Introduction to Income Measures of
Poverty: A Historical Perspective
Binayak Sen
Bangladesh Institute of Development Studies (BIDS)
A Presentation made at a GED-ERG training workshop organized for GED and SSIP Project of
UNDP, Dhaka , 9 May 2015
Outline and Scope
Placing Poverty Measures in a Broader
Development Context
• Genealogy of a Concept:
• From Famine to Hunger to Poverty
• Remembering Jack: Relevance of a Household Survey and Qual-Quant for Poverty
Measurement
• Setting the Poverty Lines
• Basic Poverty Measures
• Poverty and Governmentality: From MDG to SDG
Genealogy of a Concept
Born out of Shadow of Famine
• Colonialism produced famines and famine prevention policies, postcolonial states reproduced poverty and poverty reduction policies
• The Literary imagery of Bengal famines
• Spectre of Famine in the 19th Century and the First half of the 20th
century, and the famous 1943 famine suggesting the complex
interplay among politics, ecology, class and exclusive development
(Iqbal 2009; Ravallion 1997 on famines and economics; Sen 1981;
Mukerjee 2010 on Churchill’s “secret war”)
• It brought attention to the relevance of “entitlement” approach, but
did not lead to comprehensive entitlement-centric policies (only
“safety net” policies were enacted)
Colonial Famine vs. Post-Colonial Poverty
• Post-colonial states denied famine, but recognized Monga or silent hunger
using the same famine-prevention policies such as special employment
schemes (see also, Alamgir 1980; Sen 1981; Ravallion 1987; Ahmed et al.
2000).
• It also came up with the idea of further differentiation among the national
poor into extreme vs. moderate poor (at global level, it invented extreme
poverty based on the 1.25 $ line as opposed to the 2 $ line). Bangladesh
made use of such differentiated concept in the 1970s (see, Khan 1977;
Alamgir 1978).
• “Capability” approach arose in connection with the focus on global poverty
in the 1980s while “entitlement as developmental right” re-entered in
connection with rights-based approach to development in the 2000s.
Measure for Measure: “Some Rise by Sin, and
Some by Virtue Fall”
• Famine did not pose a measurement problem, in fact the colonial
governments wanted not to measure it. Poverty demanded
measurement and the governments were too happy to invest in it.
• As a result, poverty discourse developed more along the line of
measures and less along the line of drivers and policies. Even today
the largest poverty initiative is in the form measuring and identifying
the “extreme poor” rather than to eradicate it in the shortest possible
time!
• However, inequality discourse get sidelined in post-colonial
governments. This is surprising since poverty is outcome of two
factors—income growth and contemporaneous changes in inequality.
History of Poverty Measurements: Introducing the Basic Concepts
Remembering Jack: The Originator of an Idea
• J. C. Jack of Faridpur: the pioneer of poverty survey in
Bangladesh (1910/ 1916), For details, see Begum and Sen
(2011).
• Jack also suggested extreme poverty (those “living in
indigence”), in moderate poverty (“above indigence below
comfort”), and “those in comfort”.
• Jack suggested multidimensional measures—not just
income, but assets (such as housing), paid attention to
seasonality, and implied the use of QualQuant.
Setting the Poverty Line
• Food energy intake method:
• Calorie method
• Calorie-income fitting graph method
• Why FEI is inferior to Cost of Basic Needs (CBN) Method (Ravallion and Sen
1996)
• Cost of Basic Needs Method:
• Normative food bundle
• Prices for costing the bundle: evolution of a practice
• Upper and Lower Poverty Lines (Ravallion 1998; World Bank 2001)
• Absolute and Relative Poverty Lines (Recall the poem of Tarapada Roy)
Basic Poverty Measures and Decompositions
• Headcount index
• Poverty Gap Index
• Squared Poverty Gap Index
• Stochastic first-order and second-order dominance tests
• Poverty Decompositions into Growth and Redistributive Components
Poverty and Governmentality: From MDG to SDG
The Changing Focus in Global Discourse
• In the 1990s, the prevalent term was “alleviation”; in the 2000s, it
shifted to “reduction”; in the 2010s, it is gradually shifting to
“eradication” of poverty
• Bangladesh has done impressively well in meeting nationally
measured poverty MDGs
• Global goal of poverty eradication by 2030 as measured by the 1.25 $
line (adjusted to PPP);
• How about proposing attainment of the “twin objectives” in the
context of the Seventh Plan: (a) eradicate national extreme poverty
by 2021; and (b) by 2021, reduce the total national poverty by 50%
from the 2010 level?
From MDGs to SDGs: Shifting Focus on
Inequality
• UN-DESA (2015): “the growth rate of per capita income of the bottom 40%
must grow at a faster rate than that for the top 10%”
• Income inequality has been rising for some time now (appropriately
measured Gini index, Palma ratio), but why suddenly a sharp focus on
“income inequality”?
• The Piketty Effect?
• The riding part of the Kuznets Curve in the backdrop huge backlog of “surplus labor”:
Osmani (2015);
• “stable rural consumption inequality in the face of rising income inequality”: Osmani
and Sen (2011)
• “the most growth-seeking sources are also the most disequalizing”: Khan and Sen
(2001; 2006)
• The need for institutional reforms in the arena of taxation, urban
management, human capital and social protection