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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

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.

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

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

Enhancing the fight against child poverty in the European Union: a benchmarking exercise

Isabelle Maquet-Engsted

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

Chapter 9 describes the indicators and the analytical framework used to analyse child poverty in the European Union. Comparative analysis is used to identify the main drivers of monetary poverty ... More

Chapter 9 describes the indicators and the analytical framework used to analyse child poverty in the European Union. Comparative analysis is used to identify the main drivers of monetary poverty among families with children in the rich EU countries. It reveals that different factors prevail across countries of the Europe Union depending on how well parents are integrated in the labour market, and how much support is available to families with children. The indicators used are those that have been developed and agreed upon in support of the EU policy coordination process in the field of social inclusion policy. The chapter discussed the potential value added of politically agreed indicators and comparative analytical frameworks for evidenced based policy making.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

New Patterns in China’s Rural Poverty

Shi Li, Peng Zhan, and Yangyang Shen

in Changing Trends in China's Inequality: Evidence, Analysis, and Prospects

The purpose of this chapter is to understand the structure of rural poverty in China. On the basis of CHIP data for 1988, 1995, 2002, 2007, and 2013, the authors analyze poverty trends and the ... More

The purpose of this chapter is to understand the structure of rural poverty in China. On the basis of CHIP data for 1988, 1995, 2002, 2007, and 2013, the authors analyze poverty trends and the structure of poverty, comparing the recent period to earlier periods. Factors that raise household income, factors that reduce the need for household expenditures, and other factors related to China’s poverty alleviation goals are considered. The analysis finds that although the absolute poverty rate continued to decline, the poverty gap and relative poverty increased after 2007. An analysis of the reasons for poverty reveals some positive effects of the rural social welfare policies; however, health problems among the elderly, among children below the age of 15, and among disabled adults continued to be a key source of 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

Unequal Growth: Long-Term Trends in Household Incomes and Poverty in Urban China

Björn Gustafsson and Sai Ding

in Changing Trends in China's Inequality: Evidence, Analysis, and Prospects

This chapter investigates inequality and poverty among formal urban residents in China by using CHIP data from 1988 through 2013, with a focus on the period from 2007 to 2013. It begins with an ... More

This chapter investigates inequality and poverty among formal urban residents in China by using CHIP data from 1988 through 2013, with a focus on the period from 2007 to 2013. It begins with an overview of changes in the urban economy and relevant public policies. Analysis of the data reveals a slowdown but still fairly rapid growth of urban household incomes from 2007 to 2013, as compared to earlier periods. This slowdown reflects slow growth in urban wage income, the main component of formal urban household incomes. From 2007 to 2013 growth in urban incomes was mainly due to increases in pension income and in the imputed rent from owner-occupied housing. Inequality among formal urban residents increased from 1988 to 1995, but thereafter it did not follow a clear trend. From 2007 to 2013, however, inequality increased slightly. Estimates of urban poverty show ongoing large declines in absolute poverty but an increase in relative poverty.Less

Sweden: Child Poverty during Two Recessions

Jan O. Jonsson and Carina Mood

in Children of Austerity: Impact of the Great Recession on Child Poverty in Rich Countries

This chapter looks at child poverty trends in Sweden across two recessions, the first (severe) 1991–6, and the second (hardly noticeable) 2008–10, using a number of measures. Absolute (bread-line) ... More

This chapter looks at child poverty trends in Sweden across two recessions, the first (severe) 1991–6, and the second (hardly noticeable) 2008–10, using a number of measures. Absolute (bread-line) household income poverty and economic deprivation surged, with some lag, during the first recession, but shrunk steadily as the macro-economy improved up until around 2006, after which there is no trend but temporary fluctuations. Relative income poverty fell somewhat during the earlier recession but has grown since the mid-1990s, mainly because of a more precarious situation for one-parent families and non-employed parents (often immigrants). In a rare but theoretically important step, child poverty is also measured by young people’s own reports, showing few trends between 2000 and 2011. While material conditions improved somewhat, relative poverty did not change, in stark contrast to household relative poverty—perhaps because poor parents distribute more economic resources to their children during hard times.Less

USA Child Poverty: The Impact of the Great Recession

Christopher Wimer and Timothy M. Smeeding

in Children of Austerity: Impact of the Great Recession on Child Poverty in Rich Countries

The Great Recession (GR) was the most dramatic economic downturn the USA has experienced in more than six decades. But against this backdrop, the USA actually made some limited progress against child ... More

The Great Recession (GR) was the most dramatic economic downturn the USA has experienced in more than six decades. But against this backdrop, the USA actually made some limited progress against child poverty over the Great Recession when one considers the new US Supplemental Poverty Measure which lies at about 40 per cent of median income. The main reason was the growth of a well-targeted near cash safety net, combined with earnings enhancements in the form of refundable tax credits. These enhancements helped the working poor, but not many parents of children who could not find jobs. However these improvements had little if any effect on relative poverty counted at a European or cross-national relative poverty standard set at 60 per cent of median income. Greater progress against child poverty in the US requires a continued strong job market coupled with a child allowance.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

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

Socioeconomic origins of parents and child poverty

Jonathan Bradshaw, Emese Mayhew, Shirley Dex, Heather Joshi, and Kelly Ward

in Children of the 21st century: From birth to nine months

Probably one of the single most important elements of a child's origins that affect their development and subsequent life chances is the family's economic circumstances. This chapter reviews the ... More

Probably one of the single most important elements of a child's origins that affect their development and subsequent life chances is the family's economic circumstances. This chapter reviews the socioeconomic human capital of parents of Millennium Cohort babies and considers families' financial resources. It examines the extent of families living in poverty at the start of the cohort child's life and the family characteristics associated with living in poverty are described. Measuring poverty involves discussing how to assess poverty using income and relative poverty measures available in the data. The chapter also includes an examination of how families feel their financial circumstances changed over the time of having this birth. Finally, it considers the contribution to family resources and relationships of wider kin, in the form of grandparents who are part of babies' social, relationship and financial capitals at the start of their lives.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