectancy is an example.

In my opinion, it is urgent to fight poverty in order to attain a fairer and better society and, for that purpose, several policies and measures should continue to be carried on, creating solutions that fit the needs. In developed countries, as the case of Portugal, those issues can be addressed via, for instance, provision of benefits in kind, further increase of the national minimum wage, better implementation of progressive taxes and investment in employment conditions. Particular attention should be given to the increase of the national minimum wage, as it must be sustainably supported by healthy organizations and companies, able to pay their employees that higher amount.

Beatriz Jesus, Master in Management student at Nova SBE

Figure 1 – pobreza portugal – (2017). Google.pt. Retrieved 12 April 2017

Figure 2 – Poverty, social exclusion and health in Portugal. (2017). Sciencedirect.com. Retrieved 13 April 2017

Paradigm Shift: Transforming Policy Design into Evidence-based Policy Design

The following paragraphs address the existing phenomena of low attrition of research evidence in the design process of policies to improve our planet, its causes and what can be done to improve on it.

While there is no doubt that there are areas that lack robust research evidence, other areas do not make sufficient use of research available evidence till today. One should think that policies, as a matter of fact, are always the fine tuned product that coming into existence based on sound preparation and research – especially because there is barely a “roll back” for an executed policy. However, numerous authors like DuFlo , Dhaliwal and Tulloch , or Spiel and Strohmeier , stress the slow and incomplete uptake of research findings and highlight the lack of intensive cooperation between researchers, politicians and administrators when it comes to development and implementation of sustainable policies.

As a result of the low attrition, the term evidence-informed policy making (EIPM) was coined. In recent years, the uptake of evidence already increased positively, however still only a small subset of development programs is covered. In education for example, Spiel and Strohmann examine the development of a national strategy for violence prevention in the Austrian Public School System as a successful example for establishing a sustainable cooperation between research, policy, and practice. Is mere evidence-informed policy feasible? Frankly: No ; policymakers and politicians have political, technical, financial and time constraints that cannot be abandoned for pure EIP, but one has to argue that the uptake of evidence is so low, that there is still enormous scope to incorporate evidence in decision making, despite the presents of constraints.

Why not more of this? In the core, we can observe three major issues: First of all there is scarcity of robust research evidence, secondly, evidence is generally compounded by the technical language of research journals where it is usually published – seeming to be formulated merely for an elitist group of individuals and lastly, there are not sufficiently enough working means of communication of results to a policy audience that ensure an automatic transfer. Policymakers may have difficulties comparing different studies , especially if there is not clear guidance on how to relate new evidence to the existing research. If one would want to find the best intervention to increase school attendance in Sub-Saharan, should he or she commit to constructing new buildings, encourage community involvement, treat children for intestinal worms, or introduce something else like conditional cash transfers?

What can be done about these challenges? Dhaliwal and Tulloch  have presented how the gaps could be filled that they have observed between research and policymaking together with their colleagues of the Abdul Latif Jameel Poverty ActionLab (J-PAL). First of all you could create policy tools that allow for effective communication of finings to partners. Examples would be policy briefcases and a cost-benefit analysis which includes the ratio of program impact and incurred costs.
To encourage policymakers to make more use of rigorous evidence and promote a culture of evidence based decision making, companies like J-PAL conduct executive research courses with participants in key decision making roles in federal and state governments as well as international development organizations. The ultimate goal of this should be to foster partnerships between researchers and policymakers. However there are some barriers that cannot all be presented in this blog post, but are illustrated in Table 1 below. J-PAL for example has dedicated staff responsible for only answering policymaker’s requests, like identifying researchers for a planned program, or to send relevant information and presentations on a pressing policy issue. This is also facilitated through the conduction of conferences to provide a platform for finding matches and share knowledge. A successful example of this is the Chilean ‘Compass Commission’ . The Chilean Ministry has approached J-PAL to convene a commission to find out the most pressing social problems that the country faces and to brainstorm and evaluate innovative interventions to tackle them. The result was the Compass Commission which is like a taskforce that consisted of leading academics and policymakers from all over the world, ultimately submitting a report to the Chilean President in 2011.

The approaches outlined above may not present the best action alternatives for everyone as stakeholders may have very specific needs. However, the key message from this statement is to encourage committed individuals and organizations whose mission is similar to mine or J-PAL’s: Ensuring that policy is driven by evidence and research is translated into action.
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Universal Allowance per Child for social protection in Argentina and its effects on labour formalization

According to the INDEC (the National Institute of Statistics and Census from Argentina), poverty in Argentina reached the 32,3% of the population in 2016. To fight poverty the government takes into practice a low-income support program called the Universal Allowance per Child for social protection. It consists of a monthly payment made by the ANSES (the National Social Security Administration) to families with children age under 18 and with a maximum of 5 children. In addition, it gives priority to disabled and the younger children. Besides, one of the two parents is paid, and the mother is prioritized.

People who receive this aid must fulfil certain requisites and conditions. This payment is transfer to people who is unemployed, to workers in the informal sector with incomes lower or equal to the minimum wage, independent workers, workers from the domestic service, and people who receive certain programs offered by the government. Moreover, the beneficiary and its family need to be registered in the ANSES. It is also required an annual schooling certification of the children and health controls. As regards the amount of money instalment, this depends on the income of the family. The families with the lowest income receive a payment of $1246 (77 EUR). And the ones with the highest income receive a payment of $258 (15,88 EUR).

The Universal Allowance per child caused different impacts. These ones include social, economic, educational and labour impacts. One of the most relevant is the negative effect on labour formalization. According to the research made by Agis, Cañete and Panigo, the welfare indicators improved with this low-income support program, mainly in the poorest regions of Argentina. In addition, they found that the indigence indicators reduced from 55% to 70%, and inequality more than 30%. Further, this program was able to reduce the probability of indigence of the most vulnerable group below the one of the rest of the society. Finally, it also decreased the poverty indicators. The authors think that although the program has positive impacts it has to be complemented with other labour policies. Kliksberg and Novacovsky evaluated the impacts of the program and concluded that it significantly increased the amount of health controls of children and teenagers. Besides, it rose the school attendance rates and guarantee the access to education since the first years of life.

As regards labour formalization, there are different researches that suggest that the Universal Allowance per Child has a negative impact on it. Gasparini and Garganta made an econometric study and obtained that the formalization of people not eligible for the program accelerated with the economic recovery (after 2009), while the formalization rate of the eligible people remains standstill. They concluded that the probability of formalization of the eligible ones is reduced approximately 40% with respect to what would happen without the program. They point out an interesting result that is the fact that the program does not encourage registered workers to become informal ones. Moreover, Sticco says in an interview with La Nación newspaper that this program discourages the participation in the labour market because people need to comply the requisite of earning an income below the minimum wage, therefore it will encourage labour precariousness and informality. On the contrary, there are other authors such as Boffi that studied that there is no evidence to state that the beneficiaries from the program reject a job opportunity from the formal sector.

In conclusion, the low-income support program called Universal Allowance per Child applied in Argentina has impacts in different issues. On the one hand, positive effects can be observed in education, health and levels of indigence. This may probably be caused by the condition of having an annual schooling certification and health care controls in order to receive the transfer. On the other hand, there are negative effects on the labour market since, as different authors suggest, it discourages formalization. This may mainly be provoked by the fact that beneficiaries must earn an income lower than the minimum wage. And there might be other factors that discourage people to enter the formal labour market.

Delfina Murisengo

Taxation on alcohol: decreasing society’s burden and increasing welfare

According to the World Healthcare Organization (WHO) estimations, Portugal is the 11^th higher consumer of alcohol per capita in the world. You may consider that drinking is part of the Portuguese “life style”, and that it is a cultural matter that we should stay out of. But should we?

In 2013, of all Portuguese deaths, 2.2% were attributable to alcohol consumption. Moreover, there is a health, social and economic burden borne by the society due to the harmful consumption of alcohol: (1) direct costs in health, police, criminal justice, unemployment and welfare systems; (2) indirect costs due to loss in workforce productivity; and (3) intangible costs like diminished quality of life of drinkers and the people linked to them. Broadly, it is estimated that the cost of alcohol to society, on average, in high-income countries, is 2,5% of GDP.

However, we should preserve the health benefits of the moderate alcohol consumption. So my kick off question is: is the Portuguese population drinking moderately?

According to the 2014 report, “A Situação do País em Matéria de Álcool”, the consumption of alcohol per capita in Portugal is 12,9 litres of pure alcohol per year, which is above the 10,9 average of Europe Region WHO. This suggests there is a drinking problem in Portugal that needs to be tackled. Moreover, a major concern is the harmful alcohol consumption of young adults. Youth evidenced 18% of binge consumption against 12% for all consumers. Same figures apply to severe intoxication (11% in youth against 6% in total population), being the 15-24 years-old the group with the highest prevalence. In addition, 46% of the 15-24 and 48% of 25-34 years-old consumes six or more alcoholic drinks in one occasion, which are the highest rates amongst all the decennials.

Therefore, there is a call for policy actions to tackle the behaviour of consumers, particularly young adults that might be endangering their future.

My suggestion to address this issue is increasing the taxation over alcoholic beverages, supported by the research “The Effectiveness of Tax Policy Interventions for Reducing Excessive Alcohol Consumption and Related Harms”, American Journal of Preventive Medicine. This research suggests that raising alcohol taxes is an effective strategy to reduce excessive alcohol consumption and its harms. Furthermore, it also suggests that the impact of a tax increase will depend on factors such as disposable income and the demand elasticity (how consumption changes with changes in prices) for alcohol. On this matter, “The Effects of Prices on Alcohol Use and its Consequences”, Alcohol Research & Health, found that youth is more responsive to price changes than the general population (an increase in the price of alcohol will decrease the consumption of alcohol in youth more than in the other groups, exactly what we want!).

As you can see in the statistics presented first, Portugal is struggling to reduce the harmful consumption of alcohol. Together with the previous arguments that the tax can decrease the consumption of alcohol, I believe that the optimal tax, which maximizes wellbeing and diminishes the cost of drunken people and their actions to the society, is higher than the tax in place right now.

Concluding, we should increase the tax on alcohol closer to the optimal tax!

 

Patrícia Sofia Pinto e Filipe

Master in Economics – Public Finance