poverty assoc. prof. dr. wongsa laohasiriwong khon kaen university

Poverty

Assoc. Prof. Dr. Wongsa LaohasiriwongKhon Kaen University

Objectives

Participants should be able to:

1. Define poverty.

2. Summarize the three main views of poverty.

3. State four justifications for measuring (analyzing) poverty.

4. Analyze poverty

.

Poverty

• According to the World Bank (2000), “Poverty is pronounced deprivation in well-being.”

• What is meant by well-being ?

Poverty

• The conventional view links well-being primarily to command over commodities,

• So the poor are those who do not have enough income or consumption to put them above some adequate minimum threshold.

• This view sees poverty largely in monetary terms.

Percent of population living on less than $1.25 per day

. UN estimates 2000-2006.

Poverty

• The broadest approach to well-being (and poverty) focuses on the “capability” of the individual to function in society.

• The poor lack key capabilities, and may have inadequate income or education, or be in poor health, or Insecurity, low self confidence, feel powerless, or lack political freedoms.

Amartya Sen (1987),

Why measure poverty?There are four reasons to measure poverty. 1. to keep the poor on the agenda; if poverty wer

e not measured, it would be easy to forget the poor.

2. to be able to identify the poor in order to be able to target interventions that aim to reduce or alleviate poverty.

3. to monitor and evaluate projects and policy interventions that are geared towards the poor.

4. to evaluate the effectiveness of institutions whose goal is to help the poor.

Measuring Poverty

• One approach is to think of one’s well-being as the command over commodities in general,

• so people are better off if they have a greater command over resources.

• the main focus is on whether households or individuals have enough resources to meet their needs.

Measuring (Analysing)Poverty

1.Typically poverty is then measured by comparing an individual’s income or consumption with some defined threshold which they are considered to be poor.

• This is the most conventional view

– poverty is seen largely in monetary terms – - is the starting point for most analyses of po

verty.

Measuring Poverty

2. approach to well-being (and hence poverty) is to ask whether people are able to obtain a specific type of consumption good:

Do they have enough food? shelter? health care? education?.

Measuring Poverty

In this view the analyst would need to go beyond the more traditional monetary measures of poverty:

- Nutritional poverty :children are stunted or wasted;

- Educational poverty : illiterate, formal schooling

- Health poverty: mulnutrition,Life expecancy, IMR

Poverty: multi-dimensional phenomenon

• while higher average incomes will certainly help reduce poverty,

• these may need to be accompanied by measures to empower the poor, or insure them against risks, or to address specific weaknesses (such as inadequate availability of schools or a corrupt health service).

Poverty VS inequality and vulnerability.

• Poverty is related to, but distinct from, inequality and vulnerability.

• Inequality focuses on the distribution of attributes, such as income or consumption, across the whole population.

• In the context of poverty analysis, inequality requires examination if one believes that the welfare of an individual depends on their economic position relative to others in society.

Vulnerability

• Vulnerability is defined as the risk of falling into poverty in the future,

• it is often associated with the effects of “shocks” such as a drought, a drop in farm prices, or a financial crisis.

• Vulnerability is a key dimension of well-being since it affects individuals’ behavior

• in terms of investment, production patterns, and coping strategies) and the perceptions of their own situations.

Measuring and analyzing poverty

• measuring and analyzing income poverty, efforts are needed to measure and study the many other dimensions of poverty.

• Work on non-income dimensions of poverty -- defining indicators where needed, gathering data, assessing trends.

Measuring and analyzing non-income poverty

• includes assembling comparable and high-quality social indicators for

education, health, access to services and infrastructure. risk, vulnerability, social exclusion, access to social capital

Develop Indicators for Poverty

• work is needed to integrate data coming from sample surveys

• with information obtained through more participatory techniques,

• which usually offer rich insights into why programs work or do not.

Develop Indicators for Poverty

• Participatory approaches illustrate the nature of risk and vulnerability,

• how cultural factors and ethnicity interact and affect poverty,

• how social exclusion sets limits to people’s participation in development,

• how barriers to such participation can be removed.

Living standards have improved...

• Living standards have risen dramatically over the last decades.

• The proportion of the developing world's population living in extreme economic poverty — defined as living on less than $1.25 per day (at 2005 prices, adjusted to account for the most recent differences in purchasing power across countries)

— has fallen from 52 percent in 1981 to 26 percent in 2005.

Social indicators

• Substantial improvements in social indicators have accompanied growth in average incomes.

• Infant mortality rates in low- and middle-income countries have fallen from 87 per 1,000 live births in 1980 to 54 in 2006.

• Life expectancy in these countries has risen from 60 to 66 between 1980 and 2006.

Social Indicator

• Adult literacy has also improved, though serious gender disparities remain.

• Male adult literacy (% ages 15 and over) rose from 77% to 86% in low- and middle-income countries between 1990 and 2004.

• Female literacy rates rose from 60% to 74%.

Percentage population undernourished world map

World Food Program, 2006

Life Expectancy 2008 Estimates CIA World Factbook

Life expectancy has been increasing and converging for most of the world. Sub-Saharan Africa has recently seen a decline, partly related to the AIDS epidemic..

Gini Coefficient World CIA Report 2009

The Gini coefficient, a measure of income inequality.

Distribution of family income - Gini index

• This index measures the degree of inequality in the distribution of family income in a country. The index is calculated from the Lorenz curve, in which cumulative family income is plotted against the number of families arranged from the poorest to the richest.

Gini index

• The index is the ratio of (a) the area between a country's Lorenz curve and the 45 degree helping line to (b) the entire triangular area under the 45 degree line. The more nearly equal a country's income distribution, the closer its Lorenz curve to the 45 degree line and the lower its Gini index, e.g., a Scandinavian country with an index of 25.

Gini index

• The more unequal a country's income distribution, the farther its Lorenz curve from the 45 degree line and the higher its Gini index, e.g., a Sub-Saharan country with an index of 50.

Gini index

• If income were distributed with perfect equality, the Lorenz curve would coincide with the 45 degree line and the index would be zero;

• if income were distributed with perfect inequality, the Lorenz curve would coincide with the horizontal axis and the right vertical axis and the index would be 100.

...but wide regional disparities persist.

• While there has been great progress in reducing poverty, it has been far from even, and the global picture masks large regional differences.

• Poverty in East Asia—the world’s poorest region in 1981—has fallen from nearly 80 percent of the population living on less than $1.25 a day in 1981 to 18 percent in 2005 (about 340 million), largely owing to dramatic progress in poverty reduction in China.

• The goal of halving extreme poverty between 1990 and 2015 has already been achieved in East Asia.


• Between 1981 and 2005, the number of people in poverty has fallen by around 600 million in China alone.

• In the developing world outside China, the poverty rate has fallen from 40 to 29 percent over 1981-2005, although the total number of poor has remained unchanged at around 1.2 billion.


• $1.25 a day poverty rate in South Asia has also fallen, from 60 percent to 40 percent over 1981-2005, but this has not been enough to bring down the region’s total number of poor, which stood at about 600 million in 2005.


• In Sub-Saharan Africa, the $1.25 a day poverty rate has shown no sustained decline over the whole period since 1981, starting and ending at around 50 percent.

• In absolute terms, the number of poor people has nearly doubled, from 200 million in 1981 to 380 million in 2005. However, there have been signs of recent progress; the poverty rate fell from 58% in 1996 to 50% in 2005.


• In middle-income countries, the median poverty line for the developing world—$2 a day in 2005 prices—is more relevant.

• By this standard, the poverty rate has fallen since 1981 in Latin America and the Middle East & North Africa, but not enough to reduce the total number of poor.


• The $2 a day poverty rate has risen in Eastern Europe and Central Asia since 1981, though with signs of progress since the late 1990s.


• The uneven progress of development is worrying. The flows of trade and capital that integrate the global economy may bring benefits to millions, but poverty and suffering persist.

Millennium Development Goals (MDGs).

• Responding to such concerns, governments and international development agencies have begun to reexamine the way they operate. In September 2000, 189 countries signed the Millennium Declaration, which led to the adoption of the Millennium Development Goals (MDGs).

MDGs

The MDGs are a set of eight goals for which 18 numerical targets have been set and over 40 quantifiable indicators have been identified.

MDGs

The goals are:• Eradicate extreme poverty and hunger • Achieve universal primary education • Promote gender equality and empower

women • Reduce child mortality • Improve maternal health • Combat HIV/AIDS, malaria, and other disease

s • Ensure environmental sustainability • Develop a global partnership for development.

poverty goal

• The poverty goal calls for reducing by half the proportion of people living on less than a dollar a day by 2015.

• A reduction from 28 percent in 1990 to 12.7 percent in 2015, would reduce the number of extreme poor by 363 million.

poverty assoc. prof. dr. wongsa laohasiriwong khon kaen university

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