Poverty - A Global Challenge

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We often categorize people on their financial stipulation. How is this process of categorizing done, and to what measure, a person is considered to be poor or rich. There rolls in the concept of Poverty. Poverty literally means a state of 'helplessness'; now you would be wondering what kind of helplessness is being talked about, given are the following few examples:

• a poor peasant cannot afford shelter and clothes for him and his family.
• a women cannot feed his child due to lack of food.
• a passionate budding scientist cannot afford to learn in school

By the terminology, Poverty means scarcity or dearth, or lacking of certain material possessions encompassing money (currency), food, shelter, attire, miscellaneous requirements. 

According to the National Power Index {it combines the products of the weighted factors of GDP, defense spending, population and technology, expressed as relative share of the global power}, Poverty is decided at global level.

Following characteristics determine the slope of poverty functions:

• Gross Domestic Product (market value of officially recognized commodities)
• Defense expenditure 
• Annual Population Growth
• Technological developments

Following is the ranking of countries according to NPI:

Rank	2010	2020	2030	2040	2050	2060
1	United States	United States	United States	China	China	India
2	China	China	China	United States	India	China
3	India	India	India	India	United States	United States
4	Japan	Japan	Japan	Japan	Brazil	Brazil
5	Germany	Germany	Brazil	Brazil	Japan	Japan
6	Russia	Russia	Russia	Russia	Germany	Germany
7	United Kingdom	Brazil	Germany	Germany	United Kingdom	Pakistan
8	France	United Kingdom	United Kingdom	United Kingdom	Pakistan	United Kingdom
9	Brazil	France	France	France	France	France
10	Italy	Indonesia	Indonesia	Pakistan	Russia	Nigeria
Rank	2010	2020	2030	2040	2050	2060
11	Indonesia	Italy	Pakistan	Indonesia	Indonesia	Indonesia
12	South Korea	South Korea	Mexico	Mexico	Nigeria	Mexico
13	Canada	Mexico	Italy	Saudi Arabia	Mexico	Russia
14	Mexico	Pakistan	Saudi Arabia	Nigeria	Saudi Arabia	Egypt
15	Saudi Arabia	Canada	South Korea	Iran	Egypt	Saudi Arabia
16	Spain	Saudi Arabia	Iran	Egypt	Iran	Ethiopia
17	Pakistan	Spain	Canada	Canada	Canada	Bangladesh
18	Iran	Iran	Nigeria	Italy	Turkey	Canada
19	Australia	Turkey	South Korea		Bangladesh	Iraq
20	Turkey	Egypt	Spain	Turkey	Iraq	Turkey

To understand the concept of poverty, we need to understand its dimensions:

Ø Income Poverty: Dependence on cash for purchases of essential goods and services

Ø Educational and Health Poverty: Lack of adequate educational and health provisons at appropriate time.

Ø Tenure Poverty: Land and housing in authorized areas are not affordable, therefore the poor occupy land illegally and construct their houses without construction and occupancy permits

Ø Personal Insecurity: Drug/alcohol abuse and domestic violence; family breakdown and reduced support for children; social diversity and visible income inequality in cities, which increases tensions and can provide a temptation for crime

Ø Financial Insecurity: Dependence on cash income and lack of access to credits and safety netsØ  Social and Political exclusion/disempowerment: Illegitimacy of residence and work. Isolation of communities that are disconnected from jobs and services.

The section provides an introduction to the concept and measurement of poverty defined as not having enough today in some dimension of well-being.

To compute a poverty measure, three ingredients are needed:

1. One has to define the relevant welfare measure. 
2. One has to select a poverty line – that is a threshold below which a given household or individual will be classified as poor. 
3. One has to select a poverty indicator– which is used for reporting for the population as a whole or for a population sub-group only.

Estimation Of POVERTY

How can we estimate poverty?

There are various ways of estimating poverty: 

monetary poverty is expressed in (absolute or relative) economic terms; human poverty relies on social indicators; social exclusion broadly implies marginalization (involving political considerations). 

STATISTICS:

Theoretical Statistics:
There are six billion people in the world
2.9 billion of them live on less that two dollars a day and 1.2 billion live on less than one dollar a day. 
In Egypt, 3.1 percent of the population survive on less than a dollar a day, and 52.7 percent live on less than two dollars 

Absolute monetary poverty indicators: 

1. Estimating poverty in terms of purchasing power is one of the most common measures of poverty. Thresholds, called poverty lines, are built on the pricing of a basket of goods that would satisfy a person’s basic nutrition needs (1). 
2. These are converted into purchasing power parity units* to secure international comparability. A headcount poverty index can then be calculated, showing the percentage of poor people in the total population. 
3. The muchpublicized headcount poverty index is then highly dependent on the level of the poverty line (the higher the poverty line, the larger the number of the poor).

                      
monetary poverty indicators: 

1. Absolute poverty measurements give no indication as to the relative position of the poor. Not only are the poor of the poorest countries generally poorer than those living in richer countries, but their position in society also depends on income distribution inequalities. Relative poverty indicators allow for interesting international comparisons. 
2. For example, the average income in the richest 20 countries is 37 times higher than that of the poorest 20; in Brazil, the income of the poorest ten percent of the population is only 0.9 percent of the total national income, while the richest ten percent get 47.6 percent. 
3. Relative monetary poverty indicators may help us understand the subjective dimension of poverty: it may be less tolerable to be poor when there is plenty of wealth on display at the top levels of society than when there are no visible opportunities of upward mobility.

Social indicators and human poverty: 

1. Monetary poverty indicators, represented by income or consumption, do not express the true dimensions of destitution. For example, less than one percent of children do not reach their fifth birthday in rich countries, but in poorer countries the number reaches 20 percent. The UNDP developed a multidimensional poverty indicator, the Human development Index, to account for social factors such as health, nutrition, life expectancy, access to water, school attendance and literacy. 
2. Social indicators may be used as complementary data to monetary poverty estimates, or they can form an approach in their own right.

Poverty as a denial of human rights: 

1. Human poverty means that people cannot lead a secure existence, make use of opportunities, have choices, freedom, dignity and self-respect, or have access to resources needed for a decent standard of living. 
2. In western industrialised countries social exclusion, the cumulative dynamics (end result) of marginalization, means denial of human rights (citizenship rights). 
3. The human poverty approach, seldom used in the developing world, allows for a better analysis of the political dimension of poverty, conspicuously absent in oversimplified monetary measurements.

ALITER

Choosing and Estimating a Poverty Line

Once an aggregate income, consumption or non-monetary measure is defined at the household or individual level, the next step is to define one or more poverty lines. Poverty lines are cut-off points separating the poor from the non-poor. They can be monetary (e.g. a certain level of consumption) or non-monetary (e.g. a certain level of literacy). The use of multiple lines can help in distinguishing different levels of poverty. There are two main ways of setting poverty lines—in a relative or absolute way: Relative poverty lines: These are defined in relation to the overall distribution of income or consumption in a country; for example, the poverty line could be set at 50 percent of the country’s mean income or consumption. Absolute poverty lines: These are anchored in some absolute standard of what households should be able to count on in order to meet their basic needs. For monetary measures, these absolute poverty lines are often based on estimates of the cost of basic food needs (i.e., the cost a nutritional basket considered minimal for the healthy survival of a typical family), to which a provision is added for non-food needs. For developing countries, considering the fact that large shares of the population survive with the bare minimum or less, it is often more relevant to rely on an absolute rather than a relative poverty line. Different methods have been used in the literature to define absolute poverty lines  The food-energy intake method defines the poverty line by finding the consumption expenditures or income level at which a person’s typical food energy intake is just sufficient to meet a predetermined food energy requirement. If applied to different regions within the same country, the underlying food consumption pattern of the population group just consuming the necessary nutrient amounts will vary. This method can thus yield differentials in poverty lines in excess of the cost-of-living differential facing the poor. The Cost of Basic Needs method values an explicit bundle of foods typically consumed by the poor at local prices first. To this, a specific allowance for nonfood goods, consistent with spending by the poor, is added. However defined, poverty lines will always have a high arbitrary element; for example, the calorie threshold underlying both methods might be assumed to vary with age. Alternative poverty lines are also sometimes used. They can be set on the basis of subjective or self reported measures of poverty. Alternatively, one can combine absolute and relative poverty lines. This technique allows to take inequality and the relative position of households into account while recognizing the importance of an absolute minimum below which livelihood is not possible. Ultimately, the choice of a poverty line is arbitrary. In order to ensure wide understanding and wide acceptance of a poverty line, it is therefore important to ensure that the poverty line chosen does resonate with social norms (with the common understanding of what represents a minimum).  For example, in some countries, it might make sense to use the minimum wage or the value of some existing benefit which is widely known and recognized as representing a minimum.  Using qualitative data could also be useful to decide what goods would go in the basket of basic needs (when constructing an absolute poverty line). For comparisons over time, the stability and consistency of the poverty line need to be ensured. Reasons for Poverty History.  War & political instability. National Dept Discrimination and social inequality.  Vulnerability to natural disasters. Colonial Rule Regional Activities and Rituals Indebtedness Agricultural Dependency Miscellaneous Factors Please contact through E-Mail for expansion of the text  BY PARTH RAGHAV ACKNOWLEDGEMENTS: Blandine Destremau http://web.worldbank.org/ wikipedia.org Parth Raghav NCERT Economics google.com