Examples and worked calculations

Before: $ ($3-$2) \times 20 = $20$

After: $(\$4-\$3)\times20=\$20$

7. 2.7 — Subsidy: social-surplus labels

Before: New total social surplus

After: New consumer surplus plus producer surplus (before subsidy cost)

Before: Increase in total social surplus

After: Increase in consumer surplus plus producer surplus

Before: From the above example, it shows that an imposition of subsidy will lead to a social welfare loss of $30 as the amount government spent is larger than the increase in consumer surplus and producer surplus; thus resource misallocation results.

After: The subsidy raises consumer surplus plus producer surplus from $120 to $270, a gain of $150. However, the government spends $180. Net social surplus after the subsidy is therefore $270 − $180 = $90, compared with $120 initially. The welfare loss is $120 − $90 = $30. This example assumes no external benefits from the additional output.

8. 2.7 — Price ceiling and floor worked assumptions

Before: Table 2.7.2.1 summarizes the calculations on impacts of price ceiling which would be required.

After: Table 2.7.2.1 summarizes the calculations on impacts of price ceiling which would be required. Assumption: The available output is bought by consumers with the highest willingness to pay. This gives the consumer surplus shown in the table. Queuing costs, black-market payments and inefficient rationing are excluded; including them can reduce welfare further.

Before: Table 2.7.4.1 summarizes the calculations on impacts of price floor which would be required.

After: Table 2.7.4.1 summarizes the calculations on impacts of price floor which would be required. Assumptions: Only the quantity demanded at the price floor is sold, and it is supplied by the lowest-cost producers. The government does not buy the unsold surplus. Government purchasing or a different allocation among producers would change the surplus calculation.

9. 3.3 — CPI and inflation rounding

Before: $ Price \; index \; in \; 2012 = \frac{573}{510} \times 100 = 112 $

After: $\text{Price index in 2012}=\frac{573}{510}\times100\approx112.35$

Before: $ \frac{112 - 100}{100} \times 100 \% = 12 \% $

After: $\text{Inflation}=\frac{573-510}{510}\times100\%\approx12.35\%$

Before: The inflation rate between 2011 to 2012 is 12%.

After: The inflation rate between 2011 and 2012 is approximately 12.35%. Use the unrounded basket costs in the calculation, then round the final answer. A whole-number index of 112 would hide part of the increase.

10. 3.1 — UK GDP worked example: investment category

Open chapter 3.1

Before: Using the expenditure approach, calculate the GDP of the UK in 2019 (Q4) using the data below.

After: Simplified exercise using the figures supplied for the UK, 2019 Q4: calculate GDP using the expenditure approach. For this exercise, assume that the investment figure covers all the investment required in the identity, and that government expenditure is final expenditure rather than transfer payments.

Before: Business investment

After: Investment (assumed total for this exercise)

Before: Source: Office for National Statistics, www.ons.gov.uk

After: Historical context: UK, 2019 Q4. The original exercise attributed its inputs to the Office for National Statistics. Business investment alone is not total gross capital formation; these supplied figures are therefore retained as a simplified exercise, not a verified official GDP estimate.

11. 3.1 — France GNI worked example

Open chapter 3.1

Before: From the data below, calculate the value of France’s GNI in 2019.

After: Simplified exercise using the figures supplied for France, 2019: calculate GNI assuming that net compensation of employees and any other primary-income flows not shown are zero.

Before: GNI = GDP + net property income from abroad GNI = 2,659,119 + 39,806 = $2,698,925 million

After: GNI = GDP + net primary income from abroad. Under the stated assumption, net primary income equals net property income: GNI = 2,659,119 + 39,806 = $2,698,925 million. Without that assumption, the two supplied figures are insufficient to calculate GNI.

12. 3.4 — Hong Kong 2012/13 tax exercise

Before: = 2.29%

After: = 2.29% Historical calculation: Hong Kong, 2012/13. The $4,800 liability and 2.29% average rate above are before the one-off tax reduction. The exercise excludes that reduction. In that year, the reduction was 75%, capped at $10,000 per case. On these facts, it reduces tax by $3,600 to $1,200; the average rate after reduction is $1,200 ÷ $210,000 × 100 ≈ 0.57%. IRD: 2012/13 reduction

13. 4.6 — Balance-of-payments worked example

Open chapter 4.6

Before: The change in reserve assets is the US $1280 million. (The government will find a depletion of reserve assets of US $1280 million.)

After: The reserve transaction is a credit of US$1,280 million under the net-inflow convention used here. It finances the remaining deficit by selling reserves, so reserve holdings fall by US$1,280 million: the change in the stock is −US$1,280 million, not +US$1,280 million. This calculation assumes zero errors and omissions, no other omitted financial flows, and no valuation changes.

14. 2.11 — Game-theory payoff tables

Open chapter 2.11

Before: We now put the payoff of different situations in an outcome matrix in Table 2.11.4.

After: We now put the payoff of different situations in an outcome matrix in Table 2.11.4. Read each pair as (B, A) : the row player’s outcome comes first and the column player’s second. In the prisoner example the entries are years in prison, so a smaller number is better.

Before: We now put the payoff of different situations in an outcome matrix in Table 2.11.4.

After: We now put the payoff of different situations in an outcome matrix in Table 2.11.4. The same order applies: (Firm B, Firm A) . Each entry is the change in profit, in millions; a larger number is better. For example, (+5, −13) means B gains 5 million while A loses 13 million.

Before: To firm A, if it cuts the price, it will either suffer a loss of 10 million or gain 5 million. If it leaves the price unchanged, it will either suffer a loss of 13 million or keep its revenue unchanged. Symmetrically, it is the same for firm B. For both firms, they are both better off if they choose to cut the price after considering the actions of the competitor. Ultimately, they will both choose to cut the price and both suffer a loss of 10 million. However, if they can cooperate, both of them will benefit from maintaining the price and prevent a loss in revenue.

After: To firm A, if it cuts the price, it will either suffer a loss of 10 million or gain 5 million. If it leaves the price unchanged, it will either suffer a loss of 13 million or keep its profit unchanged. Symmetrically, it is the same for firm B. For both firms, they are both better off if they choose to cut the price after considering the actions of the competitor. Ultimately, they will both choose to cut the price and both suffer a loss of 10 million. However, if they can cooperate, both of them will benefit from maintaining the price and prevent a loss in profit.

15. 3.4 — Lorenz-curve table labels

Before: Bottom quintile (Poorest 20%)

After: Cumulative population: poorest 20%

Before: 4th quintile (Poorest 0-40%)

After: Cumulative population: poorest 40%

Before: 3rd quintile (Poorest 0-60%)

After: Cumulative population: poorest 60%

Before: 2nd quintile (Poorest 0-80%)

After: Cumulative population: poorest 80%

Before: Top quintile (Everyone)

After: Cumulative population: 100% (everyone)

Before: Bottom quintile (Poorest 20%)

After: Cumulative population: poorest 20%

Before: 4th quintile (Poorest 0-40%)

After: Cumulative population: poorest 40%

Before: 3rd quintile (Poorest 0-60%)

After: Cumulative population: poorest 60%

Before: 2nd quintile (Poorest 0-80%)

After: Cumulative population: poorest 80%

Before: Top quintile (Everyone)

After: Cumulative population: 100% (everyone)

Before: Bottom quintile (Poorest 20%)

After: Cumulative population: poorest 20%

Before: 4th quintile (Poorest 0-40%)

After: Cumulative population: poorest 40%

Before: 3rd quintile (Poorest 0-60%)

After: Cumulative population: poorest 60%

Before: 2nd quintile (Poorest 0-80%)

After: Cumulative population: poorest 80%

Before: Top quintile (Everyone)

After: Cumulative population: 100% (everyone)

Before: Consider Table 3.4.1 and take Canada as an example. 7.2% of cumulative income corresponds to the bottom quintile in Canada (which means a portion of 20% of a country’s population), meaning that the 20% lowest-income population in the economy takes up 7.2% of the total national income. 19.9% of cumulative income corresponds to the fourth quintile in Canada, meaning that the 40% lowest-income population in the economy together takes up 19.9% of the total national income.

After: In Canada in 2005, the poorest 20% received 7.2% of total income. The poorest 40% together received 19.9%. The latter is the cumulative share of the bottom two quintiles; the second quintile alone received 19.9% − 7.2% = 12.7%.

Before: How does this show income equality/inequality? In an economy with perfectly equal income distribution, the bottom quintile would take up 20% of total income, and each of the quintiles would have 20% of total national income. If such a country were to exist, its cumulative income distribution data would be shown as in Table 3.4.2. Note that because it is cumulative, the fourth quintile also includes the income of the bottom quintile and thus appears as 40% in the data. In an economy with an extreme form of income inequality, the top quintile would have 100% of the income, while other quintiles would have 0%.

After: With perfectly equal incomes, each successive fifth of the population receives 20% of total income. The cumulative shares are therefore 20%, 40%, 60%, 80% and 100%, as in Table 3.4.2. These columns are cumulative population shares, not separate quintiles. With all income concentrated at the very top, the cumulative share remains zero until that income is included.

Before: Comparing Canada and South Africa in Table 3.4.3, notice that in Canada each quintile in the population has a greater share of the national income as compared to South Africa; this shows a more equal distribution of income in Canada as compared to South Africa.

After: In Table 3.4.3, Canada has a larger cumulative income share at each of the first four population cut-offs than South Africa. Both reach 100% at the final cut-off. Canada’s Lorenz curve therefore lies closer to the line of equality in this 2005 comparison.

16. 4.10 — South African Gini reduction

Before: The World Bank estimates that fiscal policy reduces South Africa’s Gini coefficient by around 25%. Before fiscal policy, it is estimated that South Africa’s Gini coefficient would be around 0.771; after the impact of fiscal policy, it is 0.596. It also reduces the share of the population living on less than $2.50 a day, from 46.2% to 39.0%.

Before: The World Bank estimates that fiscal policy reduces South Africa’s Gini coefficient by approximately 22.7%. Before fiscal policy, it is estimated that South Africa’s Gini coefficient would be around 0.771; after the impact of fiscal policy, it is 0.596. It also reduces the share of the population living on less than $2.50 a day, from 46.2% to 39.0%.

After: The World Bank estimates that fiscal policy reduces South Africa’s Gini coefficient by approximately 22.7%. Before fiscal policy, it is estimated that South Africa’s Gini coefficient would be around 0.771; after the impact of fiscal policy, it is 0.596. It also reduces the share of the population living on less than $2.50 a day, from 46.2% to 39.0%. Using the estimates quoted above, the absolute fall in the Gini coefficient is 0.771 − 0.596 = 0.175. The relative reduction is (0.175 ÷ 0.771) × 100 ≈ 22.7%. These are the historical estimates used in this case, not a current measurement of inequality.

17. 2.4 — UK organ-transplant waiting list

Open chapter 2.4

Before: One example of nudge theory in action was a 2013 collaboration between the Nudge Unit, the Department of Health, the National Health Service (NHS), the Driver and Vehicle Licensing Agency (DVSA) and the Government Digital Service. The aim was to increase the number of organs donated in an attempt to reduce the shortage of organs available for transplant; for example, in March 2020 there were 112,000 people on the national transplant waiting list in the UK.

After: In 2013, the Behavioural Insights Team worked with the Department of Health, the NHS, the Driver and Vehicle Licensing Agency (DVLA) and the Government Digital Service to encourage organ-donor registration. The shortage remained substantial: at the end of February 2020, 6,138 people were on the UK active transplant waiting list.

18. 2.4 — Organ-donation opt-out scope

Open chapter 2.4

Before: Another step that has been taken to increase the number of organ donors in the UK has been the adoption of an ‘opt-out’ system. This aims to increase the number of people on the organ donor list by changing their default choice. As of spring 2020, all adults in England are automatically considered to be an organ donor when they die, unless they have actively opted out.

After: England introduced an opt-out organ-donation system on 20 May 2020. Consent may be deemed for eligible adults who have not recorded a decision against donation. It does not cover everyone: exceptions include people under 18, people who lack the capacity to understand the arrangements, and people who have not been ordinarily resident in England for at least 12 months. The policy illustrates a change in the default; it does not mean that every adult automatically donates organs.

19. 2.7 — Hurricane Katrina intensity

Before: In 2005, Hurricane Katrina, a Category 5 tropical cyclone, hit the city of New Orleans and the surrounding area.

After: Hurricane Katrina reached Category 5 over the Gulf of Mexico, but made landfall in Louisiana on 29 August 2005 as a Category 3 hurricane. It caused severe damage in New Orleans and the surrounding area.

20. 2.7 — UK VAT example

Before: In the UK, there is also a reduced rate of 5% which applies to certain goods and services like children’s car seats and home energy; some goods are also VAT-exempt, such as most foods, postage stamps, and children’s clothes.

After: The UK also applies a reduced VAT rate of 5% to certain goods and services, including children’s car seats and domestic energy. Most food and children’s clothes are zero-rated: VAT is charged at 0%. This differs from exemption; for example, qualifying postage stamps are exempt. Zero-rated sales are taxable supplies, allowing the seller to recover eligible input VAT.

Before: For example, the rate of VAT in the UK in 2020 is 20%. This means that consumers have to pay a tax of 20% on any good they purchase, except for a small number of VAT-exempt goods such as books and education.

After: In the UK in 2020, the standard VAT rate was 20%. Not every purchase attracted that rate: books, for example, were generally zero-rated, while qualifying education was exempt. Zero-rating and exemption both mean no output VAT is charged to the purchaser, but they differ in the supplier’s entitlement to recover input VAT.

21. 2.9 — Public housing used as a public-good example

Open chapter 2.9

Before: Around 79% of Singapore’s population lives in public housing managed by the state Housing and Development Board (HDB). HDB apartments are issued by the state on 99-year leaseholds, and the price of each apartment depends on the size, type, and location of the property, with extensive government support available to those looking to purchase properties. The ‘owners’ of a HDB flat do not own the flat itself; the property ownership is maintained by the HDB, and the ‘owners’ buy the right to use the flat.

Before: Around 79% of Singapore’s population lives in public housing managed by the state Housing and Development Board (HDB). HDB apartments are issued by the state on 99-year leaseholds, and the price of each apartment depends on the size, type, and location of the property, with extensive government support available to those looking to purchase properties. Buyers generally acquire leasehold ownership for the remaining term of the lease rather than freehold ownership. This is distinct from renting a flat.

After: Around 79% of Singapore’s population lives in public housing managed by the state Housing and Development Board (HDB). HDB apartments are issued by the state on 99-year leaseholds, and the price of each apartment depends on the size, type, and location of the property, with extensive government support available to those looking to purchase properties. Buyers generally acquire leasehold ownership for the remaining term of the lease rather than freehold ownership. This is distinct from renting a flat. Classification: An individual flat is rival and excludable, so public housing is not a pure public good. This case illustrates government provision for housing affordability and equity. Government ownership or subsidy alone does not make a good non-rival or non-excludable.

22. 2.9 — PFI, public goods and outsourcing

Open chapter 2.9

Before: The UK’s Private Finance Initiative (PFI) is a policy which aims to create ‘public-private partnerships’ (PPPs) where private firms are contracted by the government to complete and manage public infrastructure, such as hospitals, schools, and roads. PFI therefore uses private sector investment to deliver public sector infrastructure.

After: The UK’s Private Finance Initiative (PFI) was a form of public-private partnership in which private firms financed and delivered public infrastructure, often providing associated services under long-term contracts. In October 2018, the government announced that it would no longer use PFI or its successor PF2 for new projects. Existing contracts continued. The case below concerns the historical model.

Before: There are several potential benefits of using the PFI to provide public goods. Since the private sector is believed to be more efficient than the public sector, PPPs might improve efficiency; they might also provide extra investment which can help the government to achieve more projects. PPPs also encourage the contracted firm to deliver the asset quickly, as they are not paid until the asset has been delivered. However, the PFI has been criticised on the grounds that it adds to public debt, represents poor value for money as long service contracts are difficult to change, and increases the government’s administration costs.

After: There are several potential benefits of using the PFI to provide public infrastructure and services. Since the private sector is believed to be more efficient than the public sector, PPPs might improve efficiency; they might also provide extra investment which can help the government to achieve more projects. PPPs also encourage the contracted firm to deliver the asset quickly, as they are not paid until the asset has been delivered. However, the PFI has been criticised on the grounds that it adds to public debt, represents poor value for money as long service contracts are difficult to change, and increases the government’s administration costs.

Before: There are several potential benefits of using the PFI to provide public infrastructure and services. Since the private sector is believed to be more efficient than the public sector, PPPs might improve efficiency; they might also provide extra investment which can help the government to achieve more projects. PPPs also encourage the contracted firm to deliver the asset quickly, as they are not paid until the asset has been delivered. However, the PFI has been criticised on the grounds that it adds to public debt, represents poor value for money as long service contracts are difficult to change, and increases the government’s administration costs.

Before: One example of the use of PPPs is Ramsay Health, which operates 30 hospitals and 3 neurological units under contract to the NHS, employing over 3,500 staff. NHS patients accounted for around 77.3% of Ramsay Health’s patients in 2016.

After: A related example of NHS outsourcing is Ramsay Health. The original case reports 30 hospitals, 3 neurological units and over 3,500 staff, with NHS patients accounting for around 77.3% of its patients in 2016. These figures belong to the historical case. Contracting a private hospital to treat NHS patients does not, by itself, establish that the arrangement is a PFI infrastructure project.

23. 2.10 — Education proves signalling

Open chapter 2.10

Before: Data shows that education is a good signal of ability, and that higher levels of education tend to be linked to higher levels of employment. For example, in the US in 2018, the employment rate among those aged 25-34 was highest for those with a bachelor’s degree or higher (86%), followed by those who had completed high s school (72%) and those who had not completed high school (59%).

After: Higher levels of education are associated with higher employment rates, but that association alone does not establish signalling. Education may also develop human capital, while people entering education may differ in their prior characteristics. For example, in the US in 2018, the employment rate among those aged 25-34 was highest for those with a bachelor’s degree or higher (86%), followed by those who had completed high s school (72%) and those who had not completed high school (59%).

Before: Higher levels of education are associated with higher employment rates, but that association alone does not establish signalling. Education may also develop human capital, while people entering education may differ in their prior characteristics. For example, in the US in 2018, the employment rate among those aged 25-34 was highest for those with a bachelor’s degree or higher (86%), followed by those who had completed high s school (72%) and those who had not completed high school (59%).

After: Higher levels of education are associated with higher employment rates, but that association alone does not establish signalling. Education may also develop human capital, while people entering education may differ in their prior characteristics. For example, in the US in 2018, the employment rate among those aged 25-34 was highest for those with a bachelor’s degree or higher (86%), followed by those who had completed high school (72%) and those who had not completed high school (59%).

24. 2.11 — FTC hospital merger

Open chapter 2.11

Before: For example, in 2011 the FTC blocked a merger between the Phoebe Putney Memorial Hospital and the Palmyra Medical Centre in Georgia on the grounds that this merger would reduce competition significantly and allow the merged entity to raise prices for patients.

After: In 2011, the FTC challenged the proposed acquisition of Palmyra Medical Center by the hospital authority that owned Phoebe Putney Memorial Hospital in Georgia, arguing that it would reduce competition. The acquisition nevertheless completed in December 2011. The case later resulted in a 2015 consent order; it is an example of a merger challenge, not a merger successfully blocked in 2011.

25. 4.4 — EFTA as a common market

Open chapter 4.4

Before: A common market combines free trade between members and a common external tariff, as in a customs union, with free movement of factors of production, including labour and capital. One example is the European Free Trade Association (EFTA).

After: A common market combines free trade between members and a common external tariff, as in a customs union, with free movement of factors of production, including labour and capital. The EU single market illustrates these features. EFTA is a free-trade association, not a customs union: its members do not share a common external tariff. Iceland, Liechtenstein and Norway participate in the EU single market through the EEA; Switzerland does not belong to the EEA.

26. 4.10 — Chinese railway financing as FDI

Before: For example, a new railway in Kenya connecting Mombasa and Nairobi, which opened in 2017, was financed mainly by China’s EXIM Bank, which covered more than 90% of the $3.6 billion cost. The railway cut travel times between the cities in half, meaning that it was a significant improvement to Kenya’s infrastructure. The Bank also provided 85% of the funding for a $475 million railway in Addis Ababa, serving 4 million of the city’s residents.

Before: A related but distinct form of Chinese finance is infrastructure lending. A new railway in Kenya connecting Mombasa and Nairobi, which opened in 2017, was financed mainly by China’s EXIM Bank, which covered more than 90% of the $3.6 billion cost. The railway cut travel times between the cities in half, meaning that it was a significant improvement to Kenya’s infrastructure. The Bank also provided 85% of the funding for a $475 million railway in Addis Ababa, serving 4 million of the city’s residents.

After: A related but distinct form of Chinese finance is infrastructure lending. A new railway in Kenya connecting Mombasa and Nairobi, which opened in 2017, was financed mainly by China’s EXIM Bank, which covered more than 90% of the $3.6 billion cost. The railway cut travel times between the cities in half, meaning that it was a significant improvement to Kenya’s infrastructure. The Bank also provided 85% of the funding for a $475 million railway in Addis Ababa, serving 4 million of the city’s residents. The railway loans described here are debt finance, not evidence of foreign direct investment. FDI requires a lasting ownership interest and significant influence in an enterprise; a bank loan does not establish that relationship by itself.

27. 4.6 — China’s 2019 exchange-rate direction

Open chapter 4.6

Before: In 2019, the Chinese government lowered the exchange rate between the Chinese yuan and the US dollar to below 7 yuan per dollar for the first time in over a decade. This came a few days after President Trump said that he would impose a 10% tariff on $300 billion worth of Chinese goods. It had the impact of making Chinese exports more competitive, as they became cheaper to buy with foreign currencies.

After: In 2019, the yuan depreciated beyond 7 yuan per US dollar for the first time in over a decade. This came a few days after President Trump said that he would impose a 10% tariff on $300 billion worth of Chinese goods. It had the impact of making Chinese exports more competitive, as they became cheaper to buy with foreign currencies.

28. 3.5 — QE1 purchase amounts

Open chapter 3.5

Before: QE1 began in November 2008, when the Fed decided to buy around $100 billion of agency debt and around $500 billion of mortgage-backed securities. Ths round was extended in March 2009, when the Fed bought another $850 billion of mortgage-backed securities.

After: QE1 began in November 2008, when the Federal Reserve announced purchases of up to $100 billion of agency debt and $500 billion of agency mortgage-backed securities (MBS). In March 2009, it announced an additional $750 billion of MBS purchases, bringing the planned MBS total to $1.25 trillion, and an additional $100 billion of agency debt purchases. It also announced purchases of up to $300 billion of longer-term Treasury securities.

29. 3.3 — Japan: deflation and debt illustration

Before: As shown by the graph below, Japan experienced a period of deflation between 1991 and 2001.

After: Japan’s asset-price bubble collapsed in the early 1990s. Persistent consumer-price deflation emerged later, in the late 1990s; the entire period from 1991 to 2001 should not be described as continuous deflation.

Before: The period of sustained deflation led to a transfer of resources from debtors to creditors. Assume that a consumer took out a ten-year loan in 1997 at the interest rate of 2.1%, which was the yield on long-term government bonds in that period; when the consumer came to repay the loan in 2007, the impact of deflation would have meant that their debt burden would be 20% higher than they had expected.

After: A fixed nominal debt becomes more burdensome when the price level is lower than expected. For a given nominal repayment, real debt = nominal repayment ÷ price index. Its proportional increase relative to the expected burden is therefore (expected price index ÷ actual price index) − 1. A quoted nominal bond yield of 2.1% in 1997 does not by itself establish a 20% unexpected increase in the debt burden by 2007: the expected and actual price paths, and the loan terms, would also be needed.

Before: The graph below shows Japan’s unemployment level between 1960 and 2019. The unemployment rate rose sharply between 1990 and 2002, concurrent with the rise in deflation.

After: The graph shows Japan’s unemployment rate between 1960 and 2019. Unemployment rose sharply between 1990 and 2002, spanning the post-bubble slowdown and the later emergence of persistent deflation.

30. 3.3 — US/Japan graphs: current dollars mislabelled

Before: The graph below shows the value of US exports of goods and services in 2020 US dollars. It shows that the value of the US’s exports was very low during the 1970s, indicating that the US’s international competitiveness was poor. This may have been in part due to the high level of domestic inflation, which made imports from the US more expensive for consumers in other countries.

After: The graph shows US exports of goods and services in current US dollars, not constant 2020 dollars. These nominal values reflect changes in prices as well as quantities. A lower dollar value in the 1970s does not, on its own, show weaker international competitiveness; relative prices, exchange rates and export volumes would also need to be considered.

Before: The graph below reports Japan’s consumption from 1970 to 2019, in billions of 2020 US dollars. It shows that consumption dropped below the trend level from 1995 to 2010, suggesting that deflation prompted consumers to defer their consumption. The rise in consumption from 2007 to 2011 may be indicative of the deferred consumption being carried out.

After: The graph reports Japan’s consumption from 1970 to 2019 in current US dollars. Both domestic prices and the yen–dollar exchange rate affect this series, so changes in the plotted values cannot be read directly as changes in real consumption. The graph alone does not establish that consumers postponed purchases because of deflation.

31. 3.4 — Ontario pilot as UBI

Before: Two UBI experiments have been carried out in Canada, with the most recent one being the Ontario 2017 Basic Income Pilot. Under this programme, single participants received up to $16,989 a year and couples received up to $24,027. The beneficiaries of the programme reported using the additional funds to augment disability payments, pay for education, fund transportation, and purchase necessities such as food and warm clothes which they were previously unable to afford.

Before: Ontario launched a Basic Income Pilot in 2017. It was a means-tested guaranteed-income experiment, rather than a universal payment to everyone. Under this programme, single participants received up to $16,989 a year and couples received up to $24,027. The beneficiaries of the programme reported using the additional funds to augment disability payments, pay for education, fund transportation, and purchase necessities such as food and warm clothes which they were previously unable to afford.

After: Ontario launched a Basic Income Pilot in 2017. It was a means-tested guaranteed-income experiment, rather than a universal payment to everyone. Under this programme, single participants received up to $16,989 a year and couples received up to $24,027. The beneficiaries of the programme reported using the additional funds to augment disability payments, pay for education, fund transportation, and purchase necessities such as food and warm clothes which they were previously unable to afford. The quoted amounts were maximum annual payments in Canadian dollars. Payments were reduced by 50 cents for each dollar of earned income. This withdrawal rule and the restricted eligibility distinguish the pilot from a universal basic income.

32. 4.9 — Haiti inequality and debt-relief date

Open chapter 4.9

Before: In 2012, Haiti’s Gini Index was 0.41, suggesting that it has significant levels of inequality. In 2012, the official poverty estimates suggested that over 6 million Haitians lived below the poverty line of US$2.41 per day, and more than 2.5 million fell below the extreme poverty line of US$1.12 per day.

After: In 2012, Haiti’s Gini Index was 0.61, suggesting that it has significant levels of inequality. In 2012, the official poverty estimates suggested that over 6 million Haitians lived below the poverty line of US$2.41 per day, and more than 2.5 million fell below the extreme poverty line of US$1.12 per day.

Before: When the country declared independence in 1804, France demanded that the country pay the French government and French slaveholders the modern equivalent of $21 billion in compensation for the slaves and land of Haiti; this debt was paid off in 1947. In 2006, Haiti was added to the World Bank and IMF’s highly indebted poor country initiative; it met the requirements for the completion of this programme in September 2009, which meant that it qualified for the cancellation of its external debt obligations. However, due to various factors, including the fact that the debt initiative only cancelled loans made before 2005 and the 2010 earthquake, it still had around $2,212.8 million in external debt in 2018.

After: When the country declared independence in 1804, France demanded that the country pay the French government and French slaveholders the modern equivalent of $21 billion in compensation for the slaves and land of Haiti; this debt was paid off in 1947. In 2006, Haiti was added to the World Bank and IMF’s highly indebted poor country initiative; it met the requirements for the completion of this programme in June 2009, which meant that it qualified for the cancellation of its external debt obligations. However, due to various factors, including the fact that the debt initiative only cancelled loans made before 2005 and the 2010 earthquake, it still had around $2,212.8 million in external debt in 2018.

33. 4.10 — South Africa: absence of legal protections

Before: However, this legislative framework lacks quotas for representation of women, the criminalisation of marital rape and legislation regarding equal pay for equal work.

After: South Africa criminalised marital rape in 1993. Its employment-equity legislation also provides protection for equal pay for work of equal value; the relevant 2013 amendment took effect in 2014. The existence of these legal protections should be distinguished from questions about enforcement and remaining inequality.

34. 4.10 — EU–Mercosur agreement date

Before: In 2018, Brazil, as part of a bloc with Argentina, Paraguay, and Uruguay, signed a trade deal with the EU which aims to:

After: On 28 June 2019, the EU and Mercosur—then comprising Argentina, Brazil, Paraguay and Uruguay in these negotiations—reached an agreement in principle on the trade part of an association agreement. This was not a trade agreement signed and in force in 2018. The historical proposal aimed to:

35. 2.8 — England carrier-bag charge

Before: An example of legislation to reduce a negative externality is the UK’s 5 pence charge on single use carrier bags. This came into effect in October 2015; from then, all large shops and supermarkets have to charge 5p for each plastic carrier bag that customers use. This charge was not a tax, as the money does not go to the government; rather, the purpose of the charge was to reduce the number of bags given out, encourage customers to re-use them, and reduce litter.

After: England introduced a 5p charge on single-use plastic carrier bags at large retailers on 5 October 2015. The charge aimed to reduce the number of bags supplied, encourage reuse and reduce litter. It was not a tax paid to the government. From 21 May 2021, England increased the charge to 10p and extended it to all retailers. The results below concern the earlier policy.

Before: The plastic bag charge has had a significant impact on the use of plastic bags in the UK. For example, in 2013, major supermarkets in England gave out over 7.4 billion plastic bags. In 2018, it was found that the charge has reduced plastic bag sales in major supermarkets by 86%.

After: The plastic bag charge has had a significant impact on the use of plastic bags in England. For example, in 2013, major supermarkets in England gave out over 7.4 billion plastic bags. In 2018, it was found that the charge has reduced plastic bag sales in major supermarkets by 86%.

36. 2.8 — British Columbia carbon tax

Before: In Canada in 2020, the region of British Columbia has a carbon tax rate of $40 per tonne of CO2 equivalent emissions. This is calculated to be consistent with estimates of the social cost of carbon, which is the economic value of avoided climate change damages for current and future generations as a result of reducing greenhouse gas emissions.

After: In 2020, British Columbia, Canada, had a carbon tax rate of $40 per tonne of CO2 equivalent emissions. This is calculated to be consistent with estimates of the social cost of carbon, which is the economic value of avoided climate change damages for current and future generations as a result of reducing greenhouse gas emissions.

Before: Research has shown that the carbon tax in British Columbia reduced the consumption of gasoline and natural gas, and therefore led to a reduction in overall emissions of CO2. For example, per capita emissions decreased by 12.9% in 2008-2013, three and a half times more than the per capita decline in the rest of Canada. The tax also incentivised people to buy fuel-efficient vehicles. In 2012-13, this carbon tax raised around $1,120 million in revenue. These revenues were used to offset the damage caused by carbon emissions, including by providing carbon tax relief, maintaining industry competitiveness, and encouraging new green initiatives.

After: Research has shown that the carbon tax in British Columbia reduced the consumption of gasoline and natural gas, and therefore led to a reduction in overall emissions of CO2. For example, per capita emissions decreased by 12.9% in 2008-2013, three and a half times more than the per capita decline in the rest of Canada. The tax also incentivised people to buy fuel-efficient vehicles. In 2012-13, this carbon tax raised around $1,120 million in revenue. Under the revenue-neutral arrangements then in place, revenue was returned through tax reductions and credits. It was not a fund earmarked for environmental projects.

Before: Research has shown that the carbon tax in British Columbia reduced the consumption of gasoline and natural gas, and therefore led to a reduction in overall emissions of CO2. For example, per capita emissions decreased by 12.9% in 2008-2013, three and a half times more than the per capita decline in the rest of Canada. The tax also incentivised people to buy fuel-efficient vehicles. In 2012-13, this carbon tax raised around $1,120 million in revenue. Under the revenue-neutral arrangements then in place, revenue was returned through tax reductions and credits. It was not a fund earmarked for environmental projects.

37. 2.8 — EU ETS target

Before: Negative production externalities (especially those related to pollution) can be corrected by the use of tradable permits. Tradable permit means each firm (or individual) that owns permits has the right to emit a quantity of pollutants determined by the permits. These permits can be bought and sold. The total supply of permits is fixed by the government. The price of the permit is determined by the level of demand and supply in the market. When demand increases as in Figure 2.8.16, price increases. By controlling Q, the government is able to control the maximum amount of pollutant released. The largest tradable permit system is the European Union Emissions Trading System for carbon dioxide emissions.

After: Negative production externalities (especially those related to pollution) can be corrected by the use of tradable permits. Tradable permit means each firm (or individual) that owns permits has the right to emit a quantity of pollutants determined by the permits. These permits can be bought and sold. The total supply of permits is fixed by the government. The price of the permit is determined by the level of demand and supply in the market. When demand increases as in Figure 2.8.16, price increases. By controlling Q, the government is able to control the maximum amount of pollutant released. One of the largest tradable permit systems is the European Union Emissions Trading System for carbon dioxide emissions.

Before: The European Union Emissions Trading System (EU ETS) was launched in 2005. It was the first greenhouse gas trading scheme in the world, and is still the biggest. By 2020, it is estimated to have reduced CO2 emissions by more than 1 billion tons between 2008 and 2016, or 3.8% of total EU-wide emissions. In 2030, the emissions from sectors that are covered by the ETS will be cut by 43% from 2005 levels.

After: The EU Emissions Trading System (EU ETS) launched in 2005. It is one of the world’s largest emissions-trading systems. The original case reports an estimated reduction of more than 1 billion tonnes of CO₂ between 2008 and 2016, equivalent to 3.8% of EU-wide emissions. Its earlier framework targeted a 43% reduction in covered-sector emissions by 2030 relative to 2005. The revised framework raises that 2030 target to 62%.

Before: The ETS aims to reduce climate change emissions in a cost-effective way. It operates in all the EU countries plus Iceland, Liechtenstein and Norway, and limits emissions from over 11,000 installations using energy, and the airlines operating between those countries, meaning that it covers around 45% of the EU’s greenhouse gas emissions.

After: The ETS aims to reduce climate change emissions in a cost-effective way. In the historical coverage described around 2020, it operated in all the EU countries plus Iceland, Liechtenstein and Norway, and limits emissions from over 11,000 installations using energy, and the airlines operating between those countries, meaning that it covers around 45% of the EU’s greenhouse gas emissions.

Before: The ETS aims to reduce climate change emissions in a cost-effective way. In the historical coverage described around 2020, it operated in all the EU countries plus Iceland, Liechtenstein and Norway, and limits emissions from over 11,000 installations using energy, and the airlines operating between those countries, meaning that it covers around 45% of the EU’s greenhouse gas emissions.

After: The ETS aims to reduce climate change emissions in a cost-effective way. In the historical coverage described around 2020, it operated in all the EU countries plus Iceland, Liechtenstein and Norway, and limited emissions from over 11,000 installations using energy, and the airlines operating between those countries, meaning that it covers around 45% of the EU’s greenhouse gas emissions.

Before: The ETS aims to reduce climate change emissions in a cost-effective way. In the historical coverage described around 2020, it operated in all the EU countries plus Iceland, Liechtenstein and Norway, and limited emissions from over 11,000 installations using energy, and the airlines operating between those countries, meaning that it covers around 45% of the EU’s greenhouse gas emissions.

After: The ETS aims to reduce climate change emissions in a cost-effective way. In the historical coverage described around 2020, it operated in all the EU countries plus Iceland, Liechtenstein and Norway, and limited emissions from over 11,000 installations using energy, and the airlines operating between those countries, meaning that it covered around 45% of the EU’s greenhouse gas emissions.

38. 2.8 — Hong Kong vaccination timetable

Before: The table below outlines the vaccinations offered by the childhood immunisation programme.

After: The table summarises the Department of Health schedule dated 9 October 2024. It illustrates government provision at that date; birth-cohort arrangements are explained below.

Before: 2-4 months

After: 2 months

Before: 3-5 months

After: 4 months

Before: DTaP-IPV (against diphtheria, pertussis, tetanus and polio) (first dose) Pneumococcal Vaccine (first dose)

After: DTaP-IPV (first dose); PCV15 (first dose)

Before: DTaP-IPV (second dose) Pneumococcal Vaccine (second dose)

After: DTaP-IPV (second dose); PCV15 (second dose)

Before: MMR (against measles, mumps, and rubella) (first dose) Varicella (against chickenpox)

After: MMR (first dose); varicella (first dose); PCV15 (booster)

Before: DTaP-IPV (booster dose)

After: DTaP-IPV (booster); MMRV (second dose, for children born on or after 1 July 2018)

Before: 6 years

After: Primary 1

Before: MMRV (combination of MMR and varicella vaccines) DTaP-IPV (booster dose)

After: DTaP-IPV (booster); MMRV for children born 1 January 2013–30 June 2018

Before: 10-11 years

After: Primary 5

Before: HPV vaccine (first dose) (female only)

After: 9-valent HPV (first dose, girls)

Before: 11-12 years

After: Primary 6

Before: DTaP-IPV (booster dose) HPV vaccine (second dose)

After: Reduced-dose diphtheria and pertussis / tetanus / inactivated polio (booster); 9-valent HPV (second dose, girls)

Before: The table summarises the Department of Health schedule dated 9 October 2024. It illustrates government provision at that date; birth-cohort arrangements are explained below.

After: The table summarises the Department of Health schedule dated 9 October 2024. It illustrates government provision at that date; birth-cohort arrangements are explained below. PCV15 is the 15-valent pneumococcal conjugate vaccine. MMRV combines measles, mumps, rubella and varicella protection. Department of Health schedule (9 October 2024)

39. 2.9 — PFI described as an active new-project model

Open chapter 2.9

40. 3.3 — Universal Credit allowance

Before: In the UK in 2020 those who are unemployed are entitled to a government benefit called Universal Credit. If eligible, those who are single, over 25 and unemployed will receive £409.89 a month in government benefits. This may mitigate the loss of income associated with unemployment, but is a small amount in comparison to many wages; for example, it is estimated that average monthly costs while living in London are around £824.72, without accounting for rent costs.

After: In the UK in 2020/21, the Universal Credit standard allowance for an eligible single claimant aged 25 or over was £409.89 a month, including the temporary pandemic uplift. Universal Credit is means-tested, and entitlement depends on household circumstances. This is a historical allowance, not the current rate. This may mitigate the loss of income associated with unemployment, but is a small amount in comparison to many wages; for example, it is estimated that average monthly costs while living in London are around £824.72, without accounting for rent costs.

Before: For example, in 2020, people who are single and aged 25 or over can claim £409.89 in unemployment benefits per month. Given that the UK’s national minimum wage is £8.72 an hour, and people earning minimum wage would have to work around 47 hours a week to make the same amount as the unemployment benefit, the existence of the benefit might disincentive working.

Before: For example, in 2020, people who are single and aged 25 or over can claim £409.89 in unemployment benefits per month. Given that the UK’s national minimum wage is £8.72 an hour, and people earning minimum wage would have to work around 47 hours a month to make the same amount as the unemployment benefit, the existence of the benefit might disincentive working.

After: For example, in 2020, people who are single and aged 25 or over can claim £409.89 in unemployment benefits per month. Given that the UK’s national minimum wage is £8.72 an hour, and people earning minimum wage would have to work around 47 hours a month to make the same amount as the unemployment benefit, the existence of the benefit might disincentive working. Historical comparison, 2020/21: £409.89 ÷ £8.72 per hour ≈ 47 hours per month, or about 10.8 hours per week averaged over a year. This compares gross wages with the standard allowance only; it does not calculate a claimant’s net gain from work, which depends on benefit withdrawal and household circumstances.

41. 3.6 — Brazil expenditure ceiling

Open chapter 3.6

Before: The main contractionary fiscal policy introduced by the government was an expenditure ceiling enforced by a constitutional amendment. This expenditure ceiling mandated a zero real growth rule for federal primary expenditure for the next twenty years from 2016, meaning that federal spending would have to be maintained at 2016 real levels, with adjustments only being made for inflation. This will lead to a reduction in public expenditure relative to GDP and relative to Brazil’s population growth.

After: Brazil adopted a constitutional expenditure ceiling in 2016, intended to limit federal primary spending in real terms for twenty years. It linked permitted nominal growth to inflation, with the aim of restraining expenditure relative to GDP. This is a historical policy: a new fiscal framework replaced the ceiling in 2023.

Before: Stimulations showed that this would reduce federal expenditure from 19% of GDP in 2017 to 12% of GDP in 2036; the government hoped that this would have a deflationary impact on the economy, and mitigate the effects of the economic crisis.

After: Simulations under the original 2016 framework projected that it would reduce federal expenditure from 19% of GDP in 2017 to 12% of GDP in 2036; the government hoped that this would have a deflationary impact on the economy, and mitigate the effects of the economic crisis.

Before: Furthermore, since the government committed to maintaining pensions spending at around 10% of GDP, there was a necessary fall in social expenditure on public health and education. This expenditure is expected to fall from 2.41% of GDP in 2017 to 1.93% in 2026. Cash transfers to poor families and investments in infrastructure, culture, sports, and social assistance will also shrink, from around 7% of GDP in 2017 to 2.6% of GDP in 2026. These measures will likely have significant impacts on the human capital of the economy, and therefore mitigate its long-term growth and productivity.

After: Projections under the original ceiling suggested that health and education expenditure would fall from 2.41% of GDP in 2017 to 1.93% in 2026, and that other social and infrastructure spending would fall from around 7% to 2.6%. These were projections under the old rule, not observed outcomes for 2026. Their economic concern remains useful: prolonged restraint on education, health and infrastructure may weaken human capital and productive capacity.

42. 3.7 — NAFTA timeline

Open chapter 4.4

Before: In 1994, Canada, Mexico and the United States signed the North American Free Trade Agreement (NAFTA), creating one of the largest trade blocs in the world. Under NAFTA, barriers to trade between the three countries were either reduced or eliminated.

Before: In 1992, Canada, Mexico and the United States signed the North American Free Trade Agreement (NAFTA), creating one of the largest trade blocs in the world. Under NAFTA, barriers to trade between the three countries were either reduced or eliminated.

After: In 1992, Canada, Mexico and the United States signed the North American Free Trade Agreement (NAFTA), creating one of the largest trade blocs in the world. Under NAFTA, barriers to trade between the three countries were either reduced or eliminated. NAFTA entered into force on 1 January 1994. It was replaced by the US–Mexico–Canada Agreement (USMCA) on 1 July 2020. The trade figures that follow describe the NAFTA period.

Before: For example, the North American Free Trade Agreement (NAFTA) is a regional trade agreement between the USA, Canada, and Mexico.

After: For example, the North American Free Trade Agreement (NAFTA) is a regional trade agreement between the USA, Canada, and Mexico. NAFTA is used here as a historical free-trade agreement: it operated from 1994 until its replacement by USMCA on 1 July 2020.

43. 3.7 — Australian income-tax cuts

Before: This plan has three stages:

After: The original plan announced in 2019 had three stages:

Before: In 2022-23, the government will increase the top threshold of the 19% tax bracket to $45,000, and the low income tax offset to $700.

After: The original plan scheduled an increase in the top threshold of the 19% bracket to $45,000 and in the low-income tax offset to $700 for 2022/23. These measures were subsequently brought forward to 2020/21.

Before: In 2024-25, the 32.5% tax rate will be reduced to 30% with the aim of improving incentives and increasing the reward for effort.

After: The original third stage proposed reducing the 32.5% rate to 30% from 2024/25. Before implementation, the package was redesigned: from 1 July 2024, the 19% rate became 16%, the 32.5% rate became 30%, and the thresholds for the 37% and 45% brackets became $135,000 and $190,000 respectively.

Before: The Australian government predicts that the plan will increase the number of people paying a 30% tax rate from around 47% of the population to around 70% of the population, and the number of people paying a 19% tax rate from 16% of the population to 24% of the population.

Before: Under the original proposal, the Australian government predicted that the plan will increase the number of people paying a 30% tax rate from around 47% of the population to around 70% of the population, and the number of people paying a 19% tax rate from 16% of the population to 24% of the population.

After: Under the original proposal, the Australian government predicted that the plan will increase the number of people paying a 30% tax rate from around 47% of the population to around 70% of the population, and the number of people paying a 19% tax rate from 16% of the population to 24% of the population. Those percentages were projections for the original plan, not the distribution under the redesigned 2024 tax cuts. Australian Treasury: tax cuts

44. 3.7 — Changi Terminal 5 timetable

Before: It has planned to build a new terminal at Changi International Airport which will increase the airport’s capacity from 85 million passengers per year in 2018 to 135 million per year by 2030. This investment will cost around $10 billion US dollars, with the government funding around 70% of the project and the remainder funded by the Changi Airport Group.

After: The plan described in the original case was to build a new terminal at Changi International Airport which will increase the airport’s capacity from 85 million passengers per year in 2018 to 135 million per year by 2030. This investment will cost around $10 billion US dollars, with the government funding around 70% of the project and the remainder funded by the Changi Airport Group.

Before: The plan described in the original case was to build a new terminal at Changi International Airport which will increase the airport’s capacity from 85 million passengers per year in 2018 to 135 million per year by 2030. This investment will cost around $10 billion US dollars, with the government funding around 70% of the project and the remainder funded by the Changi Airport Group.

Before: The plan described in the original case was to build a new terminal at Changi International Airport which was expected to increase the airport’s capacity from 85 million passengers per year in 2018 to 135 million per year by 2030. This investment will cost around $10 billion US dollars, with the government funding around 70% of the project and the remainder funded by the Changi Airport Group.

Before: The plan described in the original case was to build a new terminal at Changi International Airport which was expected to increase the airport’s capacity from 85 million passengers per year in 2018 to 135 million per year by 2030. The original case projected a cost of around $10 billion US dollars, with the government funding around 70% of the project and the remainder funded by the Changi Airport Group.

After: The plan described in the original case was to build a new terminal at Changi International Airport which was expected to increase the airport’s capacity from 85 million passengers per year in 2018 to 135 million per year by 2030. The original case projected a cost of around $10 billion US dollars, with the government funding around 70% of the project and the remainder funded by the Changi Airport Group. Updated timetable: Changi Airport Group now schedules Terminal 5 to open in the mid-2030s, with its first phase able to handle around 50 million passengers annually. The 2030 opening date and the total-capacity comparison above belong to the earlier plan. Changi Airport Group: Terminal 5

45. 4.10 — Zambian secondary schooling

Before: High primary completion rates are likely a result of the provision of free education by the government; public schooling is free and compulsory from age seven to fourteen, with parents only needing to cover additional costs like uniforms, stationery, and books. Secondary education, however, is not publicly funded, meaning that school fees pose a significant barrier to continued education.

After: Historically, fees at secondary level were a barrier to continued schooling in Zambia; this did not mean that secondary education received no public funding. From January 2022, the government extended free education through secondary level in public schools. Families may still face associated costs, and enrolment gains can put pressure on classrooms, staffing and learning materials.

46. 4.10 — UK coal phase-out

Before: Almost 53% of the electricity that powers homes and businesses in the UK comes from clean sources, including 33% from renewables. The UK has a commitment to completely phase out the use of coal power by 2025.

After: Almost 53% of the electricity that powers homes and businesses in the UK comes from clean sources, including 33% from renewables. The UK’s original 2025 deadline for ending unabated coal-fired power generation was brought forward to 1 October 2024. The energy-share figures in this historical case should not be treated as current data.

47. 3.3 / 4.9 — Poverty thresholds and country comparisons

Open chapter 4.9

Before: However, India’s poverty rate is still very high; between 20 and 30% of its population are living in absolute poverty.

After: However, India’s poverty rate is still very high; between 20 and 30% of its population are living in absolute poverty. Data context: The 20–30% estimate above is retained from the original case. Its survey date and poverty-line definition are not specified, so it is not a verified current estimate and should not be directly compared with a differently defined rate. The World Bank updated its international extreme-poverty line to $3.00 a person per day in 2021 PPP prices in June 2025. Earlier $1.90 figures use 2011 PPP prices. PPP dollars are purchasing-power-adjusted units, not amounts converted at market exchange rates. Old poverty percentages cannot be relabelled with the new threshold; they require recalculation from the underlying survey data. World Bank: June 2025 update

Before: Malawi has a GNI per capita of $320, and ranks 171st out of 189 countries according to the Human Development Index. Around 70% of the population live below the poverty line, with an income of below $1.90 a day. In 2015/16, around 40% of the population, or 6.5 million people, relied on food aid.

After: Malawi has a GNI per capita of $320, and ranks 171st out of 189 countries according to the Human Development Index. Around 70% of the population live below the poverty line, with an income of below $1.90 a day. In 2015/16, around 40% of the population, or 6.5 million people, relied on food aid. Historical poverty measure: The $1.90 line quoted in this case uses the earlier 2011 PPP standard. The paragraph combines statistics from different periods; its undated estimates remain awaiting source verification. The World Bank updated its international extreme-poverty line to $3.00 a person per day in 2021 PPP prices in June 2025. Earlier $1.90 figures use 2011 PPP prices. PPP dollars are purchasing-power-adjusted units, not amounts converted at market exchange rates. Old poverty percentages cannot be relabelled with the new threshold; they require recalculation from the underlying survey data. World Bank: June 2025 update

Original evidence-review scope

The following groups contain both confirmed corrections and unresolved claims. See the applied changes below; these groups are not wholly unresolved.

48. Causal claims from before-and-after graphs

Chapter 2.7 / 3.3 / 3.7

Several passages infer causation from co-movement: NHS austerity/deaths; unemployment/crime; unions/wage growth; rail privatisation/safety; inflation/exports.

49. America First tariff case

Chapter 4.6

The passage mixes announced and implemented measures, says a 5% Mexico tariff was placed then averted, uses $50bn ambiguously as tariff revenue rather than covered imports, and dates a 2019 study’s result to December 2019.

50. Unsourced cost, damage and health totals

Chapter 2.7 / 2.8

US housing subsidies of $15bn; bottled water above $5/gallon; 100,000 marine deaths; 400-year plastic degradation; and selected smoking elasticities have no sufficiently precise source in the displayed text.

51. Haiti and Malawi dated portraits

Chapter 4.9

The cases mix statistics from 1999–2019 with present-tense descriptions: HIV prevalence, GDP/GNI per capita, road access, parliament, governance and business rankings. Haiti’s public-transport assertion is absolute.

52. Expired forecasts and planned projects

Chapter 3.7 / 4.10

Made in China 2025, Russia’s 2022/2025 industrial forecasts, Solar Sister’s 2022 target, Ethiopia’s proposed privatisations, and 2021 infrastructure spending forecasts remain future-looking.

53. US 1970s inflation and recession data

Chapter 3.5

The example describes 4.9% and 11.1% as January and December 1974 inflation while citing an annual World Bank series. The crisis example also does not specify that quoted quarterly GDP declines may be annualised.

54. Policy success and programme design

Chapter 2.8 / 3.4

The sandeel example says stocks returned to high levels without an end date; the Canadian child-benefit illustration has historical amounts without a benefit year; the electricity example may confuse share of demand eligible for switching with share of customers.

Update · 15 October 2026: The unresolved list below records the earlier review. See the latest applied corrections and removals.

Confirmed evidence-review corrections · 14 October 2026

31 targeted paragraph edits across nine chapters. Historical examples have explicit dates where verified. Unverified claims and numerical estimates remain unchanged; their presence is not an endorsement. The original capture, design, diagrams and interactive features are preserved.

Chapter 2.7 · audit group 50

Before: One example of a government subsidy is housing subsidies; these aim to promote homeownership and to support the construction industry. In the US, the federal government spends around $15 billion on housing subsidies per year. There are two kinds of housing subsidy in the US: interest rate subsidies, such as the mortgage interest deduction on federal income tax, and down-payment assistance, through which the federal government matches the amount that low-income families save for a down-payment on a house.

After: One example of a government subsidy is housing subsidies; these aim to promote homeownership and to support the construction industry. In the US, the federal government spends around $15 billion on housing subsidies per year. Examples of housing support in the US include tax relief, such as the mortgage interest deduction on federal income tax, which reduces taxable income rather than the contractual mortgage interest rate, and down-payment assistance, through which the federal government matches the amount that low-income families save for a down-payment on a house.

Evidence for this audit group: IRS mortgage-interest guidance · GAO historical housing-assistance analysis · NOAA plastic debris · NOAA degradation explanation · Original study · WHO tobacco taxation manual

Chapter 2.7 · audit group 48

Before: However, in recent years, public satisfaction in the NHS has fallen. This is largely due to a decrease in government funding following government spending cuts as part of austerity policies. For example, a study of OECD data found that the NHS is significantly under-resourced compared to other developed nations, with among the lowest number of doctors, nurses, and hospital beds per capita. The Institute for Public Policy Research found that over 130,000 deaths in the UK could have been prevented had austerity not stopped progress in public health policy. That said, the NHS succeeds in protecting people from heavy financial costs when they are unwell, and has waiting times and efficiency rates comparable to other developed countries.

After: However, in recent years, public satisfaction in the NHS has fallen. Funding constraints are one possible influence, but this does not establish a single cause of changing satisfaction. Health spending grew more slowly in real terms during 2010–2014, while social-care spending fell. For example, a study of OECD data found that the NHS is significantly under-resourced compared to other developed nations, with among the lowest number of doctors, nurses, and hospital beds per capita. In its 2019 report, the Institute for Public Policy Research estimated that over 130,000 deaths could have been prevented if earlier improvements in preventable mortality had continued. This is a comparison with an extrapolated trend, not a count of deaths proved to have been caused solely by NHS funding cuts. That said, the NHS succeeds in protecting people from heavy financial costs when they are unwell, and has waiting times and efficiency rates comparable to other developed countries.

Evidence for this audit group: IPPR report, 2019 · BMJ Open spending study, 2017 · UNODC crime survey definitions · UK 2018 official bulletin · Evans, Accident Analysis & Prevention

Chapter 2.8 · audit group 50

Before: These taxes have been effective in the US; studies have shown that for every 10% increase in the price of a pack of cigarettes, youth smoking rates drop around 7%. However, a 2012 study also found that higher cigarette taxes might disproportionately affect lower-income smokers. Lower-income smokers in New York spent 23.6% of their income on cigarettes, compared to 2% spent by higher-income residents. This regressive tax also did not appear to be encouraging lower-income smokers to quit.

After: These taxes have been effective in the US; studies have shown that for every 10% increase in the price of a pack of cigarettes, youth smoking rates drop around 7%. However, a 2012 study also found that higher cigarette taxes might disproportionately affect lower-income smokers. Using 2010–2011 survey data, the 2012 study found that lower-income smokers in New York spent 23.6% of household income on cigarettes, compared with 2.2% for higher-income New York smokers. These figures describe the burden on continuing smokers; they do not establish that higher taxes failed to encourage quitting.

Chapter 2.8 · audit group 50

Before: Plastic bags are very harmful for the environment. They are manufactured from non-renewable crude oil, meaning that the manufacturing process produces large amounts of pollution, and that the bags themselves are not biodegradable; it takes around 400 years for each bag to biodegrade. Around 100,000 marine animals die every year from eating or being strangled by plastic bags.

After: Plastic bags are very harmful for the environment. They are manufactured from non-renewable crude oil, meaning that the manufacturing process produces large amounts of pollution, and that conventional plastic bags persist in the environment. Their breakdown depends on the material and environmental conditions; fragmentation into microplastics is not the same as complete biodegradation. Around 100,000 marine animals die every year from eating or being strangled by plastic bags.

Chapter 2.8 · audit group 54

Before: One example of successful collective self-governance in response to the depletion of a common access resource is the Japanese sandeel stock in Ise Bay, which serves fisheries in the Aichi and Mie Prefectures. Given the nature of this resource, harvesting tends to be concentrated in the two or three weeks immediately after the fishing season opens; there is therefore a risk of over-harvesting.

After: A historical example of collective self-governance in response to the depletion of a common access resource is the Japanese sandeel stock in Ise Bay, which serves fisheries in the Aichi and Mie Prefectures. Given the nature of this resource, harvesting tends to be concentrated in the two or three weeks immediately after the fishing season opens; there is therefore a risk of over-harvesting.

Evidence for this audit group: Aichi fisheries report, 17 March 2026 · Canada Revenue Agency historical calculation sheet · EMA annual report 2018–19

Chapter 2.8 · audit group 54

Before: The implementation of these measures, and the close collaboration between fishers and researchers, has led to the return of stocks to high levels.

After: The case illustrates cooperation between fishers and researchers, but it should not be read as evidence of permanent stock recovery. Aichi’s fisheries report of 17 March 2026 recorded that the fishery would not open. Later closures do not, by themselves, establish the cause of stock depletion.

Evidence for this audit group: Aichi fisheries report, 17 March 2026 · Canada Revenue Agency historical calculation sheet · EMA annual report 2018–19

Chapter 3.3 · audit group 48

Before: The graph below compares the United States unemployment rate as a percentage of the labour force with the number of people coming into formal contact with the police. It shows that the decrease in the unemployment rate after the 2008 financial crisis was associated with a reduction in the crime rate, suggesting that lower levels of unemployment also decrease criminality.

After: The graph below compares the United States unemployment rate as a percentage of the labour force with the number of people coming into formal contact with the police. It shows that the decrease in the unemployment rate after the 2008 financial crisis was associated with fewer people coming into formal contact with the police. Police contacts are not a measure of all crime, and this association alone does not establish that lower unemployment caused the decline.

Evidence for this audit group: IPPR report, 2019 · BMJ Open spending study, 2017 · UNODC crime survey definitions · UK 2018 official bulletin · Evans, Accident Analysis & Prevention

Chapter 3.4 · audit group 54

Before: For example, the Canada child benefit (CCB) is a monthly payment made to eligible families to help with the cost of raising children under 18. The maximum benefit that families can get under the CCB is $6,765 per child under 6, and $5,708 per child aged between 6 and 17. This means that a two-parent family with two children aged 4 and 9 earning $55,000 a year would receive $9,329 a year.

After: The Canada child benefit (CCB) is a monthly payment to eligible families with children under 18. For July 2020–June 2021, the maximum annual benefit was C$6,765 per child under 6 and C$5,708 per child aged 6–17. For two eligible children aged 4 and 9 and adjusted family net income of C$55,000, the annual benefit was C$6,765 + C$5,708 − 0.135 × (C$55,000 − C$31,711) = C$9,328.985, or approximately C$9,329. This assumes full-year eligibility and excludes separate supplements. Adjusted family net income is the programme’s income measure, not simply gross salary.

Evidence for this audit group: Aichi fisheries report, 17 March 2026 · Canada Revenue Agency historical calculation sheet · EMA annual report 2018–19

Chapter 3.5 · audit group 53

Before: The 2008 financial crisis led to US GDP decreasing by around 6% in the fourth quarter of 2008 and the first quarter of 2009, and the US unemployment rate rising to 10.1% by October 2009. The PEW Research Centre found that, on average, US households lost nearly $5,800 in income due to the reduced economic growth during the crisis, with the US losing $3.4 trillion in real estate wealth from July 2008 to March 2009 and $7.4 trillion in stock wealth from July 2008 to March 2009.

After: The 2008 financial crisis led to a contraction in US real GDP: the April 2009 BEA advance release reported annualised falls of 6.3% in the fourth quarter of 2008 and 6.1% in the first quarter of 2009. These figures were subsequently revised. An annualised fall of 6% is equivalent to about 1.53% within one quarter. The crisis also led to the US unemployment rate rising to 10.1% by October 2009. The PEW Research Centre found that, on average, US households lost nearly $5,800 in income due to the reduced economic growth during the crisis, with the US losing $3.4 trillion in real estate wealth from July 2008 to March 2009 and $7.4 trillion in stock wealth from July 2008 to March 2009.

Evidence for this audit group: BLS historical CPI-U table · BEA April 2009 advance release · FRED discount-rate series · FRED federal-funds series

Chapter 3.5 · audit group 53

Before: Unemployment in the US had been rising even before the financial crisis. The Fed therefore began reducing interest rates in September 2007, and reduced them steadily until June 2008. The graph below shows the US interest rate between 1950 and 2019, and illustrates the steep drop in the interest rate in response to the financial crisis.

After: Unemployment in the US had been rising even before the financial crisis. The Fed therefore began reducing interest rates in September 2007, and reduced them steadily until June 2008. The graph below shows the US discount-rate series between 1950 and 2019, rather than the federal-funds target rate, and illustrates the steep drop in the interest rate in response to the financial crisis.

Evidence for this audit group: BLS historical CPI-U table · BEA April 2009 advance release · FRED discount-rate series · FRED federal-funds series

Chapter 3.5 · audit group 53

Before: With the interest rate almost at zero in mid-December 2008, the Fed began to use ‘unconventional’ monetary policy.

After: With the federal-funds target range reduced to 0–0.25% in December 2008, the Fed began to use ‘unconventional’ monetary policy.

Evidence for this audit group: BLS historical CPI-U table · BEA April 2009 advance release · FRED discount-rate series · FRED federal-funds series

Chapter 3.5 · audit group 53

Before: As shown in the graph below, the US experienced high inflation in the 1970s. Inflation went from 4.9% in January 1974 to 11.1% in December of that year.

After: The annual inflation graph below illustrates the high inflation of the 1970s. Monthly year-on-year CPI-U figures are a different measure: BLS index levels imply inflation of approximately 9.4% in January 1974 and 12.3% in December 1974. These monthly observations should not be read directly from the annual graph.

Evidence for this audit group: BLS historical CPI-U table · BEA April 2009 advance release · FRED discount-rate series · FRED federal-funds series

Chapter 3.7 · audit group 54

Before: For example, the government began to deregulate the electricity market in 2003, when it created the National Electricity Market of Singapore (NEMS). The NEMS is designed to promote competition and efficiency in the sector, and to encourage private investment. The government then moved to deregulate the retail market for electricity, meaning that by 2014 80% of electricity consumers were able to select their electricity providers. This has led to a decrease in electricity prices of around 10%.

After: For example, the government began to deregulate the electricity market in 2003, when it created the National Electricity Market of Singapore (NEMS). The NEMS is designed to promote competition and efficiency in the sector, and to encourage private investment. The government then moved to deregulate the retail market for electricity. By 2018, EMA reported that over 60,000 business accounts had switched to buying electricity from retailers; these accounts represented 79% of total electricity demand. Demand share is different from the proportion of consumers. This has led to a decrease in electricity prices of around 10%.

Evidence for this audit group: Aichi fisheries report, 17 March 2026 · Canada Revenue Agency historical calculation sheet · EMA annual report 2018–19

Chapter 3.7 · audit group 52

Before: Between 1994 and 1997, the British government privatised British Rail, the UK’s railway system, in order to promote efficiency by creating more competition.

After: Between 1994 and 1997, the British government privatised British Rail, the UK’s railway system, in order to promote efficiency by creating more competition. This is a historical account of the 1994–1997 privatisation. Infrastructure and train operations should be distinguished: Network Rail was reclassified to the public sector from 1 September 2014.

Evidence for this audit group: State Council plan, official National Audit Office copy · European Commission account of the ban · Solar Sister 2022 annual report · Finance Ministry transaction document, 2021 · Ethio Telecom share-offer history · Ethiopian Securities Exchange · German federal government historical targets · UK official Network Rail classification

Chapter 3.7 · audit group 52

Before: In 2010, the German government set a goal of generating 80% of the country’s required energy from renewable sources by 2050. Until 2011, Germany obtained around 25% of its electricity from nuclear energy; however, this began to be phased out in 2011, with eight of the 17 reactors being shut down immediately. Since then, the focus shifted to renewable energy, with government funding allowing for a boom in manufacturing capacity and innovation. For example, between 2000 and 2013, Germany was third in the world in terms of patent filings for renewable energy technology.

After: In 2010, the German government set a goal of generating 80% of the country’s electricity from renewable sources by 2050. Until 2011, Germany obtained around 25% of its electricity from nuclear energy; however, this began to be phased out in 2011, with eight of the 17 reactors being shut down immediately. Since then, the focus shifted to renewable energy, with government funding allowing for a boom in manufacturing capacity and innovation. For example, between 2000 and 2013, Germany was third in the world in terms of patent filings for renewable energy technology.

Chapter 3.7 · audit group 52

Before: In 2015, the Chinese government launched its ‘Made in China 2025’ scheme, which aims to help the country move away from producing cheap, low-quality goods, and towards the production of higher-value products and services. It aims to increase the proportion of high-value goods that are produced domestically to 70% by 2025, focussing on a number of key industries:

After: In 2015, the Chinese government launched its ‘Made in China 2025’ scheme, which aimed to help the country move away from producing cheap, low-quality goods, and towards the production of higher-value products and services. It set a target of achieving domestic supply of 70% of core basic components and key basic materials by 2025. This was a target, not evidence that it was achieved. The scheme focused on a number of key industries; these included:

Chapter 4.6 · audit group 49

Before: Also in March 2018, Trump imposed tariffs of $50 billion on goods from China. This escalated into a trade war.

After: Following announcements in March 2018, the US imposed 25% tariffs on Chinese imports worth US$34 billion on 6 July 2018, followed by a further US$16 billion on 23 August. The US$50 billion total describes the value of covered imports, not tariff revenue. These measures formed part of the escalating trade dispute.

Evidence for this audit group: USTR July notice · USITC 2018 timeline · White House announcement · Congressional Research Service chronology · Original NBER study · AEA explanation · BEA release, 6 March 2019 · CBO January 2020 outlook

Chapter 4.6 · audit group 49

Before: In May 2019, a 5% tariff was placed on all imports from Mexico, although these were averted on the 7th of June 2019.

After: On 30 May 2019, a 5% tariff on imports from Mexico was announced for implementation on 10 June. It was suspended on 7 June before taking effect; it was a threatened tariff, not a tariff imposed in May.

Chapter 4.6 · audit group 49

Before: It is widely agreed that these policies did not have the desired effect. A study published in 2019 found that by December 2019, the tariffs had led to a reduction in aggregate real income of $1.4 billion per month, and cost US consumers around $3.2 billion in added tax. Between when President Trump took office in 2017 and March 2019, the US trade deficit grew by $119 billion to reach $621 billion, the highest it had been since 2008.

After: Amiti, Redding and Weinstein’s 2019 study estimated that, by the end of 2018, the tariffs generated approximately US$3.2 billion in additional tariff payments per month and a US$1.4 billion monthly loss of real income. Separately, the BEA release of 6 March 2019 reported that the annual goods-and-services trade deficit rose from US$552.3 billion in 2017 to US$621.0 billion in 2018, an increase of US$68.7 billion. The release date should not be confused with the period measured, and the deficit change alone does not isolate the effect of tariffs.

Chapter 4.6 · audit group 49

Before: The Congressional Budget Office estimated that the tariffs would reduce real GDP by around 0.5% and raise consumer prices by around 0.5% in 2020, due to their effect on trade flows, prices, and output.

After: In its January 2020 outlook, the Congressional Budget Office projected that the tariffs would reduce the level of real GDP by roughly 0.5% and raise consumer prices by 0.5% in 2020, relative to the comparison without those tariffs. These were model projections, not observed outcomes or a 0.5-percentage-point fall in the GDP growth rate.

Chapter 4.9 · audit group 51

Before: Public transportation does not exist; most people travel by car or bicycle, or on foot. However, there are only around 36 vehicles per 1,000 inhabitants.

After: Public transport services exist, including privately operated shared vehicles, but poor roads, affordability and limited access constrain mobility, as described in the World Bank’s 2018 transport analysis. However, there are only around 36 vehicles per 1,000 inhabitants.

Evidence for this audit group: World Bank transport study · French presidency, 2025 historical statement · HAPHIA summary, February 2022 · Open Budget Survey 2019 · UNDP Human Development Report 2019 · IPU Malawi parliament · World Bank Haiti GDP indicator

Chapter 4.9 · audit group 51

Before: When the country declared independence in 1804, France demanded that the country pay the French government and French slaveholders the modern equivalent of $21 billion in compensation for the slaves and land of Haiti; this debt was paid off in 1947. In 2006, Haiti was added to the World Bank and IMF’s highly indebted poor country initiative; it met the requirements for the completion of this programme in June 2009, which meant that it qualified for the cancellation of its external debt obligations. However, due to various factors, including the fact that the debt initiative only cancelled loans made before 2005 and the 2010 earthquake, it still had around $2,212.8 million in external debt in 2018.

After: Haiti declared independence in 1804. In 1825, France demanded that the country pay the French government and French slaveholders the modern equivalent of $21 billion in compensation for the slaves and land of Haiti; this debt was paid off in 1947. In 2006, Haiti was added to the World Bank and IMF’s highly indebted poor country initiative; it met the requirements for the completion of this programme in June 2009, which meant that it qualified for the cancellation of its external debt obligations. However, due to various factors, including the fact that the debt initiative only cancelled loans made before 2005 and the 2010 earthquake, it still had around $2,212.8 million in external debt in 2018.

Chapter 4.9 · audit group 51

Before: Around 6% of adults suffer from HIV/AIDS. AIDS is the leading cause of death for adolescents and adults, making up 5.8% and 21.6% of deaths respectively.

After: The HAPHIA household survey, conducted from July 2019 to November 2020, estimated HIV prevalence at 1.8% among adults aged 15–64. This is a dated prevalence estimate, not a current count of AIDS cases. AIDS is the leading cause of death for adolescents and adults, making up 5.8% and 21.6% of deaths respectively.

Chapter 4.9 · audit group 51

After: Malawi has a GNI per capita of $320, and ranked 172nd out of 189 countries in the 2019 Human Development Report, using 2018 data. Around 70% of the population live below the poverty line, with an income of below $1.90 a day. In 2015/16, around 40% of the population, or 6.5 million people, relied on food aid.

Chapter 4.9 · audit group 51

Before: The National Assembly, Malawi’s parliament, has 193 seats, with members of parliament being elected directly in local constituencies. The president’s party tends to not have a parliamentary majority, and a large number of members of parliament are independent, without party affiliation. None of the parties have clear political profiles or ideological delineation, making it difficult for for voters to make choices in their own best interests; at the same time, ‘chameleon politics’, where politicians switch parties for career advancement, is common, meaning that voters cannot rely on the party affiliation of their representatives. Furthermore, the Malawi Electoral Commission (MEC) is under-resourced, and often unprepared to carry out elections.

After: In the historical period described here, Malawi’s National Assembly had 193 seats; the legislature elected in 2025 has 229 seats, with members of parliament being elected directly in local constituencies. The president’s party tends to not have a parliamentary majority, and a large number of members of parliament are independent, without party affiliation. None of the parties have clear political profiles or ideological delineation, making it difficult for for voters to make choices in their own best interests; at the same time, ‘chameleon politics’, where politicians switch parties for career advancement, is common, meaning that voters cannot rely on the party affiliation of their representatives. Furthermore, the Malawi Electoral Commission (MEC) is under-resourced, and often unprepared to carry out elections.

Chapter 4.9 · audit group 51

Before: There were accusations of fraud in the 2019 general elections, with photos showing that tabulation sheets had been edited using Tipp-Ex. There are also significant levels of corruption in government. The Anti-Corruption Bureau (ACB) has been accused of being ineffective and itself corrupt, and generally speaking high-level officials are able to act with impunity. The government does not publish its budgets, meaning that the people cannot check the government’s spending, and few high-level officials declare their financial assets while in office.

After: There were accusations of fraud in the 2019 general elections, with photos showing that tabulation sheets had been edited using Tipp-Ex. There are also significant levels of corruption in government. The Anti-Corruption Bureau (ACB) has been accused of being ineffective and itself corrupt, and generally speaking high-level officials are able to act with impunity. Budget transparency was limited: the 2019 Open Budget Survey recorded a published 2018/19 executive budget proposal, so the issue was incomplete transparency rather than an absence of published budgets, and few high-level officials declare their financial assets while in office.

Chapter 4.10 · audit group 52

Before: From 2014, Russia applied tariffs on imported products in the food sector; this led to the cost of food imports dropping from $60 billion in 2014 to $20 billion in 2017, and has allowed Russia to strengthen its global position in the market and to become self-sufficient.

After: From August 2014, Russia imposed an import ban on specified food products from specified countries; this led to the cost of food imports dropping from $60 billion in 2014 to $20 billion in 2017, and has allowed Russia to strengthen its global position in the market and to become self-sufficient.

Chapter 4.10 · audit group 52

Before: By 2022, Solar Sister expect to have reached around seven million people in five different countries, with a community of around 10,000 entrepreneurs, 95% of whom will be female.

After: An earlier Solar Sister target was to reach around seven million people in five countries by 2022, through around 10,000 entrepreneurs, 95% of them women. These were targets. Its 2022 annual report instead reported reaching over 3.7 million people and supporting over 8,500 entrepreneurs by the end of that year; these are organisation-reported outcomes.

Chapter 4.10 · audit group 52

Before: The Ethiopian government is planning to privatise several industries in the near future, as part of a push towards economic liberalisation; although Ethiopia is one of Africa’s fastest-growing economies, it is one of the most state-controlled in the continent.

After: The Ethiopian government announced plans to privatise several industries, as part of a push towards economic liberalisation; although Ethiopia is one of Africa’s fastest-growing economies, it is one of the most state-controlled in the continent.

Chapter 4.10 · audit group 52

Before: The government is planning to sell a 49% stake in Ethio Telecom, the biggest telecoms company in Africa in terms of number of customers in a single country. To promote competition in the telecoms sector, it will also auction spectrum to two other telecoms companies.

After: The government’s June 2021 proposal was to sell a 40% stake in Ethio Telecom, the biggest telecoms company in Africa in terms of number of customers in a single country. To promote competition in the telecoms sector, it also planned to auction spectrum to two other telecoms companies.

Chapter 4.10 · audit group 52