Bittle and Lane on Charity: An Uncharitable Comment
T HE recent article by Bittle and Lane on charities' contains errors surprisingly naive in any article published in the Economic History Review. Bittle and Lane fashion a constant-price series of the values of charitable donations by using the composite price index developed by Phelps Brown and Hopkins to deflate the current price series of W. K. Jordan. There is nothing objectionable in this procedure, though the extremely simple division sums which are all that is involved scarcely merit eight precious pages of the Review, including one graph and four tables. The nazvetd emerges when the authors seek to justify the use of this particular price index. They note that Jordan himself "remained unconvinced that a meaningful index of inflation had been, or could be, constructed with which accurately to deflate his data", and go on to assert that Jordan was convinced that "it could have only local applicability as 'the prices and values in one English region in say the late sixteenth century bore almost no relation to prices in another.' " Aware of these views, Messrs Bittle and Lane calculate the coefficients of correlation between several pairs of series: first, between the Phelps Brown and Hopkins index and Jordan's estimates of charitable benefactions for all England, and for four regional subdivisions, and then secondly between the benefactions totals themselves for these various geographical subdivisions-in all cases for decade intervals over the period I 480-90 to i65 i-6o. The authors comment on this procedure: "The assumption underlying this approach was that a high correlation with these totals would indicate that, contrary to Jordan's assertion, such a scale could be meaningfully applied. A further assumption was that, should the various district totals likewise correlate highly with each other, the 'regional differences' proposed as a further deterrent to such an approach might be disregarded." These "assumptions" are sheer nonsense. Both the total money value of the benefactions and the level of prices rose through time, so that one should expect, and in fact finds, a positive correlation between them. Suppose for the sake of argument that the undeflated total of benefactions had in fact followed a declining trend; in that event one would have expected a negative correlation between it and the Phelps Brown-Hopkins index over the same period. Should one then have concluded that the price index is a bad and inappropriate deflator to use? The answer of course is not at all: it would be just as good, or as bad, as in the first case, the degree of statistical relationship between the price index and the money value of the benefactions over time being totally irrelevant to the question of the suitability of the former as a deflator.