Poverty not a one-dollar-per-day statistic

Diana Cariboni writes on the recent annual report by Social Watch, which defines poverty beyond World-Bank-type metrics of a dollar a day. Social Watch maintains that the estimate on the number of poor globally ought to be closer to 2 billion rather than the 1.3 billion the Bank estimates. This has been a controversial issue -- how, precisely, to define poverty globally, when differing social conditions, GNPs, gender equality, political conditions, geography, social welfare programs, environmental health, etc. all play key roles in both the causes and effects of poverty. I haven't read through this entire report (found here), but this article is a good place to start.

The report points out that the one dollar a day indicator does not apply equally well to all regions. The Economic Commission for Latin America and the Caribbean (ECLAC) puts the threshold for extreme poverty at two dollars a day, while in the United States it is estimated at around 12 dollars a day, it notes.

Researchers Sanjay Reddy and Thomas Pogge stated in a 2003 study that the World Bank poverty indicator "does not provide the means to interpret purchasing power between countries or between years".

"Thus it is possible for people who are considered poor in one country to have more products or engage in higher consumption than those not identified as poor in another," they added.

For the team that put together this year's report - Social Watch has been publishing its annual reports since 1996 - the one dollar a day indicator responds to ideological and political motives.

"This indicator has led World Bank researchers to claim that 'globalisation is working,' since it seems to imply that the proportion of people living in poverty in the world as a whole is declining," said Social Watch coordinator Roberto Bissio.

By adopting that indicator, the international community - which decided in 2000 to undertake a frontal assault on hunger and inequality - "takes some distance from the views of...Nobel Prize-winning economist Amartya Sen, who states that poverty must be seen as the deprivation of basic capabilities rather than merely as lowness of incomes," said Bissio, a Uruguayan activist....

The report itself can be found in .pdf form here. You can see Reddy's and Pogge's paper, "How Not to Count the Poor," here (.html or .pdf -- link is .html). Some of Sen's work can be found via the Human Development and Capability Association (of which Helmut, incidentally, is also a member).

Cariboni's article goes on to say:

When it comes to measuring poverty, Social Watch proposes going beyond income and evaluating a country's capabilities of meeting the needs of the population, using new indicators.

The Basic Capabilities Index (CBI) developed by Social Watch is based on three indicators: the proportion of births attended by skilled health personnel, under-five infant mortality, and the proportion of children who stay in school through the fifth grade.

By combining these three indicators that are easily available in all countries into one number, it is possible to compare conditions and reach global conclusions, says Social Watch.

One of these conclusions is that "extreme poverty is not declining and is actually increasing in Africa, Latin America, the Middle East, Eastern Europe and most of Asia, where progress is concentrated in Vietnam, India and China."

The 10 countries that rank lowest on the BCI are Chad, Ethiopia, Rwanda, Guinea-Bissau, Niger, Madagascar, Bangladesh, Burundi, Laos and Pakistan, while the top 10 are Switzerland, Sweden, Portugal, the Netherlands, New Zealand, Norway, Luxembourg, Japan, Iceland and Greece, in descending order.

This also includes a Gender Equity Index, which finds these results:

The countries that earned the highest possible score (12) were Australia, Finland, Iceland, Norway and Sweden, followed by Canada, Colombia, France, Moldova, Latvia, Lithuania, the Russian Federation, the United Kingdom and the United States, which were given a score of 11.

The lowest-ranking countries were Yemen (with a score of 3), C- te d'Ivoire, Egypt, Pakistan and Togo (4), and Algeria, Guatemala, India, Lebanon, Nepal, Saudi Arabia, Sudan, Syria and Turkey (5).