Poverty%20Measures%20and%20Nutrition

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Poverty Measures and Nutrition
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Poverty Measures and Nutrition

• Public action to combat hunger has to take note
  of the causal links and of the gaps in those
  links, Dreze and Sen (1991, Hunger and Public
  Action).
• Poverty at the individual and/or household level
  represents a serious constraint on economic
  activity.
• A lack of economic opportunities feeds into
  poverty.
• These lack of opportunities can be reenforced by
  income inequality.

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Poverty Measures and Nutrition

• Income inequality though represents one (very
  important) component of economic inequality
  defined by Ray (1998, p.p170) as
• the fundamental disparity that permits one
  individual certain material choices, while
  denying another individual those very same
  choices. (emphasis added).
• What Ray is really saying is that those factors
  that determine material choices are of importance
  here such household wealth, income.

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Poverty Measures and Nutrition

• Questions to be addressed
• How do we measure poverty?
• Who are the poor?
• What determines poverty?

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Poverty Measures and Nutrition

• How do we measure poverty?
• Poverty can be both absolute and relative. See
  Martin Ravallion, (1994) Poverty Comparisons.
• Absolute Poverty Those people who do not have
  adequate nutritional intake per day, or do not
  have adequate shelter or clothing in order to
  survive are deemed to be in absolute poverty.
• Is traditionally measured by introducing largely
  ad hoc poverty lines. E.g. the World Bank
  reports the number of people in countries below a
  1 or 2 a day as a proportion of the total
  population.
• Better but more expensive method is to calculate
  nutritionally based poverty lines World Health
  Organisation.

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Poverty Measures and Nutrition

• (Q) Is it simply that more income means better
  life expectancy?
• Diminishing returns to income think obesity
  and other rich world diseases. Known as the
  Preston Curve.

Life Expectancy at birth
Income per capita
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Poverty Measures and Nutrition

• Chronic Poverty those who never get out of
  absolute poverty.
• See Chronic Poverty Research Centre,
  www.chronicpoverty.org
• for more information on this type of poverty.

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Poverty Measures and Nutrition

• Relative Poverty The relative position of some
  economic unit (e.g. individual, household, racial
  group) compared to another economic unit. A
  person can be relatively poor but not absolutely
  poor is really to do with distribution of
  income in a country.
• E.g. Economic growth will generally result in a
  reduction of absolute poverty but will only
  change relative poverty if there is a change in
  distribution of income. (Woolard and Leibbrandt,
  2001, pp. 47).

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Poverty Measures and Nutrition

• Absolute Poverty Lines
• Poverty line measures signal to researchers
  where poverty is and becomes the first place to
  start in analyzing poverty in a certain country,
  within a certain economic group etc..
• Examples of Poverty Lines
• (1) 1 a day and 2 a day lines that the World
  Bank and United Nations Development Programme
  (UNDP) use.
• (2) Calories per capita or per household
• Both measures are absolute in that people can be
  lifted out of poverty if they can increase income
  or calories and poverty can be eradicated.

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Poverty Measures and Nutrition

• Relative Poverty Lines
• Calculate a poverty line that is based on the
  income level of the population. Relative poverty
  cannot be eradicated unless income inequality is
  addressed.
• (1) Standard percentage of people earnings below
  50 of the median or mean wage can vary the 50
  figure down to 10 or 25.
• Note If income increases for all then relative
  poverty will still be apparent since you will
  always have some who fall below 50 of the new
  (higher) median income level.

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Poverty Measures and Nutrition

• Estimating the poverty gap Applied examples
• A number of general poverty measures from
  Foster, Greer and Thorbecke (1984), Econometrica,
  Vol 52(3), pp.761-66.
• The FGT poverty index is defined as,
• Where n is the total sample size, z is the
  chosen poverty line, and is the standard of
  living indicator for person i, normally denoted
  as income. The parameter measures the
  sensitivity of the index to transfers between the
  poor units.

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Poverty Measures and Nutrition

• The conditional term means that individual is
  income must be below the chosen poverty line.
• The poverty gap measure (PG) is generated when
  1.
• Hence (1) becomes,

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Poverty Measures and Nutrition

• So if the majority of n poor individuals are
  along way short of the poverty line (z) then
  would be large and the number of people with a
  large depth of poverty is high.
• Example 1
• i90,25,30,5,45,70,20,20,15,15,10,10
• Let z100
• 1/12(0.10.750.70.950.550.30.80.80.850.
  850.90.9),
• So,
• Poverty Gap Index 8.45/120.704

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Poverty Measures and Nutrition

• Example 2
• When i90,90,95,90,90,96,85,70,50,60,90,30
• Let z100
• 1/12(0.10.10.050.10.10.040.150.30
  .50.40.10.3),
• So,
• Poverty Gap Index 2.24/120.187
• So the PG index does not merely count how may
  people are poor (since in both examples 12 people
  are below the ad hoc poverty line) but reveals
  the depth of povertythose in example 1 suffer
  greater poverty depth than those in example 2.

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Poverty Measures and Nutrition

• What can then be calculated is the minimum
  financial cost of alleviating poverty by setting
  0 and using the summation part of the FGT
  index i.e. the sum of the value of resources
  required to place each agent in the society just
  above the poverty line.
• This is formally represented simply as,
• An easier calculation than (3) is taken from
  Kanbur (1987, Measurement and alleviation of
  poverty, IMF Staff Papers Vol 34(1)) who simply
  uses .

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Poverty Measures and Nutrition

• Critique of Poverty Lines
• Generally, ad hoc shares of the average income
  per person are taken to locate a poverty line.
  For example, taking a poverty line as 50 of the
  mean/median income level.
• One weakness with such an approach is that the
  number of people in poverty is determined
  solely by where the poverty line is placed
  (Deaton, 1997). Hence a number of poverty lines
  must be estimated to give a clearer idea of what
  really is going on. Another weakness is that
  such poverty lines DO NOT measure the depth of
  poverty.

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Poverty Measures and Nutrition

• Critique of Poverty Lines cont
• Poverty lines are static, capturing a position
  of poverty at a certain point in time. However,
  it is highly likely that poverty is dynamic in
  nature with people moving in and out of poverty.
• For a more realistic understanding of the nature
  of poverty and who the poor are in a society the
  researcher must delve much deeper.

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Poverty Measures and Nutrition

• Poverty A Different Methodology
• But poverty clearly has a more human face and
  one which many economists often overlook or
  choose to skip over because it is very hard to
  quantify. No surprise that the methodology used
  is then qualitative in nature.
• McKay (2002, pp. 5) refers to participatory
  investigations into poverty and inequality which
  necessarily involves the researcher NOT sitting
  in his/her ivory tower but actually living for a
  time in villages/households and understanding the
  dynamics of these micro-economies.

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Poverty Measures and Nutrition

• The role of children in the family, of gender
  differences, of who works for money income and
  who does not, of access to any public services
  that exist, of the dynamics of villages and
  tribes, of who gets what when an elder dies.the
  list is long and interesting from a
  micro-economic perspective.

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Poverty Measures and Nutrition

• Who are the Poor?
• The poor of any country share similar
  characteristics.
• In developing countries the poor tend to be
  Black, female, young, rural, unskilled and
  perhaps semi-skilled (this is determined by the
  nature of economic growth, trade liberalization
  policy, subsidies etc).
• The factors that determine who is poor include
  socio-economic institutions, e.g. Indian caste
  system, apartheid, racism (still in Malaysia).

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Poverty Measures and Nutrition

• What Determines Poverty?
• Research indicates that the quality and quantity
  of education, urban-rural location, racial group,
  gender, health and employment status all impact
  on whether somebody is poor or not.
• Other factors include socio-economic factors,
  the historical legacy of a country, social
  customs, property rights, economic dependence,
  political system/affiliations etc. This is where
  much debate lies.
• There is a large, positive correlation between
  unemployment and poverty.
• However the direction of causality is not
  straightforward.

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Poverty Measures and Nutrition

• Indeed one of the problems in researching
  poverty and the linkages between poverty and the
  labour market is that an endogeneity (happening
  at the same time) concern is raised immediately,
  i.e. Does employment status determine poverty, or
  does poverty cause employment status?
• Certainly you would expect that if somebody is
  employed in the formal sector as a salaried
  worker with job security (e.g. public sector
  civil servant) then they are less likely to
  either report being poor themselves and/or less
  likely to be categorized as being poor by some
  poverty line.
• However the importance too of the history of the
  individual is vital in determining whether he/she
  is in poverty. Of particular importance here are
  the institutional structure of a country, social
  customs and the household structure and dynamics.

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Poverty Measures and Nutrition

• How does individual poverty impact on the
  individuals participation in the labour market?
• Given poverty does exist in a country there are
  several ways this can impact on participants
  behaviour in the labour market.
• (1) Liebenstein (1963) first made the direct
  link between poverty in the form of being
  under-nourished and productivity in the labour
  market. He found that if a person was
  under-nourished then this impacted negatively on
  productivity and assuming a wage labour market
  would mean a low wage, with MRPW. Hence poverty
  can result in a negative nutritional impact on
  the worker which can result in lower productivity.

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Poverty Measures and Nutrition

• It is unclear what the minimal calorie intake is
  and what the appropriate nutritional levels for
  workers should be in developing or indeed any
  country.
• There is an issue here involving the type of job
  somebody has (is it highly physical, and
  therefore requires far higher levels of foods)
  see Strauss and Thomas (1988).
• What is NOT beyond doubt is that poverty can
  result in a lack of food, which can impact
  negatively on productivity and output that can be
  self-perpetuating.

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Poverty Measures and Nutrition

• (2) Poverty can result in potential workers not
  being able to actively take part in the wage
  labour market because (1) physically cannot go
  where the jobs are (2) the opportunity cost of
  searching for work is too high (e.g. not able to
  subsistence farm and therefore could increase the
  risk of hunger).
• (3) Poverty within a household or within a
  community means less means by which to invest in
  (1) human capital and (2) physical capital. This
  means little chance of escaping poverty and
  indeed could result in a poverty trap emerging.
• (4) Ray (1998, pp.273) postulates that access to
  food is the same as access to income and if one
  of these factors is owned by an individual,
  he/she is likely NOT to be caught in a poverty
  trap.
• (5) As well as the physical side effects of
  being poor and lacking nutrition, there are also
  negative mental impacts that are related to
  increasing the likelihood of depression, mental
  apathy, and de-motivation.

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Poverty Measures and Nutrition

• What should be emerging for the reader is the
  causal duality of poverty and employment.
• Not only do labour markets generate income and
  therefore create the principal potential source
  of nutrition and good health, but good nutrition
  in turn affects the capacity of the body to
  perform tasks that generate income Ray (1998,
  pp.274).
• The nature of the labour market, in particular
  the level of unemployment, has a large impact on
  the relationship between poverty and employment
  and hence the poverty trap.
• If a country suffers from poverty and high
  unemployment (e.g. South Africa) then there is
  massive slack in the labour market, meaning
  demand is low and supply is high for (certain
  kinds of?) labour.

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References and Useful Websites

• Websites
• United Nations Development Programme,
  www.undp.org
• World Bank, www.worldbank.org
• Department for International Development,
  www.dfid.gov.uk
• Chronic Poverty Research Centre,
  www.chronicpoverty.org
• Brooks World Poverty Institute,
  www.bwpi.manchester.ac.uk
• References
• Deaton, A., (1997), THE ANALYSIS OF HOUSEHOLD
  SURVEYS A Microeconomic Approach to Development
  Policy, John Hopkins University Press.
• Dreze, J., and Sen, A., (1991), Hunger and
  Public Action, WIDER Studies in Economics,
  Clarendon Press.