Printer-friendly VersionEmail to a Friend

What Does It Mean to be Poor?

Economists have long debated the question: if your income is above the poverty line but you have limited access to clean water, basic health care, and education, are you still poor?

What exactly is poverty, and how can it be measured? Since the early 1970s, Indian economists have used minimum nutritional standards to define those in poverty. In 1979, the Indian Planning Commission officiallydescribed it in calorific terms: those with a per capita daily energy intake of fewer than 2,400 kilocalories in rural areas and 2,100 kilocalories in urban areas—estimates of the basic nutritional requirement to stay alive—were considered living below the poverty line. This nutrition-based approach formed the basis for defining several national poverty lines throughout the 1970s and ’80s.

In 1990, the World Bank converted national poverty lines expressed in local currencies to develop an international benchmark of $1 a day (in purchasing power parity terms). This became the new poverty yardstick. In 2008, that figure was revised to $1.25; and today, many economists argue that $2 a day is a more realistic and humane standard.

Whatever the global figure, economists have long debated the question: if your income is above the poverty line but you have limited access to clean water, basic health care, and education, are you still poor? No single factor is the cause of poverty, which is a condition far more diverse and complex than simply measuring income, spending power, or caloric intake, they noted.

Gradually, poverty became radically redefined as a state of “capability deprivations,” a broad range of limitations and barriers that prevent individuals from rising out of a destitute existence. These include social, political, environmental,and economic factors running the gamut from living in fear of your life, or with discrimination, to gender inequality and being denied a say in government. A person might be poor, but if she is able to educate her children she has hope for the future.

LANDMARK SUMMIT Timorese leader Xanana Gusmão presents a gift to then United Nations Secretary-General Kofi Annan at the UN in New York in September 2000 during the landmark UN Millennium Summit.
Photo by AFP

The ability to look after your family’s basic health needs, earning an appropriate wage for work, and living a normal life span in an unpolluted environment are just as important as how much money is earned. In effect, if an environment is created for people to live a decent life and they can be free to make their own decisions, they will be able to lift themselves out of poverty. This view turned traditional views of poverty on their head by arguing that to achieve economic growth, social reforms must take place before economic reforms.

“Development requires the removal of major sources of unfreedom,” wrote Indianborn Cambridge economist Amartya Sen in his 1999 book Development as Freedom. Mr. Sen was a groundbreaking figure in this holistic new avenue of thought among economists accustomed to measuring development simply in terms of gross domestic product (GDP) growth and poverty only in terms of income earned. For his controversial views, Mr. Sen won the 1998 Nobel Prize for Economics and was praised by the Nobel Committee for bringing an “ethical dimension” to a field dominated by technical specialists.

The list of capability deprivations went on to inspire the creation of the United Nation’s Human Development Index (HDI). In 1990, the first annual Human Development Report, which introduced the HDI, was published. It broadened the measurement of a country’s developmental progress beyond simply using GDP by also including life expectancy, literacy, and educational attainment. The HDI is now a common measurement of the well-being of a country, classifying nations as developed, developing, or underdeveloped.

With 80% of the world’s population living in developing countries, according to the Organisation for Economic Cooperation and Development (OECD), organizations worldwide worked simultaneously throughout the early 1990s toward addressing the need to cooperate with one another to face the emerging challenges of poverty in the 21st century. They also struggled to set up methods of measuring progress in battling poverty.

A series of United Nations conferences addressed key aspects of development, including education, the environment, human rights, population, and women’s issues. The World Health Organization (WHO) led a major international campaign to improve infant and child mortality rates. Developmental cooperation expanded access to family planning and improved drinking water.

EYE TO EYE WITH THE WORLD US President Bill Clinton addresses the United Nations Millennium Summit on 6 September 2000, at the UN headquarters in New York City. Actions and targets that had been refined and debated throughout the 1990s to reduce world poverty were included in the Millennium Declaration, which was adopted by 189 nations and signed by 147 heads of state and government.
Photo by AFP

In March 1995, world leaders convened for the Copenhagen World Summit for Social Development. For the first time, at such a high level, the international community committed to addressing poverty by putting people and their quality of life at the center of development efforts. There was neither a global monitoring system nor a timetable for this international commitment, but each of the 117 nations was to prepare its own national, timebound strategy.

During the summit, 2,400 international nongovernment organizations (NGOs)— from small, local activist organizations to large, well-funded foundations and “thinktanks”— participated in an unprecedented forum, bringing together widely divergent notions about poverty alleviation. What emerged was a rough global blueprint for action, a list of targets with which to tackle the daunting but doable task of eliminating poverty in our lifetime.

Although progress had been made throughout the 1990s in tackling poverty in Asia, there was now a sense of urgency for governments to push forward their obligations in the region. In November 1997, Asia and the Pacific ministers agreed to accelerate their efforts by focusing on the single goal of freeing the region of poverty through economic growth, human development, sound environmental management, and improving the status of women.

From the Marshall Plan to the 1990s, aid was contributed mostly by donor governments for individual programs on a project-by-project basis, an often inefficient method. By the mid-1990s, private funds vastly outweighed government aid, and the hallmark had become cooperation among networks and partnerships of private donors, NGOs, and local and foreign governments. Rather than the traditional focus on a project’s cost, “development effectiveness” and results were put to the forefront.

“People were no longer talking about how much money was being spent on building a new road or how many kilometers were completed,” says Shiladitya Chatterjee, an advisor in the Asian Development Bank’s Strategy and Policy Department. Instead, what was being asked was whether that road helped reduce poverty in the region. Did it help raise people’s income and lead to better access to education and medical help? Were women benefiting from this road and had the environment improved? Says Mr. Chatterjee: “We started talking about multidimensional outcomes rather than outputs and inputs.”

Adds Mr. Chatterjee: “The MDGs represent a time-bound monitorable and global program of action focusing on a set of clear universally accepted development priorities.”

In September 2000, the landmark UN Millennium Summit, the largest-ever gathering of heads of state and government, was held in New York City. Actions and targets that had been refined and debated throughout the 1990s to reduce world poverty were included in the Millennium Declaration, which was adopted by 189 nations and signed by 147 heads of state and government. Eight specific goals that break down into 21 quantifiable targets and are measured by 60 indicators were drawn from the Millennium Declarations to become the Millennium Development Goals (MDGs), a set of core human development indicators that includes everything from increasing primary school attendance worldwide and the number of women in parliament to beating malaria and HIV/AIDS.

It takes time to make the changes needed to reduce by half the number of people living on less than $1.25 a day and to cut the mortality rate among children under 5 by two-thirds, so a 25-year window was designated with 1990 as the starting point of the MDGs. The target year is 2015.

“The MDGs are a work in progress,” says Mr. Chatterjee. “There are ongoing discussions…with the result being that we now have a better sense of what poverty is, what the outcomes of development are, and a better sense of how we should support development.” •