Getting the Facts Straight
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Are global conditions improving? The answer depends on who you ask and whether they have checked the facts.
As economist and political scientist Olof Granstrom points out, we often form our view of the world without considering the underlying data. “We use what we see, what we hear, what we can see with our very, very limited capacity of understanding the world,” he explained at the CFA Institute European Investment Conference 2019 in Madrid.
Through his work with the Gapminder Foundation and currently at Novus, Granstrom has encountered many common misconceptions about the state of the world: People believe that global conditions are continually declining, for example, and that countries are neatly split between rich and poor. But the statistical data is much more nuanced.
For example, facts show that half of the world is middle class or wealthier and global poverty rates have declined to record lows. “A lot of people in India and Mexico are living on the same income levels that people are in the United Kingdom today,” Granstrom said.
“It’s not that easy saying, ‘This country’s poor and this country’s rich,’” he explained. “It’s more complex than that. And we should have a more complex worldview, not be guided by just thinking it’s rich and poor.”
Granstrom also challenged the blanket statement that everything is getting worse.
“We have, actually, quite a fantastic society,” he said. It’s a fact that child mortality rates have been declining since 1960, and today are at historic lows. “This is important to know,” Granstrom said, “because this is a great success for humanity.”
“Yes, some things are getting worse,” he acknowledged. “But some things are getting better.”
On the other hand, some improvements are only a small step toward meaningful change. The percentage of political leadership positions held by women has doubled over the last 20 years. That’s a great success story, Granstrom noted. But then he pointed out that only 22% of political leaders are women. So despite considerable progress, there is still quite a long way to go.
“Female representation is still very very low in the world, and it’s not highest in countries like Sweden,” he said. In fact, some of the most developed nations have some of the least representative governments from the perspective of gender equality. “That’s one of the misconceptions: that we in the West are so extremely good when it comes to women and equality.”
Pervasive misconceptions hinder anyone trying to make long-term decisions, whether they’re government officials developing infrastructure or pension managers planning for the needs of future retirees. The consequences of a mistake could have long-lasting effects.
Ultimately, the facts alone may not be enough to make an informed decision. Granstrom shared a story about his mentor, Hans Rosling, who was often asked what was needed for a fact-based worldview. Rosling’s advice was to dig into an issue with data in one hand and a love of humanity in the other.
“We need to look at facts, but we cannot only look at facts,” Granstrom said. “We need everything to understand the world as it is today.”
For more from Olof Granstrom, listen to the Take 15 Podcast “Olof Granstrom on Facts and Truth.”
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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.