Measuring poverty

Poverty is widely understood to be multidimensional, comprising social, natural and economic factors situated within wider socio-political processes.

An example of an absolute measurement would be the percentage of the population eating less food than is required to sustain the human body (approximately 2000–2500 calories per day).

Another interpretation by the European Anti-Poverty Network reads: [Absolute poverty] is when people lack the basic necessities for survival.

For instance they may be starving, lack clean water, proper housing, sufficient clothing or medicines and be struggling to stay alive.

Both absolute and relative poverty measures are usually based on a person's yearly income and frequently take no account of total wealth.

Major developments and research in this area suggest that standard one dimensional measures of poverty, based mainly on wealth or calorie consumption, are seriously deficient.

The US poverty line was created in 1963–64 and was based on the dollar costs of the U.S. Department of Agriculture's "economy food plan" multiplied by a factor of three.

Further, federal poverty statistics do not account for the widely varying regional differences in non-food costs such as housing, transport, and utilities.

[11] The proportion of the world's population living in countries where per-capita food supplies are less than 2,200 calories (9,200 kilojoules) per day decreased from 56% in the mid-1960s to below 10% by the 1990s.

There are similar trends for electric power, cars, radios, and telephones per capita, as well as the proportion of the population with access to clean water.

These asset-based measures may consider the real financial asset holdings, access to the credit market and poverty related to a household’s wealth.

There has already been and incentive to conduct a few pilot projects with the help of mobile phones by the World Bank in South Soudan,[16] Peru or Tanzania.

[17] The Official Poverty Measure takes into account the individual’s of family’s pretax cash income and a size and age varied set of thresholds but is not effected by in-kind programs (e.g. housing and energy programs, nutrition assistance), tax credits or the regional differences in living costs.

This section examines four case studies showcasing the diverse techniques for measuring poverty, including the Multidimensional Poverty Index (MPI) in Mexico, the Community-Led Total Sanitation (PAMSIMAS) approach in Indonesia, and the National Rural Employment Guarantee Act (NREGA) in India.

Mexico was the first country to introduce an official multidimensional poverty measure, an index which, in addition to considering the lack of economic resources, includes other dimensions that social policy must address.

It is complemented by the inclusion of social cohesion, recognising the importance of contextual and relational factors, which may be analysed in terms of their impact on society and vice-versa.

The Mexican government uses it to track progress in eradicating poverty over time and target social services and policies to those most in need.

Community-based Drinking Water Supply and Sanitation Program or Penyediaan Air Minum dan Sanitasi Berbasis Masyarakat (PAMSIMAS) approach in Indonesia is an excellent example of measuring poverty since it acknowledges how poor sanitation impacts general health conditions and their social and economic aspects.

[21] The PAMSIMAS approach motivates individuals to participate in community development by integrating themselves into identifying and fixing their sanitation problems.

Facilitators and districts are also given access to training and consulting services to help them develop better sanitation and hygiene habits.

[22] The PAMSIMAS approach in Indonesia has successfully reduced open defecation and improved access to sanitation facilities in rural areas.

According to the World Bank,[21] the percentage of communities targeted for available defecation-free status increased significantly from 0% to 58%, and roughly 81% of those schools improved their sanitation and hygiene initiatives.

For instance, the institutional sustainability of the PAMSIMAS approach also became more assertive, with 97% of districts replicating it outside of the project's target neighborhoods and 86% of communities increasing their spending on ensuring everyone has access to clean water and sanitation.

In 2005, India launched a national-anti poverty program, Mahatma Gandhi National Rural Employment Guarantee Act (NREGA).

The scheme was launched in 2005, and it guarantees 100 days of wage employment to every rural household that demands work.

The program also intends to encourage sustainable development in rural areas by creating job opportunities in forestry, water conservation, and infrastructure building.

[citation needed] Nonetheless, the NREGA has been widely recognised as an effective tool for poverty reduction and rural development in India.

In 2020, the scheme was extended to cover 116 districts affected by the COVID-19 pandemic, providing much-needed employment opportunities to vulnerable households in rural areas.

Future directions in measuring poverty are constantly changing as new discussions and trends take hold in the field of study.

In developing the matrices, multidimensional poverty measurements and including subjective well-being indicators are prominent areas.