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Poverty Times #1

How can we estimate poverty?

There are various ways of estimating poverty: monetary poverty is expressed in (absolute or relative) economic terms; human poverty relies on social indicators; social exclusion broadly implies marginalization (involving political considerations). By Blandine Destremau

There are six billion people in the world: 2.9 billion of them live on less that two dollars a day and 1.2 billion live on less than one dollar a day. In Egypt, 3.1 percent of the population survive on less than a dollar a day, and 52.7 percent live on less than two dollars (1). How can you compare a dollar’s worth of goods worldwide? And how can you estimate poverty, with its broad economic, social and political dimensions?

Absolute monetary poverty indicators: Estimating poverty in terms of purchasing power is one of the most common measures of poverty. Thresholds, called poverty lines, are built on the pricing of a basket of goods that would satisfy a person’s basic nutrition needs (1). These are converted into purchasing power parity units* to secure international comparability. A headcount poverty index can then be calculated, showing the percentage of poor people in the total population. The muchpublicized headcount poverty index is then highly dependent on the level of the poverty line (the higher the poverty line, the larger the number of the poor).

Relative monetary poverty indicators: Absolute poverty measurements give no indication as to the relative position of the poor. Not only are the poor of the poorest countries generally poorer than those living in richer countries, but their position in society also depends on income distribution inequalities. Relative poverty indicators allow for interesting
international comparisons. For example, the average income in the richest 20 countries is 37 times higher than that of the poorest 20; in Brazil, the income of the poorest ten percent of the population is only 0.9 percent of the total national income, while the richest ten percent get 47.6 percent. Relative monetary poverty indicators may help us understand the subjective dimension of poverty: it may be less tolerable to be poor when there is plenty of wealth on display at the top levels of society than when there are no visible opportunities of upward mobility.

Social indicators and human poverty: Monetary poverty indicators, represented by income or consumption, do not express the true dimensions of destitution. For example, less than one percent of children do not reach their fifth birthday in rich countries, but in poorer countries the number reaches 20 percent. The UNDP developed a multidimensional poverty indicator, the Human development Index, to account for social factors such as health, nutrition, life expectancy, access to water, school attendance and literacy. Social indicators may be used as complementary data to monetary poverty estimates, or they can form an approach in their own right.

Poverty as a denial of human rights: Human poverty means that people cannot lead a secure existence, make use of opportunities, have choices, freedom, dignity and self-respect, or have access to resources needed for a decent standard of living. In western industrialised countries social exclusion, the cumulative dynamics (end result) of marginalisation, means denial of human rights (citizenship rights). The human poverty approach, seldom used in the developing world, allows for a better analysis of the political dimension of poverty, conspicuously absent in oversimplified monetary measurements.

Blandine Destremau
URBAMA, Centre National de la Recherche Scientifique