Waylaid Dialectic

January 20, 2011

Counting the Poor so that the Poor Count

Filed under: Poverty — terence @ 4:45 pm

Over at the Guardian’s Development Blog Andrew Chambers has an interesting post taking a tilt at the poverty measures associated with MDG 1.

Given that someone’s raised poverty measurement and the MDGs, and seeing as I’m possibly the last person on Earth who actually likes the Goals, I can’t resist the opportunity to clear up a few common misconceptions about poverty measurement and the MDGs. (To be clear, not all of these are in Mr Chambers’ post).

First, to get the MDGs off the hook, it’s worth noting the oft-forgotten point made in a footnote under the official list of MDG indicators: “For monitoring country poverty trends, indicators based on national poverty lines should be used, where available.” So, when we talk about poverty and the MDGs in Middle Income Countries, we’re already meant to be referring to national poverty lines which, ought, one would hope, be higher in those countries than US$1/day PPP.

Second, World Bank global poverty figures, from which the MDG indicator was derived, are quantified in purchasing power parity dollars. Which means that comparisons like — “However, by sifting through rubbish bins she is able to collect enough recyclable material to make more than 200 baht (£4) a day” — aren’t really correct.

When the World Bank talks about a poverty line of $2.50 a day (to use the line most commonly referred to by the Bank these days), what they mean is: living off less each day than you could have purchased with $2.50 in the United States in 2005. Think about it for a moment. Could you live off $2.50 a day in the US? It’s an incredibly low figure. Ludicrously low.

It is also — to make my third point — a more or less arbitrary line, simply calculated by averaging the poverty lines of those developing countries that have poverty lines. It doesn’t bear any direct relation to nutritional or health requirements. On the other hand, given that about half the World’s population live under that line (and many millions of people still live under the $1 a day line), such measures are still useful. They’re still quite good ways of quantifying the amount of acute material deprivation in the World. The mistake people make, I think, is to assume that once someone’s over that $2.50 a day bump they’re out of poverty. As Chambers’ post illustrates, this isn’t the case. In terms of an improvement Lant Pritchett makes a convincing case for a spectrum of poverty lines. With poverty persisting until at least $10 a day. This is a much better way to think about poverty — something that people move out in increments; not something they depart in one big hop.

Fourth, where possible (in about 2/3rds of their data), the World Bank use consumption data in their poverty figures. Which means that those global poverty numbers you hear already take into account what people ‘earn’ outside the cash economy.

Fifth, where possible, the World Bank uses data in their global poverty figures. Where it’s not possible they impute the numbers. Also, poverty data, even thought it might seem otherwise, is not super reliable, with final figures dependent on all manner of collection issues and calculations. Some people argue that global poverty figures ought to be much higher than those the World Bank produces, other that they ought to be much lower.

So what does all this mean at the end of the day? Basically, that the art of poverty measurement is very much an art. Final figures hinge on methodological and philosophical choices (more on this in my next post). But even given these uncertainties, once you understand the basics, one point becomes inescapable: a tragically high portion of our planet’s population live off remarkably little. So little that, as crazy as it may seem, a $1/day PPP purchasing power parity poverty line remains a relevant, albeit insufficient, measure for quantifying global poverty.


August 6, 2010

Links – nerd war!

Friday links and we start with a nerd war – at Duncan Green’s blog Martin Ravallion and Sabina Alkire debate the merits of the new multi-dimensional poverty index. The digested debate: Ravallion’s key point is that the index, like the Human Development and Human Poverty Index before it, is conceptually flawed because it tries to ‘manually’ aggregate different features of poverty into a single number and, in doing so, hinges on value-judgments about how to weight respective elements of human development. Alkire’s key points: World Bank poverty measures miss much of what matters in life – state provision of public goods and services for example. And, when disaggregated, her index provides key information about the constituent components of poverty, potentially allowing targeted programmes. They’re both right. And lucky for us it’s not an either/or – we can draw on both measures of poverty. Which I will in the future – the MPI is a good new initiative.

Sticking with nerd-wars (by the way, I’m not using nerd pejoratively here – I’m one of them) enjoy this – an excellent debate between a Utilitarian and a proponent of Natural Law philosophy (hint you can download an MP3 podcast of the talk from the MP3 button under the TV ‘screen’). I can see the appeal of Natural Law – particularly in the belief that various aspects of human flourishing (love, friendship, health) should be valued for what they are, rather than for what they contribute to aggregate happiness or welfare (the Utilitarian position); but if you really accept that these things are incommensurate (as the Natural Law proponent does), and if you really believe their value is not instrumental to something else, how do you mediate in situations where trade-offs need to be made. I remain a Utilitarian (albeit a conflicted one).

Which may explain why, when I do let my hair down, I tend to dance like this guy (h/t Duncan Green). But hey, as the video shows, that doesn’t mean us nerd-dancers can’t be leaders. Although apparently it all hinges on the first follower…

On to aid, the Economist and ODI both have interesting features on Brazil’s nascent aid programme. As with all donors, there’s an element of international diplomacy which at least part motivates their giving, so any Brazilians out there might want to read Laura Freschi’s excellent post at Aidwatch summing up recent studies on whether giving aid helps win hearts and minds in aid recipient countries. It’s worth noting that the studies Freschi reports on are mostly special cases (US aid to Pakistan for example, and aid in Afghanistan – in both cases positive impacts may well be offset by negative perceptions of military actions, I think).

Meanwhile, on the home front George Monbiot riles against the lunacy of those who oppose speed cameras. Hear, hear.

And finally, Paul Krugman offers a handy explanation of the perils of deflation.

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