Poverty issues
In continuation of the topic of global overview more detailed analysis of poverty trends: "There is considerable debate around global trends in poverty and inequality (Ravallion, 2003). For example, there is disagreement about the amount of decline, and a few argue that the data are insufficient to determine whether poverty levels have changed (Reddy and Pogge, 2003).
As described above, according to World Bank estimates, there has been an increase in the number of people in poverty in Europe, Central Asia, Latin America and Africa. In contrast, East and South Asia has seen a decline in the number of people in poverty (using $1 a day). Also,the percent of people in poverty has also increased in Europe and Central Asia, and the Middle East and Africa, while the percent in poverty declined in other areas.
On the other hand, Bhalla (2002) argues that there were large declines in poverty rates, from 37% in 1985 to 13% in 2000. Similarly, Sala-i-Martin (2002 a, b) estimates that poverty rates and counts declined sharply over the last several decades. For example, the one-dollar-a-day poverty rate declined from 20% in 1970 to 5% in 1998 (Sala-i-Martin, 2002 a). Bhalla's and Sala-i-Martin's estimates of recent poverty are much lower than the World Bank estimate, of 23% in 1999.
Many researchers discuss the apparent contradictions in counting world poverty rates and trends. For example, Ravallion (2003) argues that the differences are due to measurement issues, e.g., how poverty is defined, use of absolute versus relative poverty, what levels are used to define poverty, using household or person as the unit of measure and so forth. For example, poverty could be measured using a relative poverty indicator, in which the 'standard' for poverty increases as a country's income increases, or using an absolute poverty indicator, such as "what poverty means in poor countries", or $1 a day (Ravallion, 2003). Ravallion (2003) indicates that any measure is somewhat arbitrary, but if the measure is used consistently, it can still be used to measure change over time.
Ravallion (2003) also points out that poverty data are often questionnaire based, and there are a number of problems in using surveys. For example, questionnaires from different countries may use different definitions (e.g., using income versus consumption to measure well-being) or may ask about different time periods (e.g., last year, last month, etc). All of these variations may result in finding different levels of poverty. Others may also use national accounts to estimate poverty, but these also have problems, for example from higher income people underreporting their income (Ravallion, 2003). Bhalla (2002) compares estimates using survey data and national accounts (table 9.1) and shows that the two methods give similar estimates from 1950 to 1980 but substantial differents in 2000, with national accounts showing much lower percents and counts.
Reddy and Pogge (2003) criticize the World Bank estimates, and argue for a better measure. According to Reddy and Pogge (2003), the main problems with the World Bank estimates are, "The Bank uses an arbitrary international poverty line unrelated to any clear conception of poverty. It employs a misleading and inaccurate measure of purchasing power "equivalence" that creates serious and irreparable difficulties for international and inter-temporal comparisons of income poverty. It extrapolates incorrectly from limited data and thereby creates an appearance of precision that masks the high probable error of its estimates. The systematic distortion introduced by these three flaws may have led to an understatement of the extent of global income poverty and to an incorrect inference that it has declined" (Reddy and Pogge, 2003, abstract).
In addition, others argue that poverty is a multi-dimensional issue, beyond just income (Deaton, 2004; Kingdon and Knight, 2003; Mowafi, 2004; Rojas, 2005). For example, income does not account for other critical aspects of well being, such as fulfilment of basic needs, social functioning, safety from insecurity (e.g., Kingdon and Knight, 2003), and lack of access to these basic necessities is seen by many as a more important indicator of poverty than just income alone (Mowafi, 2004). In addition, people are more than consumers, so that exclusion of these other aspects of life shows an incomplet picture of well being (Rojas, 2005).
The issue of poverty measurement has not yet been solved, and continues to be examined.
In sum, a decline in poverty would be consistent with other changes among less developed countries, such as improved literacy rates, declines in infant mortality rates, increased political freedom, increased newspapers, televisions and radios per capita, and increase in per capita GDP (Shackman, Liu and Wang, 2003). However, that does not seem to be the pattern emerging, but rather there is decline in some areas and increases in others. In addition, there are a number of problems with data and methods, and conclusions are therefore our 'best guess', but not by any means certain."
Source: gsociology.icaap.org
As described above, according to World Bank estimates, there has been an increase in the number of people in poverty in Europe, Central Asia, Latin America and Africa. In contrast, East and South Asia has seen a decline in the number of people in poverty (using $1 a day). Also,the percent of people in poverty has also increased in Europe and Central Asia, and the Middle East and Africa, while the percent in poverty declined in other areas.
On the other hand, Bhalla (2002) argues that there were large declines in poverty rates, from 37% in 1985 to 13% in 2000. Similarly, Sala-i-Martin (2002 a, b) estimates that poverty rates and counts declined sharply over the last several decades. For example, the one-dollar-a-day poverty rate declined from 20% in 1970 to 5% in 1998 (Sala-i-Martin, 2002 a). Bhalla's and Sala-i-Martin's estimates of recent poverty are much lower than the World Bank estimate, of 23% in 1999.
Many researchers discuss the apparent contradictions in counting world poverty rates and trends. For example, Ravallion (2003) argues that the differences are due to measurement issues, e.g., how poverty is defined, use of absolute versus relative poverty, what levels are used to define poverty, using household or person as the unit of measure and so forth. For example, poverty could be measured using a relative poverty indicator, in which the 'standard' for poverty increases as a country's income increases, or using an absolute poverty indicator, such as "what poverty means in poor countries", or $1 a day (Ravallion, 2003). Ravallion (2003) indicates that any measure is somewhat arbitrary, but if the measure is used consistently, it can still be used to measure change over time.
Ravallion (2003) also points out that poverty data are often questionnaire based, and there are a number of problems in using surveys. For example, questionnaires from different countries may use different definitions (e.g., using income versus consumption to measure well-being) or may ask about different time periods (e.g., last year, last month, etc). All of these variations may result in finding different levels of poverty. Others may also use national accounts to estimate poverty, but these also have problems, for example from higher income people underreporting their income (Ravallion, 2003). Bhalla (2002) compares estimates using survey data and national accounts (table 9.1) and shows that the two methods give similar estimates from 1950 to 1980 but substantial differents in 2000, with national accounts showing much lower percents and counts.
Reddy and Pogge (2003) criticize the World Bank estimates, and argue for a better measure. According to Reddy and Pogge (2003), the main problems with the World Bank estimates are, "The Bank uses an arbitrary international poverty line unrelated to any clear conception of poverty. It employs a misleading and inaccurate measure of purchasing power "equivalence" that creates serious and irreparable difficulties for international and inter-temporal comparisons of income poverty. It extrapolates incorrectly from limited data and thereby creates an appearance of precision that masks the high probable error of its estimates. The systematic distortion introduced by these three flaws may have led to an understatement of the extent of global income poverty and to an incorrect inference that it has declined" (Reddy and Pogge, 2003, abstract).
In addition, others argue that poverty is a multi-dimensional issue, beyond just income (Deaton, 2004; Kingdon and Knight, 2003; Mowafi, 2004; Rojas, 2005). For example, income does not account for other critical aspects of well being, such as fulfilment of basic needs, social functioning, safety from insecurity (e.g., Kingdon and Knight, 2003), and lack of access to these basic necessities is seen by many as a more important indicator of poverty than just income alone (Mowafi, 2004). In addition, people are more than consumers, so that exclusion of these other aspects of life shows an incomplet picture of well being (Rojas, 2005).
The issue of poverty measurement has not yet been solved, and continues to be examined.
In sum, a decline in poverty would be consistent with other changes among less developed countries, such as improved literacy rates, declines in infant mortality rates, increased political freedom, increased newspapers, televisions and radios per capita, and increase in per capita GDP (Shackman, Liu and Wang, 2003). However, that does not seem to be the pattern emerging, but rather there is decline in some areas and increases in others. In addition, there are a number of problems with data and methods, and conclusions are therefore our 'best guess', but not by any means certain."
Source: gsociology.icaap.org
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