Monday 18 March 2013

Lifting out of poverty

According to press reports, a new index reveals that world poverty is shrinking rapidly and that in twenty years' time the poor may no longer be with us:

"Some of the poorest people in the world are becoming significantly less poor, according to a groundbreaking academic study which has taken a new approach to measuring deprivation. The report, by Oxford University's poverty and human development initiative, predicts that countries among the most impoverished in the world could see acute poverty eradicated within 20 years if they continue at present rates."

Yet the definition and measurement of poverty are complex and contested matters, as a commentator indicates:

"OHPI and Martin Ravallion are both right and wrong in my opinion. A single measure of consumption, as used by the World Bank’s under $1.25/day indicators, does not give a true picture of poverty, and so efforts to assess other dimensions of poverty are important. But OHPI’s approach is far too limited (including for the reasons Ravallion describes). Participatory research demonstrates that poor people are extremely concerned about vulnerability to shocks, violence, discrimination, isolation and other negatives – none of which are revealed in the OPHI work. Poverty must also be seen as relative; having much less income that your peers is a factor too (as even Adam Smith recognized). Hence the MPI statistics are all-too-often counter-intuitive. It just isn’t credible that South Africa and the Palestinian Territories are virtually free of poverty; that Ethiopia has much worse poverty than Central African Republic, Burundi and Sierra Leone; that Nicaragua is poorer than Ghana, Philippines, Uzbekistan or Bolivia; or that the former Soviet Union countries are all relatively free of poverty. If indicators don’t tally with the reality as seen with ones own eyes they aren’t credible. OPHI’s papers on Bhutan, for example, make no reference to the marginalization and poverty of the “Nepalis” (those of Madheshi Nepal origin who have lived for generations in Bhutan but who are mostly denied opportunity and citizenship).

"On the other hand, Ravallion’s confidence in income statistics, and the Living Standards Measurement Surveys (LSMS) on which they are based, is misplaced. This approach has methodological flaws, is subject to serious survey errors, produces data that change little in the face of shocks that clearly have a profound impact on the poor, conceal the prevalence of poverty in wealthy countries and produces results that are often unrealistic. For example, tracking the prevailing rates of malnutrition with LSMS poverty data suggests that in about 5 years time the former will overtake the latter – i.e. there will be millions of people who go to bed hungry, even though they aren’t poor."