Understanding Global Poverty

Causes, Capabilities and Human Development

Benjamin Curtis, Serena Cosgrove

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781315316826
• Edition: 1
• Topic: Economics
• Subtopic: Political Economy
• Index: Economics

Understanding Global Poverty introduces students to the study and analysis of poverty, helping them to understand why it is pervasive across human societies, and how it can be reduced through proven policy solutions. Using the capabilities and human development approach, the book foregrounds the human aspects of poverty, keeping the voices, experiences and needs of the world's poor in the centre of the analysis.

Drawing on decades of teaching, research and fieldwork, this interdisciplinary volume is unique in its rigorous application of the multiple disciplines of anthropology, sociology, political science, public health and economics to the phenomenon of global poverty. Starting with definitions and measurement, the book goes on to explore causes of poverty and policy responses, aiming to give a realistic account of what poverty reduction programmes actually look like. Finally, the book draws together the ethics of why we should work to reduce poverty and what actions readers themselves can take to reduce poverty.

This book is an accessible and engaging introduction to the key issues surrounding poverty, with key questions, case studies, discussion questions and further reading suggestions to support learning. Perfect as an introductory textbook for postgraduates and upper level undergraduates, Understanding Global Poverty will also be a valuable resource to policy makers and development practitioners looking for a comprehensive guide to the theoretical frameworks of poverty through the lens of human development.

1 Building a framework for understanding poverty

Benjamin Curtis and Serena Cosgrove

Key questions

• How can poverty be defined?

• What are income and monetary definitions of poverty? What are their strengths and weaknesses?

• What is the capabilities definition of poverty? What are its strengths and weaknesses?

• Why study poverty from a multidimensional, multidisciplinary perspective?

• What does it mean to conceive of poverty as a human problem?

Introduction

It may have been the most troubling place we have ever visited. It was a slum in a major city in the developing world; for the moment, it doesn’t matter exactly where. An estimated one million people live in an area of about 500 acres, significantly less space than Central Park in New York City. The population was incredibly dense, with sometimes families of eight people living in houses of maybe 100 square feet, roughly the same size as a bedroom in an average American home. If they were fortunate, people would have running water in their house for about three hours a day. Otherwise, they had to get water from a communal spigot. In either case, the water was not safe to drink. Very few people in this slum had bathrooms in their homes. Instead, they had to use the public toilets. Because of the scarcity of services and the very high population density, one public toilet would serve around 1500 people. The stench was horrifying. There were few proper streets in this settlement. Rather, it was mostly pathways through dilapidated structures, and many of those pathways had open sewage in them. There was garbage everywhere. One children’s playground was on top of a giant mound of trash.

Though people might own the ramshackle structure where they lived, very few people owned the land beneath it, which means that their lives were precarious in many ways. If people did earn an income, they might be lucky to make the equivalent of USD 2 a day. Oftentimes, the working conditions were deplorable. Some people worked in a small plastics recycling industry. All day long they would sort by hand through giant piles of plastic – including things like discarded syringes – then melt the plastic down into other things. They had little to no protection from the melting plastic’s hazardous fumes, and yet this is what they did every day just to earn two dollars. There was actually a whole range of jobs in this community. Some people made pottery, some made food, some made clothing. As hard as life in this slum may sound, many people came there because they could make more money than trying to farm land in the rural areas. Why, then, was this place so troubling? It was not just the sewage, the cramped living conditions, the fumes or the paltry wages. It was that no human beings should have to live like this. And yet for most of the people in this slum, they had no better option. They were poor. Their choices were drastically restricted.

Poverty can be found virtually everywhere. It is a universal human problem. However, poverty may not be the same everywhere. The very definition of ‘poor’ can change from place to place – and yet it can also remain the same. There are some traps that will make you poor no matter where you are. This chapter is concerned with definitions because a study of global poverty must start with trying to understand what ‘poverty’ means. We consider several different ways of defining poverty, though we will ultimately suggest that a lack of opportunities is a basic, underlying definition. We will consider first monetary/income understandings of poverty, then define poverty through the idea of capabilities and functionings. We will also discuss different methodological approaches to studying poverty, stressing the need to consider insights from a variety of academic disciplines. This is a necessary foundation for understanding what poverty is, what causes it, how it affects people and how it can be remedied. Subsequent chapters will build upon this foundation to expand upon the chapter’s themes. One idea will remain consistent, however: poverty is a human problem, so just as with the example of the slum, we must never lose sight of the experiences, hopes, aspirations, tribulations and lives of human beings in poverty.

What is poverty?

How can we define poverty? This is one of those words that people use conversationally, with a meaning they think they understand, but often without thinking deeply about possible definitions. Stop right now and take a minute to think about how you would define poverty. What does it mean to be poor?

On the one hand, the definition could seem simple – but it is not nearly as simple as it initially seems. The simplest, most common way of defining poverty is ‘not having enough money’. Why use money (or the lack thereof ) to define poverty? What is money good for? The idea is that money (or income more broadly) is really a proxy to indicate a person’s or family’s ability to acquire goods necessary to survive. Money can be used to buy food, for example. Therefore, another potential definition of poverty is ‘not having enough food’. If a person is starving not by his own choice, then he is almost certainly poor; he is lacking the means necessary to survive. This food definition of poverty is most applicable in developing countries, since in high-income countries it is very rare that people do not get enough calories (though the calories they get may not be optimally nutritious). When we add the idea of food poverty to monetary poverty, the definition of poverty becomes more complex, since we recognize that poverty is a multidimensional phenomenon. There is more than one way that a person can be poor, and therefore there is more than one way of defining poverty.

As this chapter progresses, we will be exploring how poverty is multidimensional. There is nonetheless a core idea to all definitions of poverty, namely a shortfall or deprivation of something, whether something tangible such as money or food, or intangible such as rights or respect. The specific meaning of deprivation is key here: it assumes that a person is deprived of something to which he or she is entitled. Does this presume that every person is somehow entitled to a certain amount of money? Not necessarily. What it does presume is that every person is entitled to a basic material standard of living (such as having enough food) that a certain amount of money can buy. Therefore, a shortfall of money below the threshold necessary to acquire the basic necessities (such as food) deprives a person of a minimally adequate standard of living. In addition to deprivation, then, also essential to the idea of poverty is some conception of a threshold: above this threshold, whether it relates to money, food, rights, respect, etc., a person is not poor, but below it, he or she is. The question of what constitutes the threshold for an adequate minimum in the areas of income, food, rights and respect is a debatable one that we will return to repeatedly.

Income definitions of poverty

Incorporating the ideas of deprivation and a threshold, we need to examine the definition of income poverty in greater detail. Income – the money a person has – is certainly a vital component of meeting one’s needs. At the individual level, one’s income is the sum of all income-generating activities. Those activities can be in formal sector jobs, i.e. those jobs that are regulated and taxed by the government, and/or in the informal sector, which is commonly thought of as ‘under the table’ work that is not reported to the government. Informal sector jobs can include domestic service work, construction, farm work, food preparation, sales in the marketplace etc., and they are very common in the developing world. At the national level, the gross domestic product – or the total market value of all goods and services produced in the country – is a way of measuring a country’s economic prosperity. When this figure is divided by the number of people in a country, you have the GDP per capita, often used as an indicator of individuals’ standard of living. Using data from 2016, GDP per capita in the United States was USD 57,220, and USD 499 in the Democratic Republic of the Congo (DRC). While much more will be said in Chapter 3 about such measurements, a quick glance at these figures suggests that there is much more poverty in the DRC than in the USA.

Since the end of the Second World War, lack of income has been the principal definition economists have used to describe poverty. However, given what we have already said about multidimensionality, do income/monetary definitions of poverty tell the whole story? In this book, we argue that monetary or income definitions of poverty are useful, but do not include many critical dimensions of what it means to be poor. Income has an instrumental value, which means it can be used for certain other ends, including possibly acquiring things that enable a person to live a life that she values. The instrumental value of income is a prime reason why economists use it as a proxy for wellbeing or poverty. Having enough money alone, however, does not guarantee that a person will be able to live a life that she values. For example, those who are rich but sick will probably not rate themselves high on wellbeing, even if money may help them get treatment. Similarly, it is conceivable that someone who is rich but still subject to legal or cultural discrimination of various kinds, or denied basic civil rights, cannot be said to have escaped forms of poverty.

Part of the problem is that income (or other resources, including money) are not always easily converted into things a person values. Personal, environmental and institutional factors can all limit the instrumental or proxy value of income. This is an example of how institutional factors can complicate using income as a proxy: imagine two sets of parents, each with the same income, but they live in two different countries. In country A, there is a good public education system, but in country B the public system is shoddy, so parents who want a good education for their children will pay for private schools (Sen 1999: 70). Who is better off, the parents in country A or country B? They have the same level of income, but in this example, the parents in country A are better off because they are not spending additional money to send their children to school. The point of this example is that income cannot fully capture wellbeing. As another example, imagine a family whose income is somewhat above the poverty line, but where the parents squander the money on alcohol, presents for themselves or unwise investments rather than spending the money to ensure that their children are adequately fed, educated and otherwise cared for. In this example, because the family’s income is above the poverty line, it may seem that they have a basically adequate standard of living. However, the way that income is actually distributed within the family disadvantages the children. Such unequal distribution of income is all too common in many societies, with women and children most often getting less than a fair share.

It is also important to remember that income is not the same as employment. In the case of someone who has lost their job, income may be state welfare disbursements, but their self-esteem may be affected by not generating their own income. In this case again, income cannot equate to wellbeing. The problems with using income as the sole indicator of poverty magnify at the aggregate level. Imagine a country, such as the United States, with a high GDP per capita but also high levels of income inequality. In such a case where income is very unevenly distributed, there will be a small group of people with high incomes while the majority of the people have lower incomes. However, because of the way the numbers have been averaged, it appears that people are richer than they actually are: the few rich people have skewed the average. Poverty may actually be much more widespread, and much more severe, than the numbers indicate. Furthermore, economic growth – particularly in countries with high income inequality – is not the same as increased income for everyone. Because of income inequality and other structures of discrimination and marginalization, the theory that economic growth automatically benefits the poor – i.e. that ‘a rising tide lifts all boats’ – is not necessarily correct. When a country’s economy is growing, many people might not get to share in the wealth.

Few theorists argue against the utility of income at the individual or aggregate level as one potential indicator of poverty, but it is important to recognize that income as an indicator has its limitations. The simplest definition of poverty as ‘not having enough money’ is therefore inadequate. While a lack of money can lead to poverty, this lack does not in itself summarize what it means to be poor. To reiterate, poverty is multidimensional: it cannot be truly understood via a single perspective, whether money, food or some other dimension. While each dimension is worth examining in some detail to understand its relationship to poverty, a more holistic, multifaceted examination will lead to a better understanding of this phenomenon. We should also return to the idea of deprivation. What does it really mean? Deprivation of what? Deprivation can take many forms, not just of the income needed to sustain oneself. In fact, a lack of money does not serve as an adequate proxy for lack of political rights, lack of safety or control over one’s body, or a lack of adequate health and education. If deprivations of income and economic growth are insufficient for understanding poverty, then what other deprivations should we consider?

The capabilities approach

The capabilities approach calls attention to deprivation of opportunities, choices and freedoms. This is a powerful, provocative and multidimensional way of understanding what constitutes a good human life. It is most associated with the Nobel Prize-winning economist and philosopher Amartya Sen, but its ideas have been elaborated by a number of others as well, including the philosopher Martha Nussbaum and development ethicist David Crocker, to mention but a few. Sen developed this approach in part from a series of lectures at the World Bank in which he encouraged the Bank to expand its thinking about what poverty is. He agreed that income is an important asset in helping people get out of poverty, but he argued for a more comprehensive approach in which the basic abilities necessary for a human to lead a fulfilled life should be the goal of public policy. The capabilities approach thus provides a means of evaluating minimum requirements for quality of life, which then constitute demands of social justice and government policy to guarantee those minimum requirements.

Rather than focusing on a country’s economy, the capabilities approach focuses on individual humans. It prioritizes ‘the actual freedom of choice a person has over alternative lives that he or she can live’ (Sen 1990: 114). The words ‘freedom’ and ‘choice’ are key: this approach emphasizes that every human being must have the opportunity to choose aspects of a life that he or she will value. As Nussbaum has written, the capabilities approach holds ‘that the crucial good societies should be promoting for their people is a set of opportunities, or substantial fre...