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Rethinking the Measurement of Poverty

David Brady

in Rich Democracies, Poor People: How Politics Explain Poverty

This chapter begins by reviewing the shortcomings of the official U.S. measure of poverty, arguing that it is unreliable and invalid. Then, the chapter reviews major theoretical and methodological ... More

This chapter begins by reviewing the shortcomings of the official U.S. measure of poverty, arguing that it is unreliable and invalid. Then, the chapter reviews major theoretical and methodological advances in poverty measurement and advocates five criteria in the measurement of poverty: (1) to measure comparative historical variation effectively, (2) to be relative rather than absolute, (3) to conceptualize poverty as social exclusion and capability deprivation, (4) to incorporate taxes and transfers, and (5) to integrate the depth of poverty. Overall, the aim is to facilitate the integration of theoretical and methodological advances into the empirical measurement of poverty. Also, criticisms are made of absolute measures of poverty, the measurement of poverty before taxes and transfers, and measures of redistribution. This chapter makes a theoretical argument regarding how poverty should be measured for the study of affluent democracies.Less

Poverty

Fred Campano and Dominick Salvatore

in Income Distribution: Includes CD

This chapter addresses some of the normative issues related to poverty. Both absolute and relative poverty are discussed as well as the more common poverty measures. The connection between the income ... More

This chapter addresses some of the normative issues related to poverty. Both absolute and relative poverty are discussed as well as the more common poverty measures. The connection between the income distribution model and the computation of the poverty measure is illustrated.Less

Raise the Floor

Lane Kenworthy

in Progress for the Poor

One of the principal goals of antipoverty efforts should be to improve the absolute living standards of the least well-off. This book aims to enhance our understanding of how to do that.

Basic Needs and Basic Capabilities

Sabina Alkire

in Valuing Freedoms: Sen's Capability Approach and Poverty Reduction

Each of the four chapters of Part I of the book synthesizes one aspect that must be specified in the operationalization of the capability approach, then proposes a framework for doing so. This fifth ... More

Each of the four chapters of Part I of the book synthesizes one aspect that must be specified in the operationalization of the capability approach, then proposes a framework for doing so. This fifth chapter returns to the issues of whether basic capabilities pertaining to absolute poverty may be identified from without, and whether in poverty reduction activities it is necessary to focus on ‘achieving functionings’ rather than ‘expanding capabilities’. It applies the account of values and decision‐making processes built up in the previous three chapters to the issue of poverty with which economic development is concerned, and asks what, in practice, it means to address absolute poverty within the capability approach—whether and if ‘basic capabilities’ can be specified. It discusses the relativity of these basic capabilities, and the operational implications of focusing on capability rather than functionings, and finally proposes a schematic four‐part operational definition for pursuing capabilities. The focus is on Amartya Sen's work.Less

Raising the Standard: The War on Global Poverty 1

Surjit S. Bhalla

in Debates on the Measurement of Global Poverty

There are two standard approaches to the measurement of poverty: an exclusive survey-based method, and the alternative method of using distribution from the surveys and means from the national ... More

There are two standard approaches to the measurement of poverty: an exclusive survey-based method, and the alternative method of using distribution from the surveys and means from the national accounts data. Over the last two decades, household surveys have shown a disturbing trend in terms of the decreasing amount of survey ‘capture’ of national accounts data. This chapter suggests a third method for measuring poverty; this method imputes the growth rate in national accounts consumption to the mean in the benchmark year 1987. The results using this method show world poverty decline to be considerably larger than that revealed by the ‘official’ World Bank exclusive survey method. This finding forms the basis of the suggestion that the world poverty line needs to be raised in order to reflect the drift from absolute to relative poverty in the developing world. The chapter also emphasizes the lack of any relationship, theoretical or empirical, between initial inequality and future trends in poverty. What matters is the inequality around the poverty line, not overall inequality.Less

On the Welfarist Rationale for Relative Poverty Lines *

Martin Ravallion

in Arguments for a Better World: Essays in Honor of Amartya Sen: Volume I: Ethics, Welfare, and Measurement

This chapter reviews the theory and evidence supporting a relativist approach to poverty measurement. It identifies various sources of welfare interdependence, including the idea of ‘relative ... More

This chapter reviews the theory and evidence supporting a relativist approach to poverty measurement. It identifies various sources of welfare interdependence, including the idea of ‘relative deprivation’ as well as other (positive and negative) welfare effects for poor people of belonging to a better-off group. An economic model combines informal risk-sharing with the idea of a ‘positional good’, and conditions are derived in which the relative deprivation effect dominates, implying a relative poverty measure. The chapter then reviews the problems encountered in testing for relative deprivation effects and presents some micro evidence from Malawi. While the results are consistent with the emphasis given to absolute level of living in development policy discussions, relative deprivation is evident in this poor but unequal country, and it is likely to become more important as the country develops.Less

Deconstructing European Poverty Measures

Richard V. Burkhauser

in Counting the Poor: New Thinking About European Poverty Measures and Lessons for the United States

This chapter considers the implications for the EU of the American experience in measuring poverty. It begins by considering different dimensions within which both the EU and the United States must ... More

This chapter considers the implications for the EU of the American experience in measuring poverty. It begins by considering different dimensions within which both the EU and the United States must make analytical decisions in order to operationalize an income-based measure of poverty. It then turns to the fundamental concepts that the EU's relative poverty measure and the US absolute measure seek to address. It argues that relative poverty rates emerge from a social context where reducing dispersion in income is seen as a primary social goal and that this tradition has been more prevalent in European history. Absolute poverty rates tend to emerge from consideration of the minimum income necessary to live at a subsistence level, which is consistent with the tradition of thinking on this issue in the United States. At a technical level, there are refinements to the US method of measuring poverty that could usefully be drawn from the EU approach.Less

Measuring child poverty and deprivation

David Gordon and Shailen Nandy

in Global Child Poverty and Well-being: Measurement, Concepts, Policy and Action

The chapter describes how relative deprivation theory can be used to produce valid and reliable estimates of the extent and nature of child poverty both within and between countries. A worked example ... More

The chapter describes how relative deprivation theory can be used to produce valid and reliable estimates of the extent and nature of child poverty both within and between countries. A worked example using data from Mexico is provided to show how the methodology can be used to produce scientific estimates of poverty which conform to national standards. The chapter also examines the practical and theoretical problems of adapting three commonly-used poverty measurement methods (World Bank's ‘dollar-a-day’, the Wealth/Asset Index and the recent UNDP's Multidimensional Poverty method) to study the child poverty.Less

Poverty

Paul Spicker

in The Poverty of Nations: A Relational Perspective

Conventional representations of poverty treat it as a condition characterized by a lack of resources. In recent years, those representations have been challenged, as poverty has increasingly come to ... More

Conventional representations of poverty treat it as a condition characterized by a lack of resources. In recent years, those representations have been challenged, as poverty has increasingly come to be understood as a complex, multi-dimensional set of issues. It is not a single, unified idea. A ‘relative’ concept of poverty interprets the problems of poverty as socially constructed, socially defined or associated with inequality; but the idea of relative poverty still treats poverty as state of being. ‘Structural’ concepts of poverty see poverty as the product of social relationships. A relational view of poverty begins from a different conceptual base. Much of the experience of poverty is relational: examples include problems of social exclusion, lack of security, gender relationships and lack of power. The constituent elements of poverty are relational: poverty is closely identified with specific statuses such as class, dependency and lack of entitlement. Command over resources is no less relational: the things that people can buy or use, such as access to land or finance, also depend on the position of other people. Poverty is constituted by such relationships. It is, in and of itself, a relational concept.Less

Dignity, self-respect and real poverty in Europe

Christian Neuhäuser

in Absolute Poverty in Europe: Interdisciplinary Perspectives on a Hidden Phenomenon

Many people seem to believe that absolute poverty is very serious, a violation of human dignity even, while relative poverty is not. Against this assumption, I will defend the claim that both, ... More

Many people seem to believe that absolute poverty is very serious, a violation of human dignity even, while relative poverty is not. Against this assumption, I will defend the claim that both, absolute and relative poverty, are degrading. I will do so by connecting dignity with a certain understanding of self-respect that rests on the ability to take care of oneself in basic matters of life as well as the ability to see and present oneself as a respect-worthy member of one’s society. Absolute poverty threatens the ability to take care of oneself in basic matters of life. Relative poverty threatens the ability to present and see oneself as a respect-worthy member of one’s society. The consequence of this argument is that relative poverty is also serious and real poverty in the sense that relatively poor people lack what is needed to live in dignity. It is closer to absolute poverty then commonly assumed. Relating absolute as well as relative poverty to dignity and self-respect shows that serious poverty is not only a problem for very poor societies in what is called the developing world, but also prevalent in the wealthier regions of Europe.Less

Growth Is Good for the Poor, If Social Policy Passes It On

Lane Kenworthy

in Progress for the Poor

Economic growth has been good for the poor in the world’s rich nations since the 1970s. But not always. Some countries have experienced lengthy periods of economic growth with little or no rise in ... More

Economic growth has been good for the poor in the world’s rich nations since the 1970s. But not always. Some countries have experienced lengthy periods of economic growth with little or no rise in the incomes of low-end households. When growth has trickled down to the poor, government transfers have been the principal conduit. It is in countries that have increased transfers in concert with per capita GDP that the incomes of the poor have tended to rise.Less

Conclusion: responding to the dark reality of absolute poverty in European welfare states

Helmut P. Gaisbauer, Gottfried Schweiger, and Clemens Sedmak

in Absolute Poverty in Europe: Interdisciplinary Perspectives on a Hidden Phenomenon

This chapter states that the hegemonic European relative poverty paradigm necessitates a complementary approach that sheds light on overlooked or neglected individuals and groups in absolute poverty ... More

This chapter states that the hegemonic European relative poverty paradigm necessitates a complementary approach that sheds light on overlooked or neglected individuals and groups in absolute poverty in Europe. It concludes over the lessons learned by preparing ground for such a paradigmatic correlate with an approach that resists the temptation to propose a concise but again necessarily excluding conceptual framework but tries to open leeway for different scholarly debates, disciplinary perspectives and conceptual and practical approaches to why might be termed absolute poverty in Europe. This chapter closes with six perspectives on the way forward to an enhanced and more nuanced scholarly perspective on absolute poverty in an area that understands itself as an anti-thesis to destitution and absolute poverty.Less

Poverty

Nicola Amendola and Fernando Salsano

in Measuring Wellbeing: A History of Italian Living Standards

Some commentators argue that greater economic growth implies less absolute poverty. This is wrong. If the economic development process is accompanied by an increase in inequality, this may prevent ... More

Some commentators argue that greater economic growth implies less absolute poverty. This is wrong. If the economic development process is accompanied by an increase in inequality, this may prevent the benefits of growth reaching the fringes of the population: the poverty and social exclusion indicators could remain the same or even worsen. The estimates presented in this chapter—based on a unique collection of household budgets covering 150 years of Italy’s history—establish a number of unknown “facts” about the incidence and depth of poverty in Italy. This knowledge enables us to evaluate how the economic progress of the country—the spectacular increase in per-capita GDP —has been distributed among the Italians and whether it reached the poorest segment of the population. No country in the world can boast an estimate of the absolute poverty trend along such a long time frame.Less

Absolute poverty in Europe: introduction

Helmut P. Gaisbauer, Gottfried Schweiger, and Clemens Sedmak

in Absolute Poverty in Europe: Interdisciplinary Perspectives on a Hidden Phenomenon

This introduction examines three challenges – methods, concepts, politics – that can help to grasp what could be meant by absolute poverty in Europe and why it is something that deserves attention ... More

This introduction examines three challenges – methods, concepts, politics – that can help to grasp what could be meant by absolute poverty in Europe and why it is something that deserves attention from politics as well as from research. A focus on absolute poverty in Europe, instead of on relative poverty and also shifting the conceptual language in this regard, is important because it challenges what can be called the “relative poverty paradigm” which has emerged as the dominant one in Europe over the past decades.Less

The Absolute Poverty Approach

Gary S. Fields

in Employment and Development: How Work Can Lead From and Into Poverty

“Poverty” has been defined as the inability of an individual or a family to command sufficient resources to satisfy basic needs. The workman who, in Adam Smith’s day, could not appear in public ... More

“Poverty” has been defined as the inability of an individual or a family to command sufficient resources to satisfy basic needs. The workman who, in Adam Smith’s day, could not appear in public wearing a proper linen shirt, was ipso facto poor, not only to Smith but to Amartya Sen who, commenting on Smith’s observation, wrote: “On the space of the capabilities themselves – the direct constituent of the standard of living – escape from poverty has an absolute requirement, to wit, avoidance of this type of shame. Not so much having equal shame as others, but just not being ashamed, absolutely” (Sen 1984, p. 335). Over time, the poverty line needs to be adjusted for changes in the cost of acquiring the basket of basic needs. When the poverty line is adjusted for inflation and only for inflation, the line defines “absolute poverty.”Less

Poverty Research and Measurement

Robert Walker

in The Shame of Poverty

This chapter documents the changing understanding of poverty, charting shifting emphases from absolute to relative measures, from unidimensional to multidimensional ones that embrace, deprivation, ... More

This chapter documents the changing understanding of poverty, charting shifting emphases from absolute to relative measures, from unidimensional to multidimensional ones that embrace, deprivation, social exclusion and mental and social well-being, and from pragmatic to capability theories and rights-based formulations. It also briefly reports the latest statistics on the global extent of poverty. The chapter concludes that the science of poverty measurement has been shaped by political considerations and that few, if any, of the most contentious issues around the conceptualization of poverty have been permanently resolved. Definitions of poverty have been used as weapons in ideological debates and as tools by institutions jockeying for influence while the voices of those with direct experience of poverty, and who arguably know most about it, have seldom been clearly heard. Hence, until now, the shame of poverty has largely been overlooked.Less

Measures of extreme poverty applied in the European Union

Jonathan Bradshaw and Oleksandr Movshuk

in Absolute Poverty in Europe: Interdisciplinary Perspectives on a Hidden Phenomenon

This chapter operationalises and tests out a number of possible measures of extreme poverty applied to the European Union countries, using the analysis of household survey data from EU- Statistics on ... More

This chapter operationalises and tests out a number of possible measures of extreme poverty applied to the European Union countries, using the analysis of household survey data from EU- Statistics on Income and Living Conditions (SILC). It starts by reviewing developments in the conventional measurement of poverty in the EU. Then the concepts of absolute and extreme poverty are discussed. The bulk of the chapter presents the results of an analysis of the poverty rates, poverty gaps and poverty composition of five conceivable measures of extreme poverty. These are: The World Bank $ per day concept; poverty thresholds based on national minimum income schemes – social assistance; a threshold set on the basis of a minimal reference budget standard; a severe deprivation standard; and an overlaps measure based on severe deprivation and low income. The latter is the preferred option.Less