Tyranny of numbers

Rising poverty and falling living standards in Iran in 2020

Posted in General, Inequality, Living standards, Poverty by Djavad on August 28, 2021

The Statistical Center of Iran (SCI) has released the micro data from its most recent annual Household Expenditure and Income Survey (HEIS) for the Iranian year 1399 (21 March 2020 to 20 March 2021). The results do not surprise — the downward slide in living standards and the rise in poverty that started a decade ago continues. Along with the more positive news on the GDP and employment front that have become available in the last few weeks, the survey offers a relatively accurate if mixed picture of a country and a people struggling under the Trump-Biden maximum pressure campaign. Relative to household welfare, the economy is doing better. GDP grew by 3.6% last year and last quarter (spring 2021) 200,000 more people were working compared to a year ago. This makes perfect sense since falling real wages that are hurting welfare are good for employment and production.

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The role of external shocks in Iran’s inflation

Posted in General by Djavad on June 17, 2021

Last month, the consumer price index (CPI) rose at annual rate of 9.4%, down from 37.4% the months before and far lower than its peak increase of 85% last October. By itself, this is no indication that inflation is slowing. Based on past experience, inflation is likely to go back up, but it may well be a sign that inflation is on its way down, the same way it happened after the previous two bouts of high inflation in the past decade. Inflation is the most important grievance of Iranian voters as they go to the polls this week, so it is worth taking the monthly drop seriously.

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Five figures show the losers and winners of economic growth under different presidents of the Islamic Republic

Posted in General by Djavad on May 2, 2021

Iran has been under four different presidents since the end of the war with Iraq in 1988, each with its own style and philosophy. As the June presidential election nears, it is interesting to look back to the past and ask how each administration did in terms of inequality, and how the poor, the middle class and the rich fared under them.

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Iran’s Covid-19 fatalities: excess deaths show serious undercounting

Posted in COVID-19 by Djavad on November 10, 2020

The question of accuracy of reported Covid-19 deaths is not news for most countries, but in the case of Iran it is because it has geopolitical significance. Iran’s foes are interested in it because the higher the number of deaths from Covid in Iran, the more likely Iranian leaders are to stop resisting US economic pressure. For others, who care more about the plight of ordinary Iranians, higher true fatalities signify a greater humanitarian cost of US sanctions. (more…)

Update on Iran’s Covid-19 epidemic

Posted in COVID-19 by Djavad on May 17, 2020

In a recent webinar at Harvard’s Middle East Initiative and a virtual conversation with Princeton’s Iran Center (here) I discussed the extent of the Covid-19 epidemic in Iran, and each time noted that, given the country’s high level of economic distress and the government’s tight budget, stay-at-home rules may not last very long.  This has come to pass now. A few weeks ago the government relaxed the social distancing guidelines and, after a month of decline in the daily numbers of cases and deaths, both rates seem to be heading back up. (more…)

Making sense of Iran’s coronavirus statistics

Posted in COVID-19 by Djavad on April 17, 2020

Iran’s COVID-19 crisis has gotten lots of media attention because Iran was an early epicenter of the pandemic, and because of its geopolitical significance.  The crisis has also intensified pressure on the Trump administration not to heed calls by former world leaders, former US diplomats, and influential newspaper editorials, to ease sanctions against Iran.  For some proponents of regime change in Iran the epidemic is more than a human tragedy: it is also the proverbial straw that could break the camel’s back, which is why throwing some light on the intensity of the crisis is timely. (more…)

The budget for 2020/2021 has become law

Posted in Budget by Djavad on March 26, 2020

The budget for the new Iranian year 1399, which started on March 20, was presented to the parliament back in November but fell victim to the devastating coronavirus crisis and the election of the new, conservative parliament.  I was not inclined to invest the time to update this blog on the proposed budget because they seemed subject to radical modifications.  However, the deliberations of the parliament were cut short on orders from Iran’s Supreme Leader, and a slightly modified budget was submitted to the Guardian Council, which approved it last week. So now is a good time to update my budget tables.  I did not have the numbers below when I wrote this piece for ForeignAffairs.com a week ago.  I could not find all the details (like the total revenue from taxes) in the final budget that the parliament sent back to the government. (more…)

More dire predictions of economic collapse in Iran from the Wall Street Journal

Posted in General, Macroeconomy by Djavad on March 4, 2020

An angry and dystopian op-ed about Iran, published in the Wall Street Journal on March 1, committed several errors in judging Iran’s economic performance that would fail my undergraduates economic students.  They are taught to never fall prey to the vagaries of exchange rate fluctuations in developing countries when making international comparisons of living standards.  For example, if the value of a country’s currency drops suddenly, its GDP measured in US dollars doesn’t collapse immediately — it may even go up.  Since the 1960s, millions of dollars has gone into research to make data available for international comparisons.  These are widely available on the World Bank data bank site and from the Penn World Tables, where the International Comparison Project originated.  I have previously written about international comparisons of living standards here and here in this blog and elsewhere.  There is therefore no more excuse for picking bad data from the internet to write bad op-eds. (more…)

Rising employment since Trump’s sanctions may not last

Posted in Employment, General, Macroeconomy by Djavad on January 20, 2020

Earlier this month the Statistical Center of Iran (SCI) released the results of the latest quarterly labor force survey, which show employment continued to expand during fall 2019 (the third quarter of the Iranian year 1398). The data question the dire accounts of Iran’s economy that have appeared in western media, a point that I raised in a recent post in Project Syndicate and again this week in ResponsibleStatecraft.org (which has replaced Lobelog.com).  However, there are reasons to believe that this positive trend is short-lived, that as excess capacity is used up and new investments fail to materialize, the economy takes a turn for the worse.  Below, after presenting the new data, I discuss several challenges to employment if sanctions continue.  Some of these challenges can be overcome by domestic reform, such as banking reform to enable the flow of credit to producers, but others are not under the control of the government, such as moving money internationally. (more…)

Cash transfers increase after Iran protests, but do they make a difference?

Posted in General, Poverty, Sanctions by Djavad on December 1, 2019

The gasoline price hike of November 15 triggered widespread violent protests in Iranian cities.  Three days later the government announced that it would increase the amount of cash transfers to compensate for the price increase and soften its blow.  But do the new transfers adequately compensate for the gasoline price increase? My estimates below show that they more than compensate those in the bottom 40 percent of the population — generally considered to be the vulnerable part of the population — while the top 40 percent lose.  Most people in the middle break even.

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