How Poor Is Poor?

February 3, 2005
ECONOMIC SCENE
U.N. Aims to Cut Poverty in Half as Experts Wonder How to Measure It
By ALAN B. KRUEGER

ONE of the United Nations' top goals is to cut in half the proportion of people living in extreme poverty by 2015, compared with 1990. The World Bank is responsible for keeping track. Accurately monitoring poverty is essential for knowing whether the goal is achieved and whether antipoverty strategies are working.

But measuring poverty is difficult for a particular country, let alone the world. The movie star Angelina Jolie challenged celebrities at the World Economic Forum in Davos, Switzerland, last week to know "absolutely what they're talking about" when it comes to poverty, yet even experts would have trouble meeting her standard. Knowing the extent of the rise or fall of worldwide poverty is difficult because poverty is not easy to define or measure.

First, establishing a poverty line - or level of consumption below which one is considered impoverished - involves an element of arbitrariness. For many poor families, not having enough money amounts to not having enough food. But there is no particular threshold level of income or expenditures above which people automatically become fully functioning, nourished members of society.

"Poverty lines are as much political as scientific constructions," said Angus Deaton, a Princeton economist and expert on economic development. In such places as different as the United States and India, the poverty line was initially set with reference to minimum standards of food consumption. Yet over time, Professor Deaton noted, the poverty lines in both countries were adjusted to keep pace with overall price inflation, not the price of food or the share of food in the average family's budget. Despite straying from its original conception, the poverty line survived because of its political and administrative usefulness.

The U.N. has set the line for extreme poverty at living on less than $1 a day. This threshold has obvious rhetorical appeal and surely qualifies as extreme poverty by any standard in developed countries; it is also not far off the poverty line used by many of the poorest countries themselves.

Once an international poverty line is set, it must be converted to local currencies. This is trickier than it sounds. Currency exchange rates are inappropriate because most of the items that the poor consume are not traded on world markets. Living expenses are much lower in rural India than in New York, but this fact is not fully captured if prices are converted with currency exchange rates.

To convert the $1 poverty line into foreign currencies, the World Bank uses indexes of "purchasing power parity." Simply put, these indexes reflect the cost of buying a standard bundle of goods in each country.

Although it is desirable to use purchasing indexes, they are not available for all countries and are skewed toward representing the purchases of the wealthiest households, not the poorest, when they are available. Another problem is that the bundle of goods that poor families actually buy varies from country to country because of differences in tastes and availability.

Thus, the $1 poverty line is best viewed as an approximation.

Once the poverty line is set in local currency, the consumption of a representative sample of households must be compared with the line to determine the percent of people getting by on less than $1 a day. (Each household's consumption is spread equally among its members, another leap of faith.)

Again, this is harder than it sounds. The World Bank typically relies on whatever government surveys that countries routinely produce.

But there is no uniform standard in the way countries collect and process their data, which is important because the poverty rate is sensitive to how consumption is measured.

Consider India, home to 33 percent of the world's poor - or 20 percent, depending on how the data are collected.

India was a pioneer in social surveys and has one of the best government statistical agencies in the world. Still, uncertainty shrouds the level of poverty in India. In one experiment, India's national survey organization asked half of the households it surveyed to report their spending on certain items over a 30-day period and half over a seven-day period. Households reported 30 percent higher food consumption per day in the shorter interval, enough to cut the poverty rate in half. It is not certain which measure is more accurate, although follow-up work points toward the longer interval.

Perhaps the best one can hope for is consistency of measurement within countries to detect changes in poverty over time. But continuing past practices can prolong the use of misleading poverty counts that are not comparable across countries. Clearly, there is a need for Latin American countries, which usually measure poverty by income rather than consumption, to collect reliable household consumption data because consumption is a better measure of living standards.

The herculean measurement problems aside, careful research by Shaohua Chen and Martin Ravallion of the World Bank indicates that much progress has been made toward the goal of halving poverty in China and India. But, they found, little progress has occurred in Latin America and Africa, and the former Soviet states are slipping into deeper poverty. Because China and India accounted for 60 percent of the world's poor in 1990, the goal of halving poverty may be achieved a decade from now, even while many regions see no progress.

Despite the progress in China and India, 18 percent of the world's population still somehow survives on less than $1 a day.

The United Nations has recently held a number of brainstorming sessions to gather proposals for the secretary general's report to the General Assembly on achieving the development goals, which will be delivered next month.

An essential prerequisite is to improve poverty statistics and ensure their integrity.

Although the process of setting a poverty line is necessarily political, the task of measuring poverty should be insulated from political influences. The World Bank, however, is an inherently political institution.

Yet no other international body currently has the expertise or resources to monitor worldwide poverty, so it is important for the next president of the World Bank to value and protect the impartiality of the statistical and research staff. The U.N. could also help by working with statistical agencies around the world to develop uniform standards for poverty surveys and then to ensure that their data are adequately documented and publicly archived. To this end, the U.N. could restart its Household Survey Capability Program, which supported statistical offices in developing countries in the 1980's.

This may not be a cause that celebrities are ready to line up for, but improving poverty data will put the world in a better position to monitor progress and evaluate poverty reduction strategies by the time the poverty line is moved up to $2 a day.


Alan B. Krueger is the Bendheim professor of economics and public affairs at Princeton University. E-mail: akrueger@princeton.edu



Copyright 2005 The New York Times Company |

Barbara Boxer and Voting Irregularities

Why I Must Object
Senator Boxer
t r u t h o u t | Statement

Thursday 06 January 2005

Statement on her objection to the certification of Ohio's electoral votes.
For most of us in the Senate and the House, we have spent our lives fighting for things we believe in - always fighting to make our nation better.

We have fought for social justice. We have fought for economic justice. We have fought for environmental justice. We have fought for criminal justice.

Now we must add a new fight - the fight for electoral justice.

Every citizen of this country who is registered to vote should be guaranteed that their vote matters, that their vote is counted, and that in the voting booth of their community, their vote has as much weight as the vote of any Senator, any Congressperson, any President, any cabinet member, or any CEO of any Fortune 500 Corporation.

I am sure that every one of my colleagues - Democrat, Republican, and Independent - agrees with that statement. That in the voting booth, every one is equal.

So now it seems to me that under the Constitution of the United States, which guarantees the right to vote, we must ask:

Why did voters in Ohio wait hours in the rain to vote? Why were voters at Kenyan College, for example, made to wait in line until nearly 4 a.m. to vote because there were only two machines for 1300 voters?

Why did poor and predominantly African-American communities have disproportionately long waits?

Why in Franklin County did election officials only use 2,798 machines when they said they needed 5,000? Why did they hold back 68 machines in warehouses? Why were 42 of those machines in predominantly African-American districts?

Why did, in Columbus area alone, an estimated 5,000 to 10,000 voters leave polling places, out of frustration, without having voted? How many more never bothered to vote after they heard about this?

Why is it when 638 people voted at a precinct in Franklin County, a voting machine awarded 4,258 extra votes to George Bush. Thankfully, they fixed it - but how many other votes did the computers get wrong?

Why did Franklin County officials reduce the number of electronic voting machines in downtown precincts, while adding them in the suburbs? This also led to long lines.

In Cleveland, why were there thousands of provisional ballots disqualified after poll workers gave faulty instructions to voters?

Because of this, and voting irregularities in so many other places, I am joining with Congresswoman Stephanie Tubbs Jones to cast the light of truth on a flawed system which must be fixed now.

Our democracy is the centerpiece of who we are as a nation. And it is the fondest hope of all Americans that we can help bring democracy to every corner of the world.

As we try to do that, and as we are shedding the blood of our military to this end, we must realize that we lose so much credibility when our own electoral system needs so much improvement.

Yet, in the past four years, this Congress has not done everything it should to give confidence to all of our people their votes matter.

After passing the Help America Vote Act, nothing more was done.

A year ago, Senators Graham, Clinton and I introduced legislation that would have required that electronic voting systems provide a paper record to verify a vote. That paper trail would be stored in a secure ballot box and invaluable in case of a recount.

There is no reason why the Senate should not have taken up and passed that bill. At the very least, a hearing should have been held. But it never happened.

Before I close, I want to thank my colleague from the House, Congresswoman Stephanie Tubbs Jones.

Her letter to me asking for my intervention was substantive and compelling.

As I wrote to her, I was particularly moved by her point that it is virtually impossible to get official House consideration of the whole issue of election reform, including these irregularities.

The Congresswoman has tremendous respect in her state of Ohio, which is at the center of this fight.

Congresswoman Stephanie Tubbs Jones was a judge for 10 years. She was a prosecutor for 8 years. She was inducted into the Women's Hall of Fame in 2002.

I am proud to stand with her in filing this objection.