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General interest items edited by Janice Flahiff

[World Bank Report] More relatively-poor people in a less absolutely-poor world

English: World Map showing the percent of nati...

English: World Map showing the percent of national populations living on less than $1.25 per day. UN Estimates 2000-2007 (Photo credit: Wikipedia)***$1.25_per_day_2009.svg

Poverty levels affect how governments and other entities spend on programs and who benefits from the programs.
These programs include health related initiatives and on going assistance.
So, how poverty is defined ultimately does affect global health.

From the summary at the World Bank 
    [ A PDF of the document may be found here]
Summary: Relative deprivation, shame and social exclusion can matter to the welfare of people everywhere. The authors argue that such social effects on welfare call for a reconsideration of how we assess global poverty, but they do not support standard measures of relative poverty. The paper argues instead for using a weakly-relative measure as the upper-bound complement to the lower-bound provided by a standard absolute measure. New estimates of global poverty are presented, drawing on 850 household surveys spanning 125 countries over 1981-2008. The absolute line is $1.25 a day at 2005 prices, while the relative line rises with the mean, at a gradient of 1:2 above $1.25 a day. The authors show that these parameter choices are consistent with cross-country data on national poverty lines. The results indicate that the incidence of both absolute and weakly-relative poverty in the developing world has been falling since the 1990s, but more slowly for the relative measure. While the number of absolutely poor has fallen, the number of relatively poor has changed little since the 1990s, and is higher in 2008 than 1981.
And from the introduction

“One of the oldest debates on poverty concerns whether it is ―absolute‖ or ―relative.‖ Theidea of relative poverty has long dominated measurement practice in Western Europe. Thepoverty line is set at a constant proportion—one half is common—of the country or year-specificmean (or median) income.2 By contrast, absolute poverty lines have dominated past practice insome rich countries (including the US) and in most developing countries. By this view, thepoverty line is intended to have constant real value. An example is the World Bank’sinternational line of $1.25 a day at 2005 purchasing power parity (Ravallion et al., 2008).

There are two ways we can interpret this difference. One can think of a poverty line as the money metric of an underlying concept of welfare. While not observed, the poverty line in the welfare space can be thought of as a social norm, which may well vary from one setting to another. The poverty measure in any given setting will only have salience and be accepted if it accords reasonably well with prevailing ideas of what ―poverty‖ means in that setting.3 We can expect norms to differ between a rich society and a poor one, and evolve over time in growing economies. In this sense ―poverty is relative.‖ However, using a lower real poverty line in poorer countries will not then be welfare consistent, in that two people judged to have the same welfare can be treated differently depending on where or when they live. Reasoning along these lines has motivated the past emphasis on measuring absolute poverty using a common real poverty line. There is a second, very different, interpretation of why richer countries have higher poverty lines. The absolute approach implicitly sees welfare as depending on ―own consumption,‖ though often with allowances for differing needs, depending on (say) household size or demographic composition.4 By this view, the setting in which a person lives is irrelevant to whether that person is deemed to be poor or not, once one knows the person’s own consumption level. By contrast, a relative line is implied by the presence of certain social determinants of welfare, which naturally vary with the context. Relative lines are seen to reflect welfare effects of relative deprivation—that comparing two people at the same real income theone living in the richer country will feel worse off—and costs of social inclusion, namely theextra expenditures deemed necessary for participation in a rich society as compared to a poorone, including the spending needed to avoid shame. By this second interpretation, povertycomparisons can still be interpreted as absolute in the space of welfare, but (given the socialeffects) an absolute line in the welfare space requires a relative line in terms of consumption..

July 6, 2012 Posted by | Public Health | , , , | Leave a comment


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