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Approaches to Understanding and Measuring Poverty

Traditionally, poverty is defined through a single indicator of household consumption or income. For instance, the poverty line in Afghanistan is based on the Cost of Basic Needs approach, which assembles a basket of goods and services that are deemed necessary to meet a minimum standard of living (Central Statistics Organization and World Bank 2010). Those falling short of the poverty line are identified as poor. The poverty line consists of (1) the food poverty line and (2) an allowance for basic non-food needs. The food component is defined by the minimum caloric intake (i.e., the number of calories the body requires for a person to function on a daily basis). Aggregating expenditure on goods and services composes the non-food items.

This approach has been criticized by Sen (1976) who argued that it does not take into account the relative situation of the poor: individuals defined as poor remain poor even if they benefit from an increase in income as long as they remain below the poverty line (Sen 1976). Sen’s (1976) seminal work aiming at a multidimensional measure of poverty has addressed the issue of identifying the poor and aggregating their characteristics in a unique index. The multidimensional approach draws on Sen’s CA and focuses on various factors that impede individual’s wellbeing. Sen gives pre-eminence to the individual’s wellbeing, which does depend not only on income but also on capabilities, and agency, the individual’s freedom to achieve goals the person values (Sen 1999). Poverty defined as deprivation of capabilities refers to the absence of choice for a person to lead a life that he/she values. Multidimensional poverty measurement and analysis enables a greater understanding of how the inclusion of non-income dimensions can modify the appraisal of poverty. Multidimensional measures provide an accurate, easy to comprehend, able to identify variation through time, in depth and yet integrated view of poverty (Bourguignon and Chakravarty 2003). Furthermore, multidimensional measures enable researchers to view not only how many deprivations people experience at the same time but also how these overlap. Development practitioners and scholars use a wide range of definitions of poverty and differ in the breadth and narrowness of the concept and associated measures (Ruggeri Laderchi et al. 2003; Spicker et al. 2007). There is no consensus on a given definition of poverty. Ruggeri Laderchi et al. (2003) have raised several issues that arise with measuring poverty. First they consider the space in which poverty is measured: material poverty only or freedom of choice as well, as in the CA. Second, the authors raise the question of the universality of the definition of poverty: does the measure of poverty need adaptation to specific sociocultural contexts? Third, the question of the objectivity of the method for measuring poverty is raised. The authors argue that value judgements—about the definition of poverty, the choice of the type of measure of poverty and the threshold distinguishing the poor from the non-poor—are made by experts and researchers that all affect the measurement of poverty. We argue here that those choices should involve various stakeholders, including the poor themselves. Fourth, the question of the threshold or “poverty line” that discriminates the poor from the non-poor is essential. Fifth, the unit of definition is important. Poverty can be considered at the level of the individual or the household, as some resources such as shelter and access to water are common to the household, and sometimes to a whole community (access to a spring or a well for water for instance). The sixth issue is multidimensionality. Welfare economists consider that monetary metrics encompass all aspects of poverty. Proponents of Sen’s CA consider that poverty has multiple dimensions, which raises the question of measurement of each of them and their aggregation in a single index. Seventh, the time horizon considered in poverty measurement has an impact on who is captured as being poor. Depending on the measure of poverty, the importance of the time horizon differs. People can move in and out of poverty in terms of income or be durably poor. In terms of deprivation of capabilities or social exclusion, even deprivation at one point in time (for instance child malnutrition) might have long-term consequences. There are multiple ways in which poverty can be conceptualized, and the present chapter will only explore major ways in which poverty has been defined.

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