Poverty - Looking Beyond Income

October 15th, 2013
in Op Ed, syndication

by Adanna Chukwuma, INESAD

Despite the progress the world has made towards eliminating extreme poverty, one in five people on the planet are still unable to provide for their most basic needs. A report by the High Level Panel—a 27 member group advising the United Nations on a global development framework beyond the target date for the Millennium Development Goals (MDGs)—on the post-2015 development addresses this unacceptable statistic by placing the eradication of poverty on the global agenda. The question that begs answering: ‘What and whose poverty?

Follow up:

Pause for a moment and picture Aisha: She is a young widow who lives in rural northern Nigeria. She has five children, but cannot afford to send them to school. They live in a thatch-roofed wooden hut, and the closest source of potable water is 50 km away. Aisha earns an average of $2 a day. Would you describe Aisha as poor and why is this important? On the national and global scale, two reasons immediately come to mind. The adopted measure of poverty will guide who is targeted with scarce development resources and how we assess meeting national and global poverty goals. In addition, measures can be powerful drivers of change along the direction of whatever is assessed.


An African Family (Photo credit - PhotosEcosse)

An African Family (Photo credit – PhotosEcosse)

The current common measure of extreme poverty accounts only for people living on less than $ 1.25 a day. This is the average poverty line among the world’s 15 poorest countries, taking purchasing power into consideration. The underlying assumption is that income tells the whole story about poverty and that the average poverty line largely correlates with ability to meet basic needs. However, in his 1999 book Development as Freedom, the Nobel Laureate Amartya Sen powerfully explains that poverty is more broadly seen as the deprivation of the capabilities, that is the lack of opportunities and resources that would enable you to live the life you value. If one subscribes to this argument, but advocates for measuring just income poverty, this suggests that income is the sole means to enabling us experience the life we value, and this irrespective of context. This is of course, false. It appears more logical to focus, in addition to income, on the deprivations themselves, such as lack of access to education, poor health, and gender inequality. The debate currently sways towards a multidimensional view of poverty. I suggest that it should also be measured as such.

The Oxford Poverty and Human Development Initiative (OPHI), led by University of Oxford’s Dr Sabina Alkire, have developed an index to measure poverty by presenting a multidimensional picture of deprivations. This multidimensional poverty index (MPI) assesses both the nature and extent of acute poverty. The MPI captures the experience of deprivation by assessing multiple factors such as ill-health, lack of education, lack of income, poor living standards, disempowerment, poor quality of work and threat from violence. The global MPI has been released annually by the United Nations Development Programme (UNDP) since 2010, and this multidimensional approach to assessing poverty has been adapted for national use in Mexico, Colombia, China, Malaysia, among others.

There are reservations regarding the adoption of the MPI or similar indices as global poverty measures. One example is a May 2013 post published by Development Progress, a four-year research project of the Overseas Development Institute (ODI), a U.K. development think tank. In it, the author, Stephan Klasen, Professor of Economics at the University of Göttingen in Germany, argues that the development goals already present a “dashboard view” of poverty in a multidimensional manner. In his view, separating these goals and measurements of their attainment, has enabled a focus on these individual issues as individually important. For a multidimensional index involving cross-comparisons, there would be differing views on indicators, weights, cut-offs and rules of aggregation. He thus argues that a single measure could lead to a focus on measurement over actually doing something about these issues. In addition, as Erik Thorbecke of Cornell University aptly puts it, “the difficulties inherent in measuring a broadly-based, multi-dimensional concept of poverty impose severe restrictions on the number and the type of attributes that constitute poverty.”

Given the above, would we still want to measure multidimensional poverty? I would say yes, because it gives us new information. Income poverty measures often lead us to overlook a large proportion of poor people. In a February 2013 brief, OPHI researchers show that 1.7 billion people live in multidimensional poverty in the 104 countries studied, compared to 1.4 billion people, in those same countries, estimated to live on $1.25 a day or less. In fact, mismatches of 40 percent to 80 percent are regularly observed between income and multidimensional poverty. I would say yes again, because MPI’s enable us to capture the aspirations of people living in poverty in varying contexts and breaking this index down in terms of its components can help highlight particular areas of need. We do not necessarily have to subscribe to a single global MPI. In a 2011 research paper World Bank Economist Martin Ravallion makes a case for multiple indices that reflect poverty in these contexts. I would say yes finally, because the MPI can inform cost-effective and efficient policies by enabling us to divert resources to the people who need it most, for those aspects of deprivation where we get the biggest and fastest bang for the buck.

A multidimensional measure does not necessarily exclude income poverty measures. Income can be considered as a component in some settings. Alternatively, these two measures can complement each other and give a complete picture of deprivation and poverty. As long as we stick solely to income poverty measures, we are likely to leave many needy people, people like Aisha, out of the reach of programs and policy that would have otherwise presented them with the opportunities and the resources to lead the lives they want.

Original post: http://inesad.edu.bo/developmentroast/2013/10/measuring-poverty-post-2015-looking-beyond-income/

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