3 Deaton: Understanding Poverty

Abstract 

This essay addresses a number of question regarding poverty: How do we know who is poor and who is not? Is poverty the same as hunger? What is the relationship between economic growth and poverty reduction? How will we know whether the first Millennium Development Goal has been met, or whether world poverty is falling at all? It considers the issue of poverty as a lack of income or consumption, and the broader view of poverty as the absence of one or more of the basic capabilities needed to achieve minimal functioning in society, such as food, clothing, education, and political participation. The measurement of poverty in the world is also discussed.

Participatory rural assessment: asking people if they think they are poor. The poor are often people who cannot work due to illness, isability or age. Widows as well who are in poverty because they don' have sons to suport them. Some may claim to be poor even if they are not in order to claim the monetary benefits. Many NGOs have found that after a few visits, everyone is deemed poor if the only informaion gathered is by asking people questions. Self-identifying poverty does not always work, although there is much to be learned from asking people who they define poverty.

National poverty counts are also used for allocating funds.

- In the United States and many other countries, some government benefits are confined to poor or near-poor people.
- In India, the central government subsidizes food provision to state governments according to the fraction of the population that is poor.
- The South African government transfers funds to municipalities according to estimates of the fraction of their population that is poor.

Relationship between hunger and poverty

Many countries calculate poverty lines by how much it costs to obtain enough food. Someimtes vary a) if doing more manual labour - need more calories to be productive; b) men and women; c) pregnant women.

Should vary for urban / rural, hot / cold, high / low land. 

Poor diet directly correlates with poor health and increased illness or disability > lower productivity.

Calorie Engel curve: a graph displaying income against calories. People living with less than the amount of income corresponding to their required calorie intake are classified as poor. 

People with more money tend to eat tastier food and not necessarily food with more calories.

The Micawber problem

Poverty lines mean that a minescule difference in income divides two groups of people. Why should this be? 'It makes no sense to treat such similar people so differently.' Governments that do not care about reducing poverty at all could just give away small amounts of money to those below the poverty line in order to classify them as non-poor. This money could even come from the very poor whom it is harder to help. 

Poverty and Growth

'where there is economic growth, int he sense of an increase in average consumption and average income, what happens to poverty…