What are the main indicators used to measure poverty, considering both absolute and relative poverty, and how do these indicators differ in their approach and interpretation? Furthermore, what are some of the limitations associated with relying solely on income-based poverty measures, and what alternative or supplementary indicators, such as multidimensional poverty indices that incorporate health, education, and living standards, are used to provide a more comprehensive assessment of poverty? Finally, how do different organizations like the World Bank and national governments utilize these indicators in formulating and evaluating poverty reduction strategies and programs, and are there any global benchmarks or targets associated with these indicators?

Answer

The main indicators used to measure poverty can be broadly categorized into monetary, non-monetary, and subjective indicators. Each offers a different perspective on the multi-dimensional nature of poverty.

I. Monetary Indicators:

• Income Poverty: This is the most commonly used indicator. It measures whether a household’s or individual’s income falls below a defined poverty line.

  • Poverty Line: This is a threshold, usually expressed in monetary terms (e.g., dollars per day), below which individuals or households are considered poor.
    • Absolute Poverty Line: Fixed over time, usually based on the cost of basic necessities like food, clothing, and shelter. Often used in developing countries. A common benchmark is the World Bank’s international poverty line (currently $2.15 per day in 2017 PPP).
    • Relative Poverty Line: Defined in relation to the overall distribution of income in a society (e.g., 50% or 60% of the median income). More common in developed countries.
  • Poverty Rate (Headcount Ratio): The percentage of the population whose income falls below the poverty line.
  • Poverty Gap: Measures the depth of poverty by indicating how far, on average, the poor are below the poverty line. It can be expressed as a percentage of the poverty line. A higher poverty gap means the poor are further away from escaping poverty.
  • Squared Poverty Gap (Poverty Severity Index): Gives more weight to the poorest of the poor, reflecting inequality among the poor. It is calculated by squaring the poverty gap for each individual and then averaging across the population.
  • Foster-Greer-Thorbecke (FGT) Index: A general formula that encompasses the poverty rate, poverty gap, and squared poverty gap as special cases. It allows for different levels of sensitivity to inequality among the poor.
  • Gini Coefficient: Although primarily a measure of income inequality, a high Gini coefficient often correlates with higher levels of income poverty, indicating that income is concentrated among a small portion of the population.

• Consumption Poverty: Measures poverty based on a household’s or individual’s consumption expenditure.

  • Consumption Basket: A defined set of goods and services considered essential for basic living. The cost of this basket is used to determine the poverty line. Consumption data is often gathered through household surveys.
  • Advantages of Consumption: Consumption is often considered a better measure of living standards than income, particularly in developing countries, because:
    • It is less susceptible to short-term fluctuations (income can vary seasonally).
    • It can reflect access to credit and savings.
    • It may be more accurately reported than income, especially in informal economies.

• Wealth Measures:

  • Net Worth: Assets minus liabilities. Used to assess a household’s overall financial resources.
  • Asset Ownership: Ownership of durable goods (e.g., appliances, vehicles) or other assets (e.g., land, livestock). This can provide an indication of a household’s long-term economic security.

II. Non-Monetary Indicators (Multi-Dimensional Poverty):

These indicators recognize that poverty is not solely about a lack of income but also about deprivation in other essential aspects of life.

• Health:

  • Life Expectancy at Birth: A general indicator of overall health and well-being.
  • Infant Mortality Rate: The number of deaths of infants under one year old per 1,000 live births.
  • Child Mortality Rate: The number of deaths of children under five years old per 1,000 live births.
  • Maternal Mortality Rate: The number of maternal deaths per 100,000 live births.
  • Malnutrition Rates (Stunting, Wasting, Underweight): Indicators of chronic or acute undernutrition, particularly in children.
  • Access to Healthcare Services: Availability and utilization of essential health services, including vaccinations, prenatal care, and treatment for common illnesses.
  • Incidence of Disease: Prevalence of infectious diseases, such as HIV/AIDS, tuberculosis, and malaria.

• Education:

  • School Enrollment Rates (Primary, Secondary, Tertiary): The percentage of children or young adults enrolled in school at different levels.
  • School Completion Rates: The percentage of students who complete a specific level of education.
  • Literacy Rates: The percentage of the population that can read and write.
  • Educational Attainment: The highest level of education achieved by an individual or household.

• Living Standards:

  • Access to Safe Water: Percentage of the population with access to a clean and reliable source of drinking water.
  • Access to Sanitation: Percentage of the population with access to improved sanitation facilities (e.g., toilets, latrines).
  • Access to Electricity: Percentage of the population with access to electricity in their homes.
  • Housing Quality: Characteristics of housing, such as the type of materials used for walls and roofs, the number of rooms per household, and the presence of overcrowding.
  • Access to Information and Communication Technology (ICT): Ownership and use of mobile phones, computers, and internet access.

• Multi-dimensional Poverty Index (MPI):

  • A composite index developed by the United Nations Development Programme (UNDP) that combines indicators from health, education, and living standards to identify the proportion of people in a country experiencing multiple deprivations. It identifies individuals as poor if they are deprived in a certain number of weighted indicators. The MPI can be broken down to show which dimensions contribute most to poverty in a particular region or country.

III. Subjective Indicators:

These indicators capture people’s own perceptions and experiences of poverty.

• Self-Rated Poverty: Individuals are asked to assess their own economic situation or standard of living.
• Perceived Well-being: Individuals are asked about their overall satisfaction with life or their sense of happiness.
• Minimum Income Question: Individuals are asked what level of income they would need to make ends meet.
• Social Exclusion: Indicators related to participation in social and political life, access to social networks, and feelings of marginalization.
• Voice and Empowerment: Indicators that measure people’s ability to influence decisions that affect their lives and to hold authorities accountable. This includes freedom of expression, access to justice, and participation in elections.