Author: David Madden

A few weeks ago I informed readers of the passing away of Terry baker, formerly of the ESRI.  Joe Durkan has asked me to post this personal tribute to Terry.

It was a great shock for me when I heard of Terry Baker’s death.  He was someone I had known for over 40 years, had worked with as his research assistant on the Quarterly Economic Commentary, and had also enjoyed a good friendship.  I met him first when I was interviewed for the job of Research Assistant in the ESRI in January 1969.  We had more points of contact than is probably usual in these circumstances, as we had a shared, but not overlapping  history, in Tanzania – Terry as a civil servant and me as a teacher.  For both of us the experience convinced us that we wanted to stay in economics, and that economics could make a difference.  We differed in approach, as Terry believed in calm persuasion offered over time, while I was ready to do battle.  In the end we were both disappointed to see the mess the country is in now.

 

Terry and the then ESRI Director (Michael Fogarty) encouraged me to go to Nigeria. His judgement about the merits of the move was, as with so much of what he did, inspired.  It was a tough physical environment, but the work was fantastic. When I returned he threw me into the Quarterly straight away.  When I took over the Quarterly finally, Terry could always be relied upon to talk about the forecasts, to offer a different perspective and simply to bounce ideas with.  Writing came easy to him and he would simply rewrite cumbersome sentences without comment.  When I, very reluctantly, decided to leave the Institute in 1983, I persuaded him to go back doing the Quarterly and I think this was a good move for him. 

 

Within the Institute Terry did an extraordinary amount of internal referring.  His comments were incisive, but always took a positive bent.  He also ran a team in the management game, which the ESRI won on many occasions.  Terry well knew the value of the game, as it forced people to put numbers on the usual waffle about company strategy.  This benefited generations of research assistants.  He was also very generous.  When I ran a team separately he kept a place for me on his when I finally bit the dust as he had well anticipated.  I suspect he enjoyed the experience, but he made me feel welcome.

 

We met about twice a year after I left the Institute, most recently last autumn, when we agreed to get together after Christmas.  His later years were sad, following the death of his wife, Pirjo, in 2007.  Sadly, when I returned from a short break after Christmas, I learned of his death.  His death, the more recent death of Mrs. Dempsey (the first ESRI Secretary), and now the death a colleague, Todor Gradev, just knocks the heart out of one.  Terry was a very nice person, and will be missed by those who knew him.  (Joe Durkan).

It was only last night that I heard that Terry Baker, formerly of the ESRI, had died on January 3rd (see http://www.esri.ie/irish_economy/quarterly_economic_commen/ ).  Readers of an older vintage will recall his role as chief contributor and editor of the  Quarterly Economic Commentary in the 1980s.  I worked as a Research Assistant with Terry on a number of these and his modus operandi was to take my numbers, tables and clumsy sentences and magically transform them into the most elegant prose.  A pretty mean table tennis player too, if I remember.  RIP.

A lot of the recent analysis of the CPI figures on this blog has examined  which households (in terms of poor versus rich) have benefitted most from deflation.  The latest CPI figures released today  (http://www.cso.ie/releasespublications/documents/services/current/rsi.pdf) has prompted me to publish some preliminary results from some work I have been doing which looks at this from a slightly different (though complementary) angle to that taken by Jennings, Lyons and Tol in their recent ESRI working paper.  I have mentioned before on this blog the idea of what is known as the distributional characteristic of a good (or aggregate of goods), which essentially summarises the extent to which consumption of the good is concentrated amongst lower income households.  By calculating this measure we can then see which price changes will have the most impact upon poor (or rich) households.  Calculation of the measure requires detailed knowledge of expenditure patterns across households and this data is available in the Household Budget Survey (and thus unfortunately only be calculated for the years the HBS is carried out).  Some analysis I have done looking at the 2004/2005 HBS suggests the following ranking of goods in terms of their distributional characteristic (a high ranking indicates a good whose consumption is more concentrated amongst poorer households):

1.  Tobacco and Fuel/Light (their values are practically identical)

3.  Food

4.  Non-durable Household Goods

5. Miscellaneous Household Goods

6.  Housing (including mortgage interest)

7.  Durable Household Goods

8. Alcohol

9.  Clothing and Footwear

10. Transport

11.  Services

Unfortunately the classification of goods into aggregates in the HBS tables (http://www.cso.ie/releasespublications/documents/housing/hbs.pdf) does not correspond exactly with that in the published CPI but for many goods it is very close, if not exact.

So, taking this approach, what have been the relative distributional effects of recent changes in the CPI (bearing in mind that all households will benefit from price falls)?  The July fall in clothing and footwear will give greater benefit to richer households relative to poorer ones, given that this consumption of this good is relatively more concentrated amongst richer households (this is true for the broad aggregate though of course may not be so for some individual clothing items).  The fall in fuel prices is definitely very good news for poorer households as this category consistently has the highest distributional characteristic (along with tobacco).  Housing is pretty much bang in the middle in the ranking so the effect of falls in mortgage interest payments is fairly neutral.

It should also be borne in mind that these figures are based upon the HBS from about five years ago but having looked at previous HBS the rankings don’t seem to change much.  I will publish the detailed results in a UCD working paper with more information about the methodology etc in the next couple of weeks.