Alternative approaches to

conceptualising and measuring

poverty
Frances Stewart

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 Overwhelming agreement that poverty
reduction is THE objective of development

• World Bank: Poverty reduction is the benchmark

against which we should be judged. (Preston,
carried on by Wolfensohn – PRSPs etc.)
• Millennium goals: halving world poverty by 2015.
• DFID – all projects and research directed towards
poverty reduction.
• Wasn’t always so
(growth/BN/stabilisation/adjustment)

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 But do we know what poverty
means? And if not does it matter?
• Aim to consider meaning of ‘poverty’, looking at
four alternative approaches to conceptualisation
and measurement.
• Consider whether differences and problems in
each matter in terms of measurement, targeting
and policies.
• Draw heavily on QEH project (Barbara Harriss-
White, Caterina Ruggeri Laderchi, Ruhi Saith,
Susana Franco, and partners in India, Dr. Shariff
(India) and Dr.Vasquez (Peru).
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 Approaches to defining poverty
• Seems obvious: poverty is deprivation.
• Yet deprivation of WHAT?
• By how much?
• Over what time period?
• Whose? A country, region, village, family
individual.
• 4 approaches take different views on these issues,
and each has problems of interpretation.
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 Four approaches
• Monetary income: conventional definition
most commonly applied.
• Capability approach (Sen; HDR)
• Social exclusion: adopted in Europe,
spreading to developing countries.
• Participatory approaches (Chambers)

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 Some common problems
• Space:
– money income/utility; what people can do/be; what
people do/are; how they perceive their condition?
• Categories of life:
– material/spiritual/cultural/political.
• Universality
– same definition for all societies? Monetary and SE
devised for developed countries.
Capabilities/participatory for developing. Can they be
transferred?
• Objective/subjective
• Whose judgement? External/internal
• Unit: individual/family/group
• Multidimensionality: how to add up.
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• Time
 The poverty line
• Absolute/relative. Related to space question.
• Is a relative line non-arbitrary? Relative to whom?
• What is justification for absolute line: Is there a
discontinuity between poor/non-poor in behaviour
or outcomes? Or do we impose it? Nutrition
approach/ BN approach/human rights approach.
• The depth of poverty and different measures – one
line or two?

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 The monetary approach
• Utilitarian basis: poverty is deprivation of money
income = utility.
• In principle includes all income in money metric.
In practice omits social goods. Imputation of
subsistence.
• Consumption v. income.
• Poverty lines relative or nutrition based.
• National v. international lines.
• Poverty attributed to individuals but measured by
family income/consumption.
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 Some problems
• Translating household income into individual
poverty:
– Allocation of income within the family
– Needs of different family members
– Economies of scale of consumption.
• Selecting a poverty line(s)
– Ravallion: ‘the minimum cost of the poverty level of utility’.
Generally nutrition based.
• Szekeley et al : poverty rate varies between 13% and 66% in 17
Latin American countries, according calculation of equivalence scales;
assumptions of economies of scale; methods for treating missing; for
misreporting.
• Measures arbitrary essentially depending on
decisions of those measuring poverty.
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 More fundamental criticisms
• Utilitarian approach is ethically flawed (Sen).
Ignores ‘condition of life’. ‘Physical condition
neglect’; and ‘valuation neglect’ (constrained
desires).
• Externally imposed values.
• Individualistic and does not consider group
conditions, or causes of poverty.
• Neglects social goods.
• Other approaches take off from these weaknesses.

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 Capability approach
• Sen’s capability approach to development – the
objective is to enhance individual’s capabilities to
be or do different things.
• Poverty is “the failure of some basic capability to
function”
• basic capabilities are “intended to separate out the
ability to satisfy certain elementary and crucially
important functionings”
• Monetary income is a means only (and only one of
several).
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 Problems in interpreting capability
approach
• What are basic capabilities?
– Not defined by Sen, though education, health etc, often
mentioned. Deliberate to allow for differences across cultures.
– Numerous attempts to define them: Nussbaum (overlapping
consensus); Doyal and Gough (avoid serious harm);
• Can one measure capabilities? In practice functionings.
I.e. similar to BN approach.
• Cut-off rate? Controversy, e.g. over nutrition; education
level. Arbitrary.
– HPI1: life expectancy below 40, adult illiteracy, and average of not
using improved water sources and under five mortality.
– HP2: life expectancy below 60, adult functional illiteracy, the long-
term unemployment rate, and the population below an income
poverty line of 50% of median disposable household income.

• Adding up issue 12
 Social exclusion
• Mon and cap. Are individualistic; don’t look at
group situation; nor dynamics.
• SE is intended to capture structural features of
poverty.
• Process of exclusion.
• Atkinson: relativity; agency; and dynamics
• Developed in Europe: includes unemployment;
lack of social insurance; lack of housing; low
monetary incomes.

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 Applying SE to developing
countries
• Relative to whose standards?
• Developed country standards are not
normal. The ‘norm’ may be one of
deprivation.
• Exclusion can be part of inclusion (caste
system).
• Inevitably society specific and arbitrary.

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 Practical applications

• India: exclusion from health services, education,

housing, water supply, sanitation and social security.
Very large numbers socially excluded.
• Venezuela: study first defines social and political
rights and then defines SE as not having these rights.
• Tanzania study - certain very poor urban occupations
and the rural landless excluded.
• Studies of Cameroon and Thailand define ethnic
minorities as excluded; plus poorly educated farmers,
informal sector workers and the homeless.
• Peru: exclusion from political, cultural and economic
processes.
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 Advantages and disadvantages of
SE approach
• Disadvantages
– Problems of interpretation of dimensions
– Identifying breaks
– Adding up

• Advantages
– Points to groups and structural characteristics
– Agency including those who exclude
– Redistributive
– Begins to look at causes
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 Participatory
• Mon, cap., SE all impose EXTERNAL values.
• Participatory approach gets poor themselves to
define what is poverty and who are poor.
• Uses wealth of methodologies introduced by
Chambers -- mapping; modelling; seasonal
calendars; wealth and well-being ranking.
• Large variety of methods can be used flexibly,
according to the situation.

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 Some elements in a Zambian Participatory
assessment
ISSUES
Perceptions and indicators of wealth,
well being and poverty
Communal assets of rural communities
Assets of rural households
Livelihood analysis
Community based support mechanisms
METHODS
Wealth/Well-being grouping
Social mapping
Semi-structured mapping
Resource mapping
Focus group discussion
Institutional diagramming
Wealth ranking/grouping
Livelihood analysis
Coping strategies in times of crisis
Semi-structured interviews
Ranking exercises
Institutional mapping
Semi-structured interviews
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 Advantages/disadvantages

• Picks up people’s own perceptions: but could be

subject to Sen’s two neglects.
• Could provide answers to value judgements needed
in other approaches
• Samples rarely representative.
– Can omit poorest. Group often define ‘others’ as poor.
– Underrepresent women in group and in voice in group.
– Not representative of country as a whole.
• Group can be divided (women/men): who decides?
• Organiser imposes structure on questions and
replies.
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 Clearly no unique and objective
of poverty: does it matter?
• Partly depends on whether approaches in
practice pick up same people. Empirical
issue.
• But also approach tends to dictate policy
approach and targetting methods.

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Empirical question: international
comparisons
• At macro level clear that monetary and capability
poverty give different country rankings – Precise
differences depending on interpretations of each.
• The Spearman rank correlation coefficient
between national poverty lines and the HPI is
0.54;
• the correlation with the internationally set lines of
those falling below $1 or or $2 a day is much
higher at 0.707 and 0.779 respectively.
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 Graph 1
Relationship between HPI and monetary poverty
(international, $1 a day)

80
% population below $1 per day

70

60

50

40

30

20

10

0
0 10 20 30 40 50 60 70
HPI 22
 Graph 2
Relationship between Human Poverty Index and
monetary poverty (national poverty line)

80
% below national poverty line

70

60

50

40

30

20

10

0
0 10 20 30 40 50 60 70
Human Poverty Index (HPI) 23
 Empirical comparisons: national and micro
studies, India and Peru

• Broad questions:
– Do levels of monetary poverty parallel levels
of poverty in other dimensions?
– Are the findings an artefact of the monetary
poverty threshold used?

• Use of national surveys and specific

micro surveys
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 Results: large data sets
• INDIA:Monetary poverty (38 %) below CA poverty
– 52 percent of adults education poor; 26% of children;
– 70% percent of children less than 13 years old undernourished,
44% severely;
– 7% percent of individuals between 7 and 59 suffered from chronic
illness..
• PERU: Monetary poverty (54%) higher than CA-poverty:
– 20 percent of the adults and 7 percent of the children education
poor.
– 10 percent of adults were health poor and 29 percent of the
children below 5 years were undernourished.

• Distributional differences significance (Cramer’s V).

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 Individual overlaps in types of poverty
Capability poverty Education Nutrition/health
measured as

child adults child adults

% of CA-poor not India 43 60 53 63

in monetary poverty

Peru 32 37 21 55

% of monetary poor India 65 38 53 91

not CA-poor

Peru 93 73 66 94

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 Altering monetary threshholds would not
greatly alter the results.
• India:
– 33% of the richest tenth of the population were illiterate (compared with 64%
among the lowest decile).
– Among those with incomes as high as the 7th monetary decile more than 50%
are poor in either education or health.
– Proportion of health poor in the highest decile is quite similar to that in the
lowest decile.
• Peru:
– 12% of top decile are education poor among adults, and 5% among children –
compared with 32% in the lowest decile for adults and 9% for children.
– incidence of child undernutrition is 5% for the top decile of money incomes
compared with 9% for the lowest decile.
• Changing the cut-off line for monetary poverty would not eliminate
poor overlaps in either country.

– 27
 Participatory measure of poverty

• Peru:
– Rural wealth ranking : Half pop. classified differently.
• 15% of population mon. non-poor identified as poor
• 34% of population identified as mon. poor but wealth non-
poor.

– Urban wealth ranking: 47% of pop classified

differently.
• 31% wealth poor were mon non-poor
• 16% mon poor classifed as wealth non-poor.

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 Focus group discussions
• Characteristics of poverty:
– India, both urban and rural groups considered
completion of secondary school as the minimum
desirable level of education; and that a chronic health
condition, or a serious one requiring hospitalisation,
should be considered as ill-health.
– Adopting these criteria would considerably increase CA-
poverty compared with our estimates.
– In Peru, multiple dimensions of poverty were noted
including capabilities, material needs, and insecurity.
– Were not able to identify SE dimensions. Social boycott
suggested in India (mixed marriage/leprosy)
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 It does matter!
• So approach and measurement does make a
difference empirically (supported by work
in Chile and Vietnam)
• Implications for targeting and policy

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 Targeting criteria
• Major errors of both types if use one criteria
(monetary) to reach other types of poverty.
• Targeting errors apply at macro as well as
micro level. I.e. aid distribution.
• Need to decide what type of poverty
reduction is objective, therefore who is
poor, and target accordingly.

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 Policy implications
• Concept of poverty important determinant of policy
approach.
• Mon poverty suggests solution is generation of money
incomes. Ca approach that this is a means only.
• Ca approach more emphasis on social goods provision.
• Both concerned with absolute poverty, so policy response
is to raise incomes/ca generally (‘growth is good for the
poor’)
• But SE suggests redistribution essential aspect. Unlikely
that growth can EVER eliminate SE without
redistribution.
• Mon and Ca individualistic (though CA more women-
focussed). SE and participatory focus on group
characteristics. 32