POLICY-RELEVANT MEASUREMENT OF POVERTY IN LOW, MIDDLE AND HIGH INCOME COUNTRIES

David Gordon and Shailen Nandy

Introduction

The governments of all countries in the world have repeatedly made commitments to eradicate poverty during the twenty-first century. For example, at the 1995 World Social Summit, the leaders of 117 countries agreed on The Copenhagen Declaration and Programme of Action, which emphasized that the eradication of poverty 'was an ethical, social, political and economic imperative of humankind' (UN 1995). Countries subsequently committed themselves to implementing both national and international policies to substantially reduce overall poverty and eradicate absolute poverty during the twenty-first century (UN DESA 2005).

In September 2000, the governments of 189 countries adopted the United Nations Millennium Declaration resolving to 'spare no effort to free our fellow men, women and children from the abject and dehumanizing conditions of extreme poverty' (UN 2000). In December 2007, the United Nations General Assembly proclaimed the Second United Nations Decade for the Eradication of Poverty (2008–2017) and reiterated 'that eradicating poverty is the greatest global challenge facing the world today' (UN 2008).

Thus, poverty reduction is a key concern across countries. An essential task in achieving this goal is first to understand the extent of poverty – that is, to define and measure it. Accurate and precise measurement is needed in all countries (Low, Middle and High Income) to determine whether or not anti-poverty policies are effectively and efficiently eradicating poverty and deprivation. It will be very difficult, impossible even, to determine whether poverty has been eradicated globally if different definitions and measures of poverty are used in different counties. This chapter discusses some potential methods for the robust and rigorous measurement of poverty in all countries irrespective of their level of economic development.

It is not possible to produce valid and reliable measures of anything (for example, speed, mass, evolution or poverty) without a theory and a definition. The next section provides a conceptual framework for measuring poverty in all countries, irrespective of their level of development. This is followed by examples of how similar methods can be used to meaningfully assess poverty in Low, Middle and High Income Countries.

Conceptual framework It is still fashionable among some economists to repeat the old claim that: 'For deciding who is poor, prayers are more relevant than calculation, because poverty, like beauty, lies in the eye of the beholder. [...] Poverty is a value judgement; it is not something that one can verify or demonstrate' (Orshansky 1969: 37).

Orshansky defended the choices she made when developing the US poverty line by arguing, somewhat illogically, that 'if it is not possible to state unequivocally "how much is enough", it should be possible to assert with confidence how much, on average, is too little' (Orshansky 1965: 17). However, poverty is a social fact and all cultures have a concept of poverty (Gordon and Spicker 1999), which is a difficult finding to explain if poverty is solely in the 'eye of the beholder'. In Low Income Countries (LICs), poverty is often a murderous social fact which results in the deaths of millions of children (Black et al. 2003, 2010). As the World Health Organization points out, 'The world's biggest killer and greatest cause of ill health and suffering across the globe is listed almost at the end of the International Classification of Diseases. It is given code Z59.5 – extreme poverty' (WHO 1995: 1).

Poverty does not kill children as frequently in Middle and High Income Countries, although, as mentioned in the Introduction, Middle Income Countries (MICs) still harbour a large number of extremely poor people. Even in High Income Countries (HICs) with functioning social security systems and welfare states, poverty still results in premature death.

Table 1.1 illustrates how life expectancy, even in an HIC like the UK, can vary to the extent that some people are worse off than the average person in some MICs. The table shows that life expectancy at birth for men in the Carlton area of Glasgow (in the UK) is only 54 years, which is lower than the average life expectancy for men in MICs like India, the Philippines and Mexico. However, only a few kilometres walk north-east of Carlton, in the wealthier area of Lenzie, life expectancy for men is 82 years – higher than the average male life expectancy in any country in the world. In a short walk across a city in one of the richest countries in the world, one travels from one area to another where boys have a twenty-eight-year difference in life expectancy. The underlying cause of this difference is poverty, not differences in health-related behaviours (Galobardes et al. 2004, 2008; Davey Smith 2007; Commission on Social Determinants of Health 2008; Spencer 2008; Thomas et al. 2010). These deaths are cruel and measurable social facts; they are not in the 'eye of the beholder' and neither is their underlying cause – poverty.

Fortunately, since the work of Orshansky in the 1960s, significant theoretical advances have been made in poverty research. In particular, the research of Peter Townsend resulted in a paradigm shift in poverty measurement methodology (Walker et al. 2010). The first paragraph in his seminal work Poverty in the United Kingdom is arguably one of the most important ever written about poverty. It is now so well known that many researchers and students of social policy can recite it from memory:

Poverty can be defined objectively and applied consistently only in terms of the concept of relative deprivation [...] The term is understood objectively rather than subjectively. Individuals, families and groups in the population can be said to be in poverty when they lack the resources to obtain the types of diet, participate in the activities and have the living...