1. Poverty: Elements of Historical Definition 19 th -20 th centuries.

1.1.

Poverty: Poverty:

Elements of Historical DefinitionElements of Historical Definition1919thth -20 -20thth centuries centuries

Oxford English Dictionary

The condition or quality of being poor. The condition of having little or no wealth or material possessions; indigence, destitution, want (in various degrees)

Deficiency, lack, scantiness, dearth, scarcity; smallness of amount. Want of or deficiency in some property, quality, or ingredient; the condition of being poorly supplied with something; (of soil, etc.) the condition of yielding little, unproductiveness. Poor condition of body; leanness or feebleness resulting from insufficient nourishment, or the like. III. 8. attrib. and Comb., as ……… poverty programme U.S., a programme or policy designed to alleviate poverty; poverty trap, a situation in which an earned increase to a low income is offset by the consequent loss of means-tested state benefits;

The OED indicates that in the English language, concepts of “poverty” from the 14th century onward stress the idea of lack, absence, deficiency,

and ALSO more specific framing of “poverty” as

“market income poverty” ====> “having little or no wealth.”

Creating a measure for Creating a measure for “market income poverty”“market income poverty”

Benjamin Rowntree formalized a market-Benjamin Rowntree formalized a market-based measurement definition in the early based measurement definition in the early 1900s, when he established the concept of 1900s, when he established the concept of “poverty line.”“poverty line.”

““Poverty Line” ==> the income level Poverty Line” ==> the income level beneath which a person cannot buy goods beneath which a person cannot buy goods and services that constitute a socially and services that constitute a socially acceptable minimum standard of living. acceptable minimum standard of living.

Poverty lines can be set at any Poverty lines can be set at any level appropriate for the purpose at level appropriate for the purpose at

hand.hand.Higher lines designate higher Higher lines designate higher

“minimum” living standards; lower “minimum” living standards; lower lines, lower minimum standards.lines, lower minimum standards.

The Millennium Development Goal The Millennium Development Goal “line” of $US1/day at 1985 US prices “line” of $US1/day at 1985 US prices put about 1.3 billion people “in put about 1.3 billion people “in poverty” in 1990.poverty” in 1990.

The CONCEPT of a poverty line

depicting a

global minimum standard for a

socially acceptable minimum standard of living for the whole worldcame into existence onlyafter 1945.

This GLOBAL conceptualization of POVERTY as an object of measurement EVERYWHERE is a feature of WORLD ORDER in the later 20th century.

Concept => Measure => PolicyConcept => Measure => Policy

The original CONCEPT of poverty guiding The original CONCEPT of poverty guiding MEASUREMENT and POLICY was nationality.MEASUREMENT and POLICY was nationality.

The modern problem of poverty, hence the The modern problem of poverty, hence the idea of a “poverty line,” appeared FIRST idea of a “poverty line,” appeared FIRST inside territories of national state authority, inside territories of national state authority,

where NATIONAL norms prevailed, where NATIONAL norms prevailed, NATIONAL governments made policy, and NATIONAL governments made policy, and NATIONAL elites and institutions debated NATIONAL elites and institutions debated policy options.policy options.

Conceptualizing Poverty, Conceptualizing Poverty, NationallyNationally

In England, the IRISH famine and mounting URBAN poverty In England, the IRISH famine and mounting URBAN poverty became prominent features of public life, in the 1840s, became prominent features of public life, in the 1840s, when the first modern studies of poverty appeared, one when the first modern studies of poverty appeared, one influential study by Fredrick Engels, Karl Marx’s close influential study by Fredrick Engels, Karl Marx’s close associate. associate.

Modern ideas about socialism appeared at this time, to Modern ideas about socialism appeared at this time, to express the demand that the STATE protect the poor from express the demand that the STATE protect the poor from poverty induced by early industrial capitalism (in England).poverty induced by early industrial capitalism (in England).

The Irish famine followed by INDIAN famines in 1870s The Irish famine followed by INDIAN famines in 1870s brought to light massive VULNERABILITY to catastrophe brought to light massive VULNERABILITY to catastrophe among poor people living under the authority of the among poor people living under the authority of the BRITISH EMPIREBRITISH EMPIRE

From the 1870s, PROTECTING AGAINST FAMINE became From the 1870s, PROTECTING AGAINST FAMINE became official government policy in much of Europe and also in official government policy in much of Europe and also in British India. British India.

Increasing Inequality Made Poverty Increasing Inequality Made Poverty a Pressing Problem a Pressing Problem

As economic growth accelerated under As economic growth accelerated under industrial capitalism, in the industrial capitalism, in the nineteenth century, states took more nineteenth century, states took more interest in “the poverty problem.”interest in “the poverty problem.”

Growing inequality generated Growing inequality generated demands to address poverty, in demands to address poverty, in England and also in British India. England and also in British India.

Nationalism and SocialismNationalism and Socialism

Nationalism in British India and Socialism Nationalism in British India and Socialism in Europe both made strong claims that in Europe both made strong claims that states had the responsibility to protect states had the responsibility to protect the poor from calamity.the poor from calamity.

These claims became political challenges These claims became political challenges to states based on support for English to states based on support for English national business interests promoting national business interests promoting laissez fairelaissez faire market policies. market policies.

Revolution and DepressionRevolution and Depression

The Russian Revolution (1917) The Russian Revolution (1917) provided a real socialist option and provided a real socialist option and model for national movements in model for national movements in Asia, including British India.Asia, including British India.

The Great Depression (1929-1934) The Great Depression (1929-1934) forced states to take responsibility forced states to take responsibility for protecting whole national for protecting whole national populations against severe market populations against severe market fluctuations. fluctuations.

Poverty Line and Cold WarPoverty Line and Cold War

The mid-20The mid-20thth century made concepts of century made concepts of poverty more politicalpoverty more political

First: by introducing First: by introducing TWO conflicting TWO conflicting meanings for the POVERTY LINEmeanings for the POVERTY LINE, one , one associated with capitalism, the other, with associated with capitalism, the other, with socialism.socialism.

Second: by giving INEQUALITY (measured Second: by giving INEQUALITY (measured around the poverty line) two meanings, around the poverty line) two meanings, with the same conflicting associations.with the same conflicting associations.

Poverty Lines & Entitlement in Poverty Lines & Entitlement in Socialism and Welfare StatesSocialism and Welfare States

Under socialism and in welfare states, the Under socialism and in welfare states, the “poverty line” marked an income level “poverty line” marked an income level below which people became below which people became entitled to entitled to STATE provisioningSTATE provisioning of goods and of goods and services that people could not buy.services that people could not buy.

The assumption here is that the state is The assumption here is that the state is at at the very leastthe very least the provider of LAST the provider of LAST RESORT of necessary goods and RESORT of necessary goods and services for citizens.services for citizens.

Market EntitlementMarket Entitlement

By contrast, the market economy by By contrast, the market economy by itself provides no such last resort itself provides no such last resort entitlemententitlement

Amartya Sen defines entitlements of Amartya Sen defines entitlements of three kinds (three kinds (Poverty and FaminesPoverty and Famines)) 1. Self-Production (as on peasant farm)1. Self-Production (as on peasant farm) 2. Personal Property (legal ownership)2. Personal Property (legal ownership) 3. Exchange (purchase for money)3. Exchange (purchase for money)

Shifting ParadigmsShifting Paradigms

After 1970, the socialist and welfare After 1970, the socialist and welfare definitions of poverty entitlement definitions of poverty entitlement became less politically popular in became less politically popular in many states.many states.

This trend accelerated with the This trend accelerated with the dismantling of many socialist dismantling of many socialist regimes and state policies.regimes and state policies.

The NATIONAL STATE became less The NATIONAL STATE became less active as guarantor of active as guarantor of ENTITLEMENTS for the poor.ENTITLEMENTS for the poor.

Meanings of InequalityMeanings of Inequality

INEQUALITY (measured around the poverty INEQUALITY (measured around the poverty line) had also acquired two meanings, with line) had also acquired two meanings, with the same conflicting associations.the same conflicting associations.

In market-based capitalism, it retained its In market-based capitalism, it retained its meaning as meaning as UNEQUAL WEALTH UNEQUAL WEALTH among among disparate individuals.disparate individuals.

Under socialism, it acquired the meaning of Under socialism, it acquired the meaning of UNEQUAL POWERUNEQUAL POWER over the distribution of over the distribution of goods and services among social classes.goods and services among social classes.

UNEQUAL WEALTH among individuals became UNEQUAL WEALTH among individuals became more broadly defined over time. more broadly defined over time. [Kanbur et al, [Kanbur et al, Laderchi et al]Laderchi et al]Poverty = Poverty = income insufficiency (market buying power) income insufficiency (market buying power) lack of access (to goods and services in general lack of access (to goods and services in general

provisioning, not just market, e.g. courts, welfare provisioning, not just market, e.g. courts, welfare programs, family, community) programs, family, community)

lack of assets (ownership, social capital, to use to acquire lack of assets (ownership, social capital, to use to acquire necessities, or to produce, e.g. land, animals, credit) necessities, or to produce, e.g. land, animals, credit)

lack of capacity to do things (abilities), lack of capacity to do things (abilities), lack of entitlement (rights to resources), lack of entitlement (rights to resources),

Hence: insecurity, vulnerability (lack of protection, safety), Hence: insecurity, vulnerability (lack of protection, safety), lack of prospects or opportunities (e.g. education), hence lack of prospects or opportunities (e.g. education), hence poverty outcomes (symptoms) =>lack of health, food, poverty outcomes (symptoms) =>lack of health, food, shelter, hunger, disease, early death, misery, etcshelter, hunger, disease, early death, misery, etc

Implications of viewing poverty as UNEQUAL Implications of viewing poverty as UNEQUAL WEALTH among disparate individualsWEALTH among disparate individuals

The fact that non-poor people have what poor The fact that non-poor people have what poor people do not have is irrelevant to poverty. people do not have is irrelevant to poverty.

Income inequality is just a ranking of Income inequality is just a ranking of attributions, from greater to lesser, from attributions, from greater to lesser, from wealth to poverty.wealth to poverty.

Targeting poverty can mean provisioning, Targeting poverty can mean provisioning, providing, or endowing the poor with means providing, or endowing the poor with means to ends (i.e. money or jobs to buy food) or to ends (i.e. money or jobs to buy food) or with ends directly (e.g. food, housing, shelter, with ends directly (e.g. food, housing, shelter, etc). etc).

By contrastBy contrastThe UNEQUAL POWERThe UNEQUAL POWER concept of INEQUALITY concept of INEQUALITY

makes poverty an outcome of inequality.makes poverty an outcome of inequality.

This approach considers “lack” or “insufficiency” of This approach considers “lack” or “insufficiency” of wealth (by any definition) the outcome of denial;wealth (by any definition) the outcome of denial;

it applies the active verb meaning of “deprivation,” it applies the active verb meaning of “deprivation,”

indicating that things people need are taken away, indicating that things people need are taken away, deprived, deprived,

BECAUSE poor people do not have the power to BECAUSE poor people do not have the power to sustain themselves. sustain themselves.

A lack of empowerment, in this view, is not just a A lack of empowerment, in this view, is not just a lack, but a loss, as in disempowerment or lack, but a loss, as in disempowerment or oppression (an active reduction of prospects and oppression (an active reduction of prospects and freedom of action). freedom of action).

So when we see poverty as UNEQUAL So when we see poverty as UNEQUAL POWER among social classes.POWER among social classes.

The fact that non-poor people have what poor The fact that non-poor people have what poor people do not have is people do not have is very relevantvery relevant to to poverty. poverty.

Wealth inequality represents Wealth inequality represents the production the production of povertyof poverty by the systematic use of power to by the systematic use of power to provide wealth to some groups and not provide wealth to some groups and not others.others.

Targeting poverty can mean removing Targeting poverty can mean removing obstacles to their empowerment, including a obstacles to their empowerment, including a reduction of the power of the non-poor poor reduction of the power of the non-poor poor to accumulate wealth.to accumulate wealth.

Concept Concept <=><=> Measure Measure <=><=> Policy Policy

• The DEFINITION of poverty is thus a The DEFINITION of poverty is thus a complex, changing process.complex, changing process.

• In which concepts and measures In which concepts and measures derive from policy orientations,derive from policy orientations,• which are in turn formed within a which are in turn formed within a

changing world environment,changing world environment,• where people in state, regions, and where people in state, regions, and

localities engage poverty as a problem localities engage poverty as a problem today. today.

2.2.

Poverty in Global FramesPoverty in Global Frames

Since 1945Since 1945

From International to Global PovertyFrom International to Global Poverty

Conflicting meanings of Conflicting meanings of POVERTY POVERTY LINELINE, , ENTITLEMENTENTITLEMENT, and , and INEQUALITYINEQUALITY became part of became part of international policy dispute and international policy dispute and conflict after 1945,conflict after 1945,

When for the first time, THE WHOLE When for the first time, THE WHOLE WORLD of Poverty became an object WORLD of Poverty became an object of policy attention. of policy attention.


Poverty remains fundamentally Poverty remains fundamentally national:national:Concepts, Measures, and Policies differ Concepts, Measures, and Policies differ

from state to state.from state to state.

Statistics remain state products. Statistics remain state products.

State politics still determine state policies.State politics still determine state policies.

But the international system has But the international system has become more and more powerful as become more and more powerful as a context for state activities.a context for state activities.


A World Development Regime came into A World Development Regime came into being after 1945being after 1945

The World Bank, IMF, United Nations The World Bank, IMF, United Nations agencies, GATT/WTO, and major “donor agencies, GATT/WTO, and major “donor countries” set the tone for developmentcountries” set the tone for development

These organizations actively shifted the These organizations actively shifted the POVERTY paradigm away from that of POVERTY paradigm away from that of welfare/ socialism toward that of welfare/ socialism toward that of market/capitalism market/capitalism

Universal Norms, ConceptsUniversal Norms, Concepts

The Universal Declaration of Human Rights The Universal Declaration of Human Rights was the first of many UN documents to was the first of many UN documents to formulate standards, norms, and concepts formulate standards, norms, and concepts for all member states.for all member states.

Member states eventually embraced Member states eventually embraced almost all the world population.almost all the world population.

The Millennium Development Goals are The Millennium Development Goals are now the most GLOBALLY influential now the most GLOBALLY influential statements about POVERTYstatements about POVERTY

Poverty as a global problemPoverty as a global problem

Though policies focus on individual Though policies focus on individual countries, countries, each operates inside a global regimeeach operates inside a global regime composed of states and inter-state composed of states and inter-state

organizations that set the tone for the organizations that set the tone for the dominant operative matrix ofdominant operative matrix of

CONCEPT => MEASURE => POLICYCONCEPT => MEASURE => POLICY

National Poverty, Global InequalityNational Poverty, Global Inequality

The following slides indicate: The following slides indicate: PERCAPITA GDP for each national territory (total PERCAPITA GDP for each national territory (total

product/total population) is the measure of product/total population) is the measure of global inequality;global inequality;

people in poor countries are the global majoritypeople in poor countries are the global majority people in the richest countries, which set the people in the richest countries, which set the

tone for global development, are a small tone for global development, are a small minorityminority

most of the world’s poor live in Asia.most of the world’s poor live in Asia. poverty correlates with life expectancy (among poverty correlates with life expectancy (among

other quality of life variablesother quality of life variables

Wealth inequality is life inequality Wealth inequality is life inequality (Based on 1996 UNICEF data)(Based on 1996 UNICEF data)

3.3.

Measuring PovertyMeasuring PovertyInstitutions and practicesInstitutions and practices

Spatial frames for approaching povertySpatial frames for approaching poverty

Concept Concept <=><=> Measure Measure <=><=> Policy Policy

Policy orientations shape concepts Policy orientations shape concepts and measuresand measures

Concepts and measures influence Concepts and measures influence from policy orientationsfrom policy orientations

Policy orientations take shape inside a Policy orientations take shape inside a changing world environment,changing world environment,

where people in state, regions, and where people in state, regions, and localities engage poverty as a localities engage poverty as a problem.problem.

A Matrix of Interactions in the Politics of A Matrix of Interactions in the Politics of Knowledge About PovertyKnowledge About Poverty

Policy orientations inform policy within Policy orientations inform policy within structured institutional settings structured institutional settings

These settings tend toward self-justification, These settings tend toward self-justification, They structure research, interpretation, They structure research, interpretation,

explanation accordinglyexplanation accordingly Concepts, measures, and analysis rarely Concepts, measures, and analysis rarely

operate free of institutional structures.operate free of institutional structures. We all operate within structured conceptual We all operate within structured conceptual

limitations … that said, we can proceed:limitations … that said, we can proceed:

From definition to measurement: basic problemsFrom definition to measurement: basic problems (Laderchi)(Laderchi)

1.1. The “space” of poverty: The “space” of poverty: what is possible now under current what is possible now under current conditions or what is possible under altered conditions.conditions or what is possible under altered conditions.

2.2. Universality: do definitions translate or move across contexts.Universality: do definitions translate or move across contexts.

3.3. Subjective versus Objective: Values, Judgments, and AgencySubjective versus Objective: Values, Judgments, and Agency

4.4. Setting Poverty Line: Dividing Poor and Non-PoorSetting Poverty Line: Dividing Poor and Non-Poor

5.5. Units of analysis: e.g. person, family, area, populationUnits of analysis: e.g. person, family, area, population

6.6. Multidimensionality: how to evaluate elementsMultidimensionality: how to evaluate elements

7.7. Time: month, year, lifetime, or longerTime: month, year, lifetime, or longer

8.8. Do measures explain?Do measures explain?

Four ApproachesFour Approaches(Laderchi)(Laderchi)

MONETARY Measure MONETARY Measure (MM)(MM) CAPABILITY Approach CAPABILITY Approach (CA)(CA) SOCIAL EXCLUSION SOCIAL EXCLUSION (SE)(SE) PARTICIPATORY METHOD PARTICIPATORY METHOD (PM)(PM)

Definitions and Practical BenefitsDefinitions and Practical Benefits

Monetary MeasureMonetary Measure::

Poverty line cuts ranked Poverty line cuts ranked income groups by income groups by level at which money level at which money income insufficient to income insufficient to acquire necessary acquire necessary goods and services goods and services

ParsimonyParsimony StatisticsStatistics ObjectivityObjectivity TranslatableTranslatable Economic TheoryEconomic Theory Levels of ScaleLevels of Scale


CAPABILITYCAPABILITY

Poverty line Poverty line distinguishes distinguishes people without people without “freedom to live a “freedom to live a valued life,” denied valued life,” denied capacity to “realize capacity to “realize human potential” human potential”

MultidimensionalMultidimensional SubstantiveSubstantive AdaptableAdaptable Non-UtilitarianNon-Utilitarian Ethical Theory + Ethical Theory +

Economics (HDI)Economics (HDI)


SOCIAL EXCLUSIONSOCIAL EXCLUSION

Poverty line separates Poverty line separates groups marginalized groups marginalized and deprived of basic and deprived of basic social assets social assets

RelativityRelativity AgencyAgency Dynamics (process)Dynamics (process) Non-IndividualisticNon-Individualistic Multi-dimensionalMulti-dimensional


PARTICIPATORY PARTICIPATORY APPROACHAPPROACH

Poverty line defined by Poverty line defined by people themselvespeople themselves

SensitiveSensitive ContextualContextual VoiceVoice DemocracyDemocracy RelativityRelativity

Which measure is best?Which measure is best?

Money measure is ubiquitousMoney measure is ubiquitous Its practical benefits attract most supportIts practical benefits attract most support Its theoretical attachment to economic Its theoretical attachment to economic

theory implies explanatory and thus theory implies explanatory and thus predictive power for policy makerspredictive power for policy makers

But diversity of measures better captures But diversity of measures better captures realities of povertyrealities of poverty

andand

“ … “ … large discrepancies in those large discrepancies in those defined as poor according to different defined as poor according to different methods mean that one cannot rely on methods mean that one cannot rely on

the monetary indicators to identify the monetary indicators to identify those in other types of poverty, nor those in other types of poverty, nor

conversely.”conversely.”

-- Laderchi et al. -- Laderchi et al.

Poverty Elements and Orientations Poverty Elements and Orientations

The diversity of definitions emerges The diversity of definitions emerges from entanglements among technical from entanglements among technical analysts, institutions, and “poverty analysts, institutions, and “poverty issues.”issues.”

Definitions of poverty do not emerge Definitions of poverty do not emerge independently of theories, ideologies, independently of theories, ideologies, statistical methods, and analytical statistical methods, and analytical procedure that inform policy, but procedure that inform policy, but rather inside them.rather inside them.

Specialist orientations and prior Specialist orientations and prior commitments generate definitions, commitments generate definitions,

procedures, prioritiesprocedures, priorities

Human RightsHuman Rights EducationEducation EnvironmentEnvironment LawLaw HousingHousing SanitationSanitation Health CareHealth Care

GenderGender NationalismNationalism GlobalizationGlobalization EconomicsEconomics AnthropologyAnthropology Cultural StudiesCultural Studies Etc etcEtc etc

World Bank, World Bank, World Development Report, 2000/1, Attacking World Development Report, 2000/1, Attacking Poverty. Introduction.Poverty. Introduction.

Poverty is multidimensional: it includes inadequate food, shelter, health, education; vulnerability to disease, dislocation, disaster; and often mistreatment by state and society.

“Poor people live without fundamental freedoms of action and choice that the better-off take for granted.” (capabilities, rights?)

“The experience of multiple deprivations is intense and painful.” The Voices of the Poor study, which informs this report, gives a first-hand glimpse of poverty. (participatory approach)

“Of the world’s 6 billion people, 2.8 billion – almost half – live on less than $2 a day, and 1.2 billion – a fifth – live on less than $1 a day, with 44 percent living in South Asia.” (monetary poverty)

“In rich countries,” less than 1 in 100 children die before age 5; while “in the poorest countries,” as many as 20% do. In rich countries, <5% children < 5 yrs old are malnourished; in poor countries, as many as 50% ten times the percentage.

(Inequality, comparison, as definition of poverty)

IFPRI

Suresh BabuInternational Food Policy Research Institute

Poverty Measurement and Analysis

IFPRI

What is Poverty?

Poverty is “welfare level below a reasonable minimum.”Poverty has various dimensions

Income povertySecurity povertyEducation povertyHealth – Nutrition PovertyMultiple deprivation

Poor people’s perception of poverty level

IFPRI

What do we mean by “Poverty”?The primary focus is on individuals or groups suffering from multiple deprivations

Core Poor

Education poor

Health Poor

Security Poor

Income Poor

IFPRI

Poverty Lines and Poverty Measurement

Two Issues in Generating Poverty Estimates

Fixing a poverty line: Identification

Measuring poverty: Aggregation

IFPRI

Methods of Fixing Poverty Lines

Cost-of-basic-needs method (Food-share method)

Cost of basic food needsCost of basic non-food needs

Food-energy methodExpenditure level that meets the food energy requirementBased on calorie-income relationshipsFitting and tracing calorie-expenditure graph

IFPRI

Cost-of-Basic-Needs Method

Total Poverty Line = Z

Z=ZF + ZN

ZF = Food Poverty LineZN=Non-food Poverty Line

IFPRI

How to calculate the Food Poverty Line1. Calculate average household (HH) size2. Find minimum requirement of daily per-capita calories

for WHO3. Find the typical food bundle of the relative poor HH4. Calculate the calories of this food bundle

5. Determine the cost of this food bundle

WHO’s average minimumZF = calorie requirement calories in average food bundle for relatively poor HH

Cost of the average food bundle

*

IFPRI

How to Calculate the Non-food Poverty Line1. Find typical Household (HH) on the food poverty line.2. Calculate the non-food expenditures of the HH.

xF = per capita expenditures on food XN = per capita expenditure on non-foodX = total per capita expenditure

ZN = E {XN|xF= ZF} for the poor (Non-food poverty line is the per capita non-food expenditure level when the

per capita food expenditure level is equal to the food poverty line)

ZN = E {XN|x= ZF} for the ultra (extreme) poor (The non-food poverty line is given by the per capita non-food expenditure

when the total expenditure is equal to the food poverty line. The food poverty line in essence becomes the total poverty line for the ultra poor)

Z = ZF + ZN

IFPRI

Minimum daily caloric requirements by sector and gender Urban Rural

Age categories Male Female Male Female0 to 1 year 820 820 820 820>1 to 2 years 1,150 1,150 1,150 1,150>2 to 3 years 1,350 1,350 1,350 1,350>3 to 5 years 1,550 1,550 1,550 1,550>5 to 7 years 1,850 1,750 1,850 1,750>7 to 10 years 2,100 1,800 2,100 1,800>10 to 12 years 2,200 1,950 2,200 1,950>12 to 14 years 2,400 2,100 2,400 2,100>14 to 16 years 2,600 2,150 2,600 2,150>16 to 18 years 2,850 2,150 2,850 2,150>18 to 30 years 3,150 2,500 3,500 2,750>30 to 60 years 3,050 2,450 3,400 2,750>60 years 2,600 2,200 2,850 2,450

Source: Caloric requirements are from WHO (1985, Tables 42 to 49).Notes: Requirements used are for men weighing 70 kilograms and for women weighing 60 kilograms. Urban

individuals are assumed to need 1.8 times the basal metabolic rate (BMR), while rural individuals are assumed

to need 2.0 times the average BMR. Children under one year of age are assigned the average caloric need of

children either 3–6, 6–9, or 9–12 months old.

IFPRI

Poverty lines and spatial price indexes by region

Region

Food poverty

line

Reference poverty

line

Ultra poverty

line

Relative priceindex

Metropolitan 50.18 129.19 75.36 1.000

Lower urban 45.94 101.72 67.52 0.787

Lower rural 44.29 85.38 64.71 0.661

Upper urban 45.19 67.51 0.785

Upper rural 40.36 53.37 0.641

101.36

82.81

Notes: Poverty lines are monthly, per capita figures in Egyptian pounds. The Metropolitan poverty line is used as abase line to create the relative price index, which is simply the ratio of each region's reference poverty line tothe base line.

IFPRI

Issues in the Poverty Line

Does a poverty line exists?Can it be used & is it well accepted?Are international standards for setting poverty lines accepted in all countries?Can we use the same poverty line throughout a country?Can the nutritional basket underlying the poverty line be derived from surveys?

IFPRI

Measures of Poverty

Incidence of Poverty: poverty rateUse the headcount rate to calculate the poverty rate of the % of population below the poverty line

Depth of Poverty – how far a person is below the poverty linePoverty Gap – aggregation of depth of povertyPoverty Severity – aggregation with weights

IFPRI

Head-count Index of Poverty Proportion of population whose consumption (y) is less than the poverty line Z

Y1, Y2,..…Z, ..…Yn q

H =q/n

H = Head-count index q = number of poor n = size of the populationEg: if n=100; q=50 then H=0.5 or 50%

ProblemsInsensitive to the depth of povertyH will not change when a poor persons welfare changes if he/she remains below the poverty line

IFPRI

Example of the Head-count Index Calculation Income of 4 individuals in a sample:

1,2,3,4

Poverty Line Z = 3.0

H = q/n =3/4 = 0.75 or 75%

+ food energy method * BSS 1991 and BSS 1995 65 IFPRI

Year Sector BBS Graph* Fitting Method +

Ahmed et al. (1991)+

Ravallion & Sen (1994)

Rahman & Haque (1988)

Hossain & Sen (1992)

Sen & Islam (1993)

Muqtada (1986)

1973/1974

Rural

Urban

82.9

81.4 (5.6)

- - 65.3

62.5

71.3

n.a.

n.a.

63.2

55.9

37.8

1981/1982

Rural

Urban

73.8

66.0

71.8

65.3

- 79.1

50.7

65.3

n.a

n.a.

48.4

-

1983/1984

Rural

Urban

57.0

66.0

n.a.

n.a.

53.8

40.9

49.8

39.5

50.0

n.a.

n.a.

42.6

-

1985/1986

Rural

Urban

51.0

56.0

51.6

66.8

45.9

30.8

47.1

29.1

41.3

n.a.

n.a.

30.6

-

1988/1989

Rural

Urban

48.0

44.0

- 49.7

35.9

- 43.8

n.a.

n.a.

33.4

-

1991/1992

Rural

Urban

50.0

46.8

- 52.9

33.6

- - - -

Head-count of Absolute Poverty for Bangladesh

IFPRI

Poverty Gap Index (PGI)Aggregate short-fall of the poor relative to the poverty line Z

Y1, Y2,…, Yq; Yq ZPoorest Least poor

q

PG = 1/n Σ [(Z-Yi)/Z] = mean proportionate

i=1 poverty gap across the whole population (zero gap for the non=poor)

IFPRI

Example of Poverty Gap CalculationIncome of4 individuals in a sample: 1,2,3,4

Poverty line = Z = 3; n=4

PG = [(3-1)/3 + (3-2)/3]/4 = [(2/3) + (1/3)]/4 = [(3/3)/4] = ¼ or 0.25

Poverty gap index does not capture differences in severity of poverty.

IFPRI

Why?Region A = (1,2,3,4)

Region B = (2,2,2,4)

Poverty line = Z = 3HA = 0.75 HB = 0.75

PGA = 0.25 PGB = 0.25 Poverty gap will be unaffected by an income

transfer from a poor person to another poor person who remains below the poverty line

IFPRI

Squared Poverty Gap Index (SPG)Mean of the squared proportionate poverty gapReflects severity of povertySensitive to the distribution among the poor

q

SPG = 1/n Σ [(Z-Yi)/Z]2

i=1 Eg: Region A = (1,2,3,4) Region B = (2,2,2,4) with Z=3 SPGA = 0.14 SPGB = 0.08

Poverty in region A > Poverty in region B

IFPRI

Poverty AnalysisIncome/Consumption Poverty Profile

Correlates poverty with: Gender Age Residential location Ethnic characteristics Income source Employment sources Share of food/ non food consumption Education outcomes Malnutrition outcomes

IFPRI

Qualitative Analysis of Poverty

Role of informal sector?Social analysis of poverty?Institutional analysis of poverty reducing institutionsIntra-household distribution of resources

IFPRI

Use of Qualitative Methods

Subjective meaning of povertyIntra-household dimensions of povertyPoor people’s priorities for actionSocial, political, and cultural factors, gender roles, and traditional beliefsParticipants help in designing household surveysAssess the validity of HHS results at local level

IFPRI

Income or Consumption?

Consumption reflects income as well as past savings, access to credit markets, and seasonal variation in incomeNo records of income or seasonal fluctuationsLarge informal sectorsConsumption data helps in deriving the poverty line

IFPRI

Measuring Income/ Consumption Poverty

Household data availability – toolsMeasurement of income povertyQuantitative analysis toolsQualitative analysis toolsIncome poverty dynamics – tools

IFPRI

Data Needs for Poverty Analysis

National level dataNational accounts – GDP, consumption, savings, investment, imports, exports, etc.Ministry of Finance, Central Statistical AgencyBudgets, price surveys, and data collectionMonthly, quarterly, and yearly

IFPRI

Data Needs for Poverty Analysis cont.

Local level dataConsumer and producer prices, climatic data, availability and use of markets and services CSA, local service providers, regional departmentsPrice and market surveysMonthly, yearly

IFPRI

Data Needs for Poverty Analysis cont.

Household – Individual level dataHousehold income, consumption, employment, assets, production, demography, etc.CSA, sectoral ministries, NGOs, academicsHousehold survey, rapid assessments, monitoring and evaluationYearly, 2-3 years, every 5 years

IFPRI

Data Sources for Poverty Analysis

Administrative dataPopulation CensusHousehold surveys – LSMS, I&E, Labor, DHS, RRAQualitative and Participatory Assessments – ethnographic, village studies, beneficiary assessments, etc.

IFPRI

Types of Household Surveys

Single-topic surveysMulti-topic surveysCensus dataPoverty monitoring surveysTimes series dataPanel data sets

THE ENDTHE END

continuationscontinuations1.1. nutrition and povertynutrition and poverty

2.2. markets and povertymarkets and poverty

HOW to TACKLE POVERTY GLOBALLY

Before the 1970s, the general assumption internationally was that GOVERNMENTS were responsible to PROTECT people against calamitous vulnerability, to provide SAFETY and SUSTENANCE, which would not otherwise be available.

Since then, the IDEA THAT ECONOMIC GROWTH based primarily if not solely on asset allocations in the MARKET could END POVERTY or even curtail it massively has become increasingly popular.

Changing Parameters of Changing Parameters of Policy => Concept => MeasurePolicy => Concept => Measure

THE NATIONAL STATE has thus lost THE NATIONAL STATE has thus lost its formerly presumed role as its formerly presumed role as guarantor of basic welfare guarantor of basic welfare entitlements for the poor. entitlements for the poor.

A global POLICY orientation that A global POLICY orientation that promotes the CONCEPT of promotes the CONCEPT of market-market-drivendriven ECONOMIC GROWTH has ECONOMIC GROWTH has generated new efforts to measure its generated new efforts to measure its impact on wealth and inequality.impact on wealth and inequality.

Global Trends indicate growing Global Trends indicate growing

productivity, wealth, and inequalityproductivity, wealth, and inequality ratios of per capita income between rich and poor ratios of per capita income between rich and poor

countries increased more than six-fold between 1870 and countries increased more than six-fold between 1870 and 1985, as income levels dispersed over an ever-widening 1985, as income levels dispersed over an ever-widening range of variation and rich and poor economies clustered range of variation and rich and poor economies clustered on either end of a broader spectrum. on either end of a broader spectrum.

Today, inequality is increasing. The gap between the Today, inequality is increasing. The gap between the richest and poorest countries is growing. The poorest of richest and poorest countries is growing. The poorest of the poor are an ever-larger proportion of the world the poor are an ever-larger proportion of the world population. population.

Absolute poverty increased in the 1990s most Absolute poverty increased in the 1990s most dramatically in Africa, where an average household now dramatically in Africa, where an average household now consumes 20% less than 25 years ago.consumes 20% less than 25 years ago.

From “Divergence, Big Time,” by Lant Pritchett (a World Bank report)From “Divergence, Big Time,” by Lant Pritchett (a World Bank report)

Markets and PovertyMarkets and Poverty

It appears that in general It appears that in general

Market-based economic development Market-based economic development DOES generate increasing WEALTHDOES generate increasing WEALTH

but also ALLOWS for (if it does not but also ALLOWS for (if it does not generate) increasing inequality,generate) increasing inequality,

Markets Are PragmaticMarkets Are Pragmatic

The following slide indicates that The following slide indicates that investors would tend to avoid risky investors would tend to avoid risky economic environments.economic environments.

Many of which would also be poor.Many of which would also be poor.

Left to itself, therefore, the market would Left to itself, therefore, the market would not define poverty as a problem.not define poverty as a problem.

Strategic Options for Capital Investment

HH: frontiers LH: ideal

HL: ghettos LL: safety net

RISK

High Low

YIELD

High

(proceed with caution) (swarm here)

Low

(don’t go here) (stability option)

As a result of investor logics

non-market mechanisms remain critically important

for our GLOBAL DEVELOPMENT REGIME

to target poverty as a global problem

in each individual country where poverty is prevalent

as measured by global standards.

1. Poverty: Elements of Historical Definition 19 th -20 th centuries.

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