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The politics of perceptions
November 9, 2016

Material change matters, but perception too determines a feeling of deprivation. Prosperity, good governance and a focus on fairness, rather than electoral pandering, often elicit greater political support

 

Public discontent is like a chameleon. When we see it, we know it must have been hiding in plain sight for a while; but until we spot it, we are not even aware of its existence. Until Donald Trump catapulted onto the American political scene, it would have been hard to imagine poor workers uniting behind a billionaire who has specialised in taking advantage of the system to avoid paying taxes and fair wages to his employees. Similarly, no one took Brexit seriously until election results tapped into lower-class discontent among the British voters. It would be easy for us to say that poverty and declining economic conditions lead to frustration among the poor and revolt against the political elites. But is it really true?

 

India and Pakistan — a contrast

 

Poverty in Pakistan fell from nearly 35 per cent in 2001 to 10 per cent in 2013-14. Although Pakistan has recently adjusted its poverty line increasing the poverty ratio to 30 per cent, as Ghazala Mansuri of the World Bank notes, by all objective standards, even the poorest in Pakistan are better off today than a decade earlier. Paradoxically, according to the Pakistan Social and Living Standards Measurement Survey, about 21 per cent of the households felt that their economic condition had declined over the preceding 12 months while only 12 per cent felt it had improved. India has experienced a roughly similar magnitude of poverty decline, from 37 per cent in 2004-05 to 22 per cent in 2011-12. However, as the India Human Development Survey (IHDS), organised by researchers from the University of Maryland and the National Council of Applied Economic Research (NCAER) found, the proportion of households that felt that their economic condition declined between 2011-12 and 2004-05 was much smaller (about 10 per cent) compared to those who felt it had improved (about 37 per cent).

 

How do we explain that with similar economic improvements, the Indians perceived that their fortunes were improving while the Pakistanis did not? Could this be because there was greater income inequality in Pakistan than in India, making individuals keenly aware of their relative rather than absolute poverty? Empirical data does not show that Pakistan was more unequal. World Bank data show that in 2011, 42 per cent of the income was held by the top 20 per cent of the population in Pakistan; the comparable figure for India was 44 per cent. At the bottom of the distribution too, Pakistan seems marginally better with 9.4 per cent of the income in the hands of the bottom 20 per cent for Pakistani versus 8.3 per cent for India. This suggests that inequality in Pakistan and India was more or less on a par, with Indian inequality being marginally higher. Clearly something else was going on, something that related to perception, a subjective feeling of deprivation rather than objective conditions.

 

My guess is that this sense of economic deprivation is closely linked to the social and political conditions in which individuals live. Living in a society that is well governed creates a sense of security that is equally, if not more, important than actual economic advancement. This is where India probably has an edge over Pakistan.

 

While lack of comparable data do not allow us to compare Pakistan with India on these subjective factors, the IHDS data suggest that at least within India, experience of bad governance and grievances about fair treatment shape a feeling of economic marginalisation. Using data from the IHDS, Download pdf