Saturday, May 31, 2008

Why WB's 2-dollar definiton of poverty is STUPID?

My two cents on the two dollar definition of poverty:
"Under two dollars a day definition of poverty is an affordability exercise for consumerism.

A broad comparison of PPP for the world is a bad measure and I completely agree with Reddy and Pagge's explanation. In fact, its even hard to define 'poor' in India, as its a relative measure. $2 can buy different things even within India. $2 roughly translates to Rs.80, which is a decent wage per day if you are a weaver in a village in Rajastan. However, this might not be the case if you live in Mumbai where your cost of living (basic roti-dal-chawal, housing, etc) is expensive. This in reality leaves the Mumbai auto driver a 'poorer' guy than the Rajastani weaver. However, if I were to use the $2 standard to measure poverty, both would be termed 'poor'. Am not sure if the Rajastani weaver would be too happy being termed 'poor' by the World Bank economists, while he has a house for himself and makes 'good enough' wage for decent living (just because his consumption of certain commodities by 'benchmark standards is low!)."

How Not to Count the Poor?

A Reply to Reddy and Pogge by Martin Ravallion

A Reply to Ravallion

Is Globalization Working?

James's comment:
"poverty can only be defined by the exclusion of wealth.

under these metrics, the village weaver is not impoverished, but merely broke. while the bombay day laborer is impoverished by nature of his proximity to vast private wealth.

private wealth depends on the 'bottom of the pyramid.' Which is funny, because everyone and their mothers want to unlock value there, or empower the work force there -- but the bottom of the pyramid is the foundation! The vested interests in keeping them consuming at the same clip in which they earn will ensure that the idea of class mobility remains a very pretty little fantasy."

My comment:
"thanks James! income poverty (measured here) is only aspect. other indicators of poverty being, based on under-nutrition, infant mortality, access to health svcs, availability of skill jobs, etc. the latter are more realistic indicators and are universal. they can be benchmarked globally with relevance to proximity standards (% national gdp, quality of public hospitals, etc).

it is not right to even accept the WB's standard as a measure of global poverty because it is extremely hard to identify a reference bundle of commodities that must be commanded in order to avoid being poor (poverty inherently doesnt have a reference point). moreover, the equivalent ppp varies considerably depending on the reference bundle chosen. people in the BOP do not care as much about this bundle (movie tickets, etc) as they care about being healthy to do a skill based job and make enough to make ends meet (~ a middle class family above the poverty line)."