Poverty Brief - Understanding Poverty: Eva Ludi, Odi
Poverty Brief - Understanding Poverty: Eva Ludi, Odi
Poverty Brief - Understanding Poverty: Eva Ludi, Odi
POVERTY | WELLBEING
www.shareweb.ch/site/Poverty-Wellbeing
Definitions of poverty really matter. They set the stand- The idea that poverty is multidimensional was first pre-
ards by which we determine whether the incomes and sented by Townsend (Townsend, 1979) and further
living conditions of the poorest in society are accept- developed by Chambers (Chambers, 1983). In the final
able or not. Definitions of poverty are also important, declaration of the World Summit for Social Develop-
as they influence the way interventions and policies ad- ment in 1995, the United Nations concluded that:
dressing poverty are shaped. Despite this, there is am-
biguity as to how the term ‘poverty’ is used and as a ‘Poverty has various manifestations, including lack of in-
result, a range of definitions exists, influenced by differ- come and productive resources sufficient to ensure sus-
ent disciplinary approaches, world views and ideologies tainable livelihoods; hunger and malnutrition; ill health;
(Handley et al., 2009). limited or lack of access to education and other basic
services; increased morbidity and mortality from illness;
Historically, poverty has been defined in monetary homelessness and inadequate housing; unsafe environ-
terms, using income or consumption levels. In order to ments; and social discrimination and exclusion. It is also
be able to compare poverty levels across countries and characterized by a lack of participation in decision-mak-
over time, those that live below a given level of income ing and in civil, social and cultural life.”
– the poverty line (Ravallion, 2010) – are classified as (United Nations, 1995)
poor. Over the last decades, this economic definition of
poverty has been complemented by other approaches This description stresses the multidimensionality of pov-
to conceptualise poverty: basic needs approach, capa- erty. It combines notions of absolute and relative pover-
bilities approach, human development approach and ty and points to the need to differentiate poor people
multidimensional poverty approach (Handley et al., by gender, age, occupational status, origin or ethnicity.
2009). In 2001, the Development Assistance Committee (DAC)
of the Organization for Economic Co-operation and De-
Chambers (2006), a leading scholar on poverty and de- velopment (OECD) published its Guidelines for Poverty
velopment, clusters poverty definitions into four groups: Reduction (OECD, 2001) and adopted a multi-dimen-
sional poverty definition:
›› Income poverty (or its common proxy, consumption
poverty).
›› Material lack or want: besides income, this includes
Absolute and relative Poverty
absent, limited or low quality assets (such as shel-
ter, clothing, furniture, personal means of transport, Absolute poverty: when people lack basic neces-
radio, etc.). It also includes inadequate access to sities for survival. It quantifies the number of peo-
services. ple below the poverty line and is independent of
›› Capability deprivation, referring to what people can place and time.
or cannot do, or can or cannot be. This goes well Relative poverty: when people’s way of life and
beyond material lack to include human capabilities, income is much worse than the general standard of
such as skills and physical abilities, and also self- living. It classifies people as poor not by comparing
respect in society. them with a fixed poverty line, but by comparing
›› Multidimensional deprivation, with material lack or them with others in the population under consid-
want, as only one of several mutually reinforcing eration.
dimensions.
PROTECTIVE
Capabilities, enabling people to
withstand
• Economic shocks
• Natural Disasters
• Conflicts
POLITICAL
ECONOMIC
Capabilities, including
Capabilities
• Human rights
• to earn income
• Voice
• to consume
• Political freedom
• to have assets
• Participation
HUMAN SOCIO-CULTURAL
Capabilities, based on Capabilities concerning
• Health • Dignity
• Education • Valued membership of
• Nutrition society
• Shelter • Social status
Basic Needs approach One problem related to the capabilities approach is the
Basic needs are defined as minimum quantities of such lack of a fixed or universally defined set of capabilities.
things as food, clothing, shelter, water and sanitation, Not only are capabilities difficult to define, the capabil-
access to basic education and health services and secu- ities approach is also hard to operationalise, because it
rity to prevent ill health, undernourishment, or under- is difficult to compare capabilities across different peo-
and unemployment (Streeten et al. 1981). It is based ple and because there is no agreement how to weigh
on a broader understanding of well-being and includes different capabilities. Thirdly, the informational require-
access to different goods and services and related ments for assessing capabilities can be extremely high
achievements, such as adequate nutrition, life expec- (Clark, 2005).
tancy, mortality, etc. (Shaffer, 2008).
Multidimensional Poverty Index (MPI)
Despite a common poverty line used across countries The Oxford Poverty and Human Development Initiative
to compare poverty rates, it was always recognised that (OPHI) has developed an international measure of pov-
what is required to satisfy basic needs will vary greatly erty – the Multidimensional Poverty Index or MPI – for
across different countries. Countries, therefore, often the United Nations Development Programme’s Human
use several national poverty lines based on the cost of Development Report. The index goes beyond the tradi-
basic needs (CBN) approach – including a lower pover- tional focus on income to reflect the multiple depriva-
ty line which monetises the minimum calories required tions that a poor person faces with respect to educa-
to maintain life and an upper poverty line which also tion, health and living standard (see figure 2). It draws
includes a basic basket of goods and services deemed heavily on the capabilities framework as a:
necessary for a healthy life, including basic costs for
clothing, shelter and accessing education and health. “[…] process of enlarging people’s choices. The most
critical of these wide-ranging choices are to live a long
Capabilities approach and healthy life, to be educated and to have access to
Income and basic needs approaches look at ‘inputs’ rath- resources needed for a decent standard of living. Ad-
er than ‘outcomes’. Knowing the level of a household’s ditional choices include political freedom, guaranteed
income does not tell us anything about the well-being human rights and personal self-respect”
of this household. The capabilities approach, based on (UNDP, 1990).
• Substantial investment in
post-primary education and
links to labour markets
Include the poorest people • Land policy reforms Sustain
better in the economy, in enabling mobility
politics and in society through: • Progressive regional
poverty
• Better quality basic educa- development policies escapes
tion and social assistance, • Universal access to sexual
employment quality and reproductive health
measures, and better
returns to farmers
• Anti-discrimination, affirma-
g
tive action measures,
pin
Poverty status
access to justice
ca
Es
Poverty line
Tackle
chronic
poverty
impoverishment
Stop
A period of
impoverishment
Chronically poor
• Prevent conflict
part of life • Disaster Risk Management
• Universal Health Coverage
• Manage economic vulnerability
• Insure against major risks (e.g.
assets, weather, old age)
• Universal access to sexual and
reproductive health
Time
Figure 3 : Policies to tackle chronic poverty, stop impoverishment and sustain escapes from poverty
(Source: Shepherd et al., 2014)
keeping people out of poverty. Supporting people to alised groups (e.g. ethnic minorities, the landless, lower
sustain poverty escapes include a range of measures castes), whereas monetary and capability approaches
focusing on education and skills development, secure tend to focus on individual characteristics and circum-
land tenure systems for the poorest, and regional and stances. Such analysis shows that the situation of those
local economic development policies with a focus on deprived relative to the norm generally cannot be im-
employment and income generation (Shepherd et al., proved without some redistribution of opportunities
2014). and outcomes.