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March 21, 2012

The Manipulated Definition of Poverty

Statistics on poverty in the developing world are always vague, often fudged, and usually useless.

I remember, years ago, standing in the largest slum in Nairobi. Miserable, informal huts stretched into the distance. Countless children played in open sewers; vast hordes of people trudged towards their jobs, or towards something. Smoke from cookfires hung over the scene. I realized most people in that slum had never seen a medical professional, not to mention a census worker or other government official. Nobody knows how many people live in these slums, how much money they spend, how old they are when the die, how many are born.

Yet NGOs and government agencies somehow always churn out tidy tables, economists do their regression analyses on them, and poverty statistics are published to show the world how smart and how caring we are.

Governments have good reason to manipulate these statistics for political purposes. Presumably they often do. Given the weak factual base for most of this information, it is probably easy to do so. The Indian government, for instance, claims that in the past five years the number of Indians in poverty has dropped by 51 million people. By changing the definition of “poor” — by lowering the poverty line so more Indians live “above” it —  the government can claim its social programs have taken vast strides in eliminating poverty. One member of the Indian parliament, at least, called this practice into question: “Is this the poverty line or the starvation line?”

What those who live in the US need to understand, with all due humility and thanksgiving for our good fortune, is just how much better it is to be poor here than in so many other countries.

Posted in India, Politics, Quick Takes
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  • Chase

    Why did you post this? Are we supposed to not care (at least not that much) that more Americans are poorer than they were before? Or, is it is your point that, objectively speaking, the American people are not getting poorer?

    Instead of looking Kenya and other third world countries, maybe we should look at the Scandinavian countries, where poverty basically has been eliminated and the private sector continues to prosper.

  • Jacksonian Libertarian

    The Heritage Foundation did a study of American Poverty and found that
    99.7% of all poor families had a Refrigerator,
    97.7% had a Television,
    97.7% had a Stove and Oven,
    81.4% had a Microwave,
    78.3% had Air Conditioning,
    the poor in America live like the wealthy in most of the other nations.

  • carvaka

    no fan of govt. of india. but there are lot of confusion about this poverty number.
    GOI has not lowered the poverty line. they have actually increased it.
    the “lowering” is being talked about because the exact poverty line (of 2009-10) is lower than the estimated poverty line(2009-10).
    both of which are actually higher than the exact poverty line 0f 2004-05. because of inflation and other reasons .

    estimated calculation was used because of non availability of latest data.

    in indian media there is a want of intelligent journalism which adds to the confusion.

    there may be some valid questions about the definition of poverty or how accurate the method of calculation is. but it doesn’t look like manipulation. and the whole thing actually agrees with latest world bank data. may be this will help –

    http://blogs.wsj.com/indiarealtime/2012/03/20/is-india-fudging-its-poverty-numbers/

  • carvaka

    most importantly if you use the same methodology to calculate the poverty in different years, which has been done in this case, you will definitely get the trend right.

    this is despite any dispute over the actually number of poverty.

    so there seems to be very little reason to distrust the claim that poverty in the last 5 years is decreasing faster.

    this one , which gives some regional result is also interesting -
    http://www.livemint.com/2012/03/21141110/The-Tripura-model-and-other-th.html

    though it looks like there is some thing wrong in the method of calculation.

  • a nissen

    I share your puzzlement on how in the world a great many of the so called statistics thrown about can be measured, let alone prove anything. At minimum officialdom needs to make a distinction those that are actually counted and those that are not, e.g. deaths, births, reported incomes, taxes and benefits paid, degree days, etc.

    The other puzzlement is authors who can not be bothered to share the source of the information they use to justify their points of view. For example, this young scholar introduces a new approach to “gentrification” and “inequality” or does he? Can’t tell because of his lack of reference or credits.

    http://seattletransitblog.com/2012/03/13/downtown-inequality/

  • Jim.

    @Chase

    Why did he post this? A sense of intellectual honesty, perhaps. Check out comment 2. You also missed the fact that his comment about India was that they adjusted the poverty line *downward*, instead of the inexorable upward climb the Blues seem to tink is necessary.

    Scandinavian countries achieve that goal by taxing high earners heavily– occasionally over 100% of yearly income. Americans do not think this is a legitimate government practice. They also have significantly more homogenous societies whose background is firmly Protestant, which has been empirically shown to be as beneficial as Weber proposed.

    In other words, America has too many cultural differences (some of which you would not tolerate, such as conversion of the vast majority of the population to Lutheranism) to ever replicate their government.

    We have to work with what we have (“impoverished” people with far more than the bare necessites of life), and avoid making plans based on what we so not have (about a trillion dollars a year to spend on paying Americans to do, basically, nothing… and that’s just at the Federal level.)

    Poverty is not a critical, existential problem in this country. Massive, unsustainable, unpayable budget deficits are. Our leadership needs to prioritze our finances and our problems, instead of throwing more money after problems that are mostly solved.

  • a nissen

    Another case in point, at least according to those it inspired to comment:

    http://www.washingtonpost.com/blogs/ezra-klein/post/why-affordable-housing-is-a-myth-in-one-chart/2012/03/19/gIQA8p3FNS_blog.html

    Therein, a fine example of a hard to know statistic: “… the number of housing rental units for $500 a month or less fell by one million between 2007 and 2010, according to the Census Bureau.” Now how exactly does the Bureau come to know that? Read Craig’s List?

  • Bob

    The Heritage Foundation believes in honesty. You get food stamps? Ok, we take away your Refrigerator, Television, Stove and Oven,
    Microwave, and Air Conditioning. Now you are allowed to call yourself poor.

  • Chase

    Has anyone here ever thought about eliminating “welfare” as we know it and replacing it with a guaranteed annual income. Everyone would be required to work full time – or at least as close to full time as is possible – but no one would be poor and no one would lack health insurance.

  • Kris

    Bob@8: How about: I have a refrigerator, television, stove and oven, microwave, and air conditioning (and much else). Now you must pay for my food, whether you like it or not. Or else.

  • PPaul

    Comparisons with Scandinavia are poorly predictive with the rest of the world. If New Hampshire, Maine, and Vermont were a contry and owned BP oil they would be preety cool too.

  • Jim.

    @Chase, 9

    People have been chasing the “guaranteed work, guaranteed wage” unicorn for years. In fact, that’s what the Blue bureaucracy is all about.

    It doesn’t work.

    If people are guaranteed a wage, they go and do what they want to do (often nothing) instead of produce the goods and services that other people want. Even if people are “required” to work, what surety is there that they will be doing what others value?

    The market really is an effective way of organizing workers (who are also customers) to make the goods and services that customers (who are also workers) want. The alternatives really aren’t all that effective.