In this interview, Ignacio Flores discusses his work on constructing macro-consistent estimates of inequality in Latin America and a project on agricultural land distribution in France.
Ignacio Flores is a postdoctoral scholar at the Stone Center, where he is affiliated with the GC Wealth Project. He was born in Chile, earned his Ph.D. in Economics at Paris 1 Panthéon-Sorbonne University, and was previously a postdoctoral researcher at INSEAD’s James M. and Cathleen D. Stone Centre for the Study of Wealth Inequality.
A lot of your papers focus on Latin America. What are you currently working on?
I’m working on a lot of projects related to measurement. I’m not doing that because I love metrics, particularly. When I entered the field, I wanted to study inequality and its origins and impacts, and I realized that the data for studying inequality in Chile in particular, and more generally in the Latin American region, were very bad.
The biggest project I am wrapping up is constructing macro-consistent estimates of inequality in Latin America. By macro-consistent, I mean that they add up to macroeconomic income totals, such as net national income and its components (e.g., wages, dividends, self-employment income, and so on) according to the system of national accounts. And these estimates are the cornerstone of a lot of different projects. Twenty years ago, people measured inequality by looking at household surveys. In the beginning of the 2000s, Thomas Piketty, Emmanuel Saez, and others, inspired by the work of Simon Kuznets, started using modern computational power to analyze data from personal income tax records, and that allowed people to look at what’s happening at the top of the distributions, an area largely under-covered by household surveys. And so I started building tax records for Chile. But then I realized that I was just looking at the top one percent. I wanted to have the whole story.
At the time, I didn’t have a method for combining survey data and tax data to build a coherent story. Now we do. [For details, see Flores’s paper, coauthored with Thomas Blanchet and Marc Morgan, forthcoming in The Journal of Economic Inequality.] So we’re tailoring the methods to reach the goal of macro-consistent estimates of inequality by building from scratch a new methodology — one that is better adapted, in particular, to the presence of a very important informal sector, and that uses household surveys, tax records, national accounts, and some other data in a way that’s macro-consistent.
What topics are you pursuing related to wealth inequality?
One of the projects I’m currently working on concerns how land inequality — in terms of agricultural land — translates to the productivity of a system. Land is one of the oldest forms of wealth. The classical economists talked about the landowner class. Agriculture is the most direct interaction with the earth that we, as a species, have in an economic process. And it’s one of our most direct impacts on the planet.
Our findings are very preliminary, but we’re seeing that the more unequally that land is distributed, the more you will have a monoculture instead of biodiversity. And the less biodiverse a system is, the less productive it will be. Mainly through lab experiments, research in biology has shown that more biodiversity drives the average productivity of an ecosystem up, and also makes ecosystems more resilient to external shocks. We are using data from France to try to repeat these findings at a larger scale, in the context of national agricultural production.
The data we’ve got for this are amazing — they come from NASA satellites. Every eight days, the satellites take very precise measures of temperature and land productivity in terms of biomass. Also, because the European Union gives subsidies to farmers, France has a very strict system of tracking exactly what’s happening in every farm in the country. From the French geoportal, we can get published cadastral data — geo-referenced data from official records of land ownership, including the boundaries of every farm in France. So I know exactly how, from one year to the next, the distribution of the land is changing, along with what’s being planted.
I have a window of observation that’s only a bit more than ten years, but that’s enough to find some correlations between inequality and productivity. We see some interesting things happening in terms of temperature shocks, which are fairly random and allow you, from a statistical point of view, to see whether a particular ecosystem is more or less resilient to external shocks in a causal way.
How did you become interested in studying inequality?
When you grow up in Chile, it’s impossible to not see inequality. It’s everywhere in front of your eyes. I was lucky to go to a good school, and a good school in Chile means it’s also an expensive one. But because it was a French school, every French person could, regardless of their income, put their children in the school, which meant there was a bit more social diversity than other schools in the same category. This, and the exposure to French culture, which values equality as a fundamental principle, introduced me to the topic very early.
I saw that there were some places in Santiago and the country where the wealthier students would never go — they wouldn’t cross this invisible line that divides the rich neighborhoods from the poor ones and even from the middle-class neighborhoods. I was curious about that. I would take buses to any part of the capital and to other cities, just to be there and see what was happening. People are pretty segregated in Chile — you feel like you have coexistent countries, where people speak differently, behave differently, and have different social norms. All over Latin America, but especially in Chile, you can have a part of a city that looks like Europe, where people have incomes that are comparable to those in Europe, and they speak foreign languages and travel abroad. And then another part of the city looks like a poor country, with unpaved roads, and people have very low incomes.
I was born the same year that the dictatorship ended. I was one of the children of the democracy, and I grew up listening to the stories about the dictatorship — sometimes horrible stories, involving torture and disappearing people — told by elder cousins, parents, and grandparents. A big part of our current level of inequality was obtained unfairly by powers with links to the dictatorship. And the result of this inequality is an enormous waste of talent. Poor kids are not given the opportunity to strive.
So I wanted to try to contribute to making society a bit fairer, because it was pretty obvious from my perspective that a lot of things were not fair. I was very interested in subjects like philosophy, sociology, political science. And at some point I realized that in Chile, as in many other countries, economists tended to dominate socio-economic debates for some reason. So, I needed to learn their language and methods to be able to speak to people, right? And to be influential, in a way.