PHM-Exch> Publication: "How Poor is Poor? Towards a Rights-Based Poverty Line"

Wed Jul 7 20:08:25 PDT 2010

Hi Scott - and thanks for your interest and encouragement.

As it happens, this is exactly what I'm working on at the moment! The original objective was to define a "Plenty Line" as a counterpart to the poverty line, defined as the point at which further increases in income cease to increase well-being through their effects on absolute consumption (as opposed to relative income effects) - but see below on this. The next stage of the project will be an update and extension of our earlier estimates of the distribution of the benefits of global economic growth in "Growth Isn't Working" (original at http://www.neweconomics.org/publications/growth-isn%E2%80%99t-working), which will also highlight the (mind-boggling) inequality of global income distribution if one takes the analysis to the very top of the scale. This will be followed by what will hopefully be a very high-profile project bringing together the key findings and conclusions from all three.

Unfortunately, however, the "Plenty Line" analysis itself hasn't worked out very well, partly due to data problems, and partly due to very limited capacity (and no financial resources) for more serious analysis; and much of the paper is now devoted to a riposte to a critique of the Easterlin paradox (that overall well-being does not go up as economies grow, although there is a strong cross-sectional relationship between income and life satisfaction) and the idea of a satiation point (that there is some level of GDP per capita at which further growth stops increasing life satisfaction).

The paper is supposed to come out in the next couple of months, but may not now include the actual "Plenty Line" estimates. But IF YOU, OR ANYONE ELSE ON THIS LIST, HAVE SOME SERIOUS MATHEMATICAL/STATISTICAL/ECONOMETRIC BACKGROUND (to review the critique of the Easterlin/satiation critique) OR SPARE CAPACITY TO DO SOME FAIRLY SERIOUS STATISTICAL ANALYSIS, THAT COULD REALLY HELP. I should say, though, that nef ran out of money for this project some time ago (I've been working on this and related projects unpaid for the last couple of years), so no financial compensation can be offered.

All the best

David

________________________________________
From: Scott A. Wolfe [swolfe at oneworldpartners.ca]
Sent: Thursday, July 08, 2010 7:50 AM
To: David Woodward; phm-exchange at phm.phmovement.org
Subject: RE: PHM-Exch> Publication: "How Poor is Poor? Towards a Rights-Based Poverty Line"

Thanks for sharing this, David. I certainly support efforts such as this. At
the same time, it raises for me a question that often comes to mind, but
which I rarely articulate. I'm sure I'm not alone in thinking the following:
"How Rich is Rich?"

I would be interested to know if anyone out there is aware of any efforts to
determine something like a "high income cutoff", particularly in middle and
higher-income countries that, ostensibly, have a greater overall wealth to
be distributed. In other words, at what point do we start saying that
someone's wealth is excessive? Naturally, this would invite a wide variety
of perspectives on wealth and distribution of income in a given society.

But for starters, is anyone out there thinking about this sort of thing, in
practical terms? Anyone trying to establish baselines, algorithms? Anything?

Scott

Scott A. Wolfe
Health and Social Policy Advisor
Manager - Aboriginal Health Access Centre AHTF Project (2009-2010)
One World Partners
Toronto, ON    CANADA
Tel: 416.839.0531
swolfe at oneworldpartners.ca
www.oneworldpartners.ca

-----Original Message-----
From: phm-exchange-bounces at phm.phmovement.org
[mailto:phm-exchange-bounces at phm.phmovement.org] On Behalf Of David Woodward
Sent: July-07-10 12:50 AM
To: phm-exchange at phm.phmovement.org
Subject: PHM-Exch> Publication: "How Poor is Poor? Towards a Rights-Based
Poverty Line"

This paper, which has been mentioned a few times on PHA-exchange, has now
finally been published. It includes an extensive critique of the "$1-a-day"
approach to defining and measuring poverty, and of proposed alternatives;
proposes a new rights-based approach; and estimates rights-based poverty
lines for selected developing countries, using infant mortality as an
indicator of the right to child survival.

The paper can be downloaded free at
http://www.neweconomics.org/publications/how-poor-is-poor. The press release
issued by nef (the new economics foundation) to launch the report is pasted
below; and there will be an article in the July edition of New
Internationalist, which should be accessible very soon at
http://www.newint.org/issues/current/.

There will soon also be a technical version of the paper on the nef
web-site. This will discuss in greater detail the shortcomings of other
alternatives to the "$1-a-day" line and the estimation of Rights-Based
Poverty Lines. Please e-mail me at
woodwarddavid at hotmail.com<mailto:woodwarddavid at hotmail.com> if you would
like me to send you the link when it appears.

All the best

David Woodward

Development target of $1-a-day poverty line seriously flawed, says new
report.
05 July 2010

World Bank claims that we are broadly on course to halve the proportion of
people living below the $1 a day poverty line by 2015 are based on a
seriously flawed measurement system, says a new report published today by
nef.
The report claims the setting of the $1-a-day definition of poverty is:

  *   arbitrary;
  *   it imposes inconsistent standards between countries;
  *   it fails to reflect differences in inflation between rural and urban
areas;
  *   it gives much greater weight to the prices of goods brought by richer
people in those countries than by poorer people.

David Woodward, author of the report How poor is "poor"? said: "the original
approach of placing a global line of $1 a day has undoubtedly helped bring
poverty onto the political agenda. But the figures are unreliable and
potentially misleading and will not help politicians make the right
decisions. We are in danger of being lulled into complacency that the thrust
of our global economic system is working to reduce poverty."

The report proposes that the World Bank and United Nations adopt a new
global measure of poverty.   Poverty lines need to be set for each
individual country at the income level at which people in that country
actually achieve minimum acceptable standards of; child survival, health,
nutrition, education, water and housing. The new approach is being called a
"Rights-Based Poverty Line".

As David Woodward says: "at the $1 a day line, typically between one in
twelve and one in six children die before the age of five - mostly from
poverty-related causes. Between a third and half of those who survive,
however, are malnourished. How can anyone say that people are not poor just
because their incomes have risen to this level? It is not having an income
less than $1 or $2 a day which is bad, but having an income which is
inadequate to allow good health and nutrition, access to education or even
survival."

Initial analysis shows that setting a standard of 30 infant deaths per 1,000
live births gives rise to a wide range of poverty lines in different
countries: 77 cents in Nicaragua, $2.14 in Egypt, $3.16 in urban India (but
more than $3.32 in rural India), $5.17 in South Africa, $6.84 in Bolivia and
$7.21 in Senegal. These differences reflect differences between countries in
terms of disease, living conditions, access to education and health
services.
The report is seen as a first step towards a less simplistic definition of
poverty. It acknowledges that there are large gaps in data, but argues that
the new approach will help ensure that we do not draw the wrong policy
lessons from a distorted picture of poverty, and presents proposals for
collecting the data which would be required with little additional cost.

The report also covers a critique of current poverty measurements systems,
highlighting limitations with approaches such as the UNDP's Human Poverty
Indicator (HPI), amongst others. The HPI, for example, although a much more
comprehensive approach than the $1 a day measurement, has no income
component and by its nature provides population average figures, thus
struggling to identify pockets of poverty.

The report concludes: "Ultimately, however, improvements in our
understanding and measurement of poverty will serve little purpose if they
do not lead us to the next step - effective action, not merely for poverty
reduction, but for a permanent eradication of the blight of poverty in a
meaningful sense."

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Nef does not accept liability for any statements made which are clearly the sender's own and not expressly made on behalf of nef.

Please note that nef does not accept any responsibility for viruses that may be contained in this e-mail or its attachments and it is your responsibility to scan the e-mail and attachments (if any). 
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