- Definition is also a problem.
Why is it difficult to define poverty? Well one may define poverty as the lack of a certain amount of money per individual or household as the case may be. Or one may define poverty in terms of the specific resources and resource-benefits that a certain level of money can buy. Famous arguments in this line were made by the economist Amartya Sen, who – to say it rather simplistically – said that the relevant question was to analyse what money could be and what specific deprivations the lack of money was causing. In other words, money should be thought of as the means to an end, where the end could be a number of different things most of us would acknowledge are important components of welfare, for example, health, and civil and political liberties.
(Sen’s book ‘Inequality Reexamined’ is one of my favourite reads, so if you haven’t read it, look through. It’s very interesting).
Framing the Question
The reason it is important to frame the question in this alternate way is that it changes what exactly one is trying to provide to poor households. The focus shifts to the specific goods and services that are being under-provided in certain regions or for certain families. This might make for more efficiency since the same services could be provided in innovative, low-cost ways that do not require raising the income level of 100% of families to some pre-determined level.
- Focusing on end goals rather than wealth may also serve the heighten the fact that even higher income may not serve to give a certain section of society access to certain resources.
This is especially true of a very class-system driven society where certain privileges, liberties, rights and freedoms come with being the member of a caste, class or social group even if individuals outside the group have more money. Maybe beyond a minimal level of income (which ensures access to basic resources such as food, shelter etc) we care more about equality of political voice rather than economic equality. Maybe having everyone reach a higher income level will still keep a significant number of people politically powerless, and maybe economic priviliges won’t automatically accord everyone equal political rights.
I won’t go into much detail here, but I would like to point out an excellent resource that people might be interest in glancing at. It’s the publication called Pathways by the Stanford Center on Poverty and Inequality, and the issue in question is the Fall 2011 issue devoted mainly to poverty measurement. There is a new measurement of poverty being tried out at the national level in the US that’s very interesting – the Supplemental Poverty Measure (SPM).
It’s more complex but more telling than the previous measure because it is much more detailed. The basic necessities it takes into consideration when constructing its measure are food, shelter, utilities and clothing. After a detailed calculation of all the assets the family has to help it procure these basic necessities, the measure then subtracts the additional expenses the family incurs. These expenses include out-of-pocket healthcare payments since such payments reduce the availability of resources used to buy the basic goods.
- Of course, poverty is relative and poverty thresholds must be context specific.
- Pennies go farther in a small town than in a big city, and people may be able to buy higher standards of living for the same price, in one location versus another.
- This is important (albeit very expensive to do, especially if one wants a dynamic, over-time measure of poverty) to do to prevent frustratingly mismatched welfare needs and welfare measures.
Governance bodies in New York City have taken note of this, and are using city specific measures of poverty. In NYC for example, housing is one of the biggest expenses. I believe that on average, it’s almost twice as expensive as in other cities in the US. So a household spends a larger chunk of its income on housing than on other items, in NYC vis-à-vis other cities. This is important to know and important to measure if one is to strategically target housing as a mode of poverty alleviation.
Here is a 2008 report called “The CEO Poverty Measure”, a working paper by the NYC Center for Economic Opportunity. According to this report, the poverty threshold calculated for the US as a whole comes out to be $20,444 but when adjusted for the extremely high living costs in NYC, comes out to be $26,138.
This is a significant difference.
- Question : Why is it important to know?
- Answer : Because otherwise one would only target households with income levels less than $20,444 with welfare measure while failing to realise that households with incomes between $20,444 and $26,138 may continue to be deprived of resources that are fundamental to achieving well-being.