Understanding Poverty, Beyond Lack of Income

Poverty has many faces other than income.

Poverty has many faces other than income.

Changing World, Changing Needs

In the 21st century, rapid changes are taking place all over the world – even in the economically underdeveloped countries under the wave of globalization and revolution in IT and communication technologies. The poverty standard of income devised in the historical past is no longer relevant under new conditions. People today are no longer subject to the same laws, customs and social order of the bygone era. Globalization and easy of connectivity is exposing the ultrahigh inequalities between the rich West and the poor East as well as the unjust world-order. People no longer want mere economic growth; they also aspire for equal opportunity, social justice and political freedom to influence the direction of development. Therefore, a comprehensive viewpoint is needed in order to understand poverty properly. It must be seen as a human situation deprived of many things other than income.

Low Income – The Traditional Concept of Poverty

Poverty is traditionally associated with lack of income – you don’t expect a poor to have money. This is the traditional way to look at poverty still popular with most people. People are considered poor when they don’t have enough income to obtain basic necessities of life – food, shelter, drinking water, education, medicines and so on. When poverty is seen from this subsistence perspective it is absolute poverty – a situation where the poor are struggling for survival.

According to the United Nations’ 1995 World Summit in Copenhagen, “absolute poverty is a condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information. It depends not only on income but also on access to services.

This gave rise to the concept of subsistence or absolute poverty line – people with income below it are poor; in fact, they are extremely poor. India’s official poverty line is actually a subsistence poverty line.

The exploitative colonial powers had used such a poverty line definition to set bare minimum wages for their subjects so that they could get just sufficient food to replenish their energies in order to keep working. This is how the colonial countries like the UK laid the foundation for affluence in their own countries while reducing their subjects to bare survival and plundering their natural resources.

Currently, the Word Bank uses $1.25-a-day benchmark of “extreme poverty” and estimates that globally around 1 billion people are extremely poor.

Basic Needs Approach

Evolved in the 1970s, the basic needs approach revolves around listing most basic needs of people like food, shelter, clothing and other essentials of a household. Then it fixes the quantum of their minimum consumption requirements. It also considered services provided by the state or community such as safe water, sanitation, public transport, medical and education facilities etc. It, thus, established a basic framework for community development.

Of course, these minimum needs are defined by the ‘experts’ and the poor remain as mere passive recipients. However, it is attractive to policymakers due to ease of its implementation. It helped the international agencies make developmental plans.

While it is easier to restrict the poverty perspective to material and physical needs which can be planned easily by the government, it helps to remind that human lives can’t be simplified to the level of policies that the government can plan.

Society can also Dictate “Necessities”

Clearly, people are not robotic creatures needing only replenishment of physical energy needed to work. They also have social demands which must be met in order to live a satisfactory life.

“By necessaries I understand not only the commodities which are indispensably necessary for the support of life, but whatever the custom of the country renders it indecent for creditable people, even the lowest order, to be without. . . . Custom . . . has rendered leather shoes a necessary of life in England. The poorest creditable person of either sex would be ashamed to appear in public without them.” – Adam Smith in The Wealth of Nations

After all, people are social beings and are affected by the social opinions and processes. Therefore, poverty can’t be seen in isolation and must necessarily be seen in the overall social context. It must be seen in relation with the society. This relative poverty moves in response to changing social environment and what earlier used to be luxuries can become necessities now. Living in society demands that one has to satisfy social obligations and expectations; not having the resources to do so mean one is living in deprivations – in poverty.

Relative Poverty

The philosophical foundation of relative poverty is provided by Karl Marx, “Our needs and enjoyments spring from society; we measure them, therefore by society and not by the objects of their satisfaction. Because they are of a social nature, they are of a relative nature.

As Peter Townsend, a leading authority on UK poverty, puts it: People are poor if they live with resources that are so seriously below those commanded by the average individual or family that they are, in effect, excluded from ordinary living patterns, customs and activities.

People are “relatively poor” when their average resources or average living standard falls below the society average. Relative poverty is also seen as inequality. It will be always present in any society, no matter how much it progresses. Certain sections of the society will always perform less than others, so relative poverty can never be eliminated. However, if the wealth distribution becomes more even it falls.

Moving to relative poverty is in fact a shift from the “needs” to “wants” – people are poor if they “want” to live like others but can’t. Now the measure is “the deficit in the living standard”, compared with the society average. The philosophy of relative poverty is common in the developed nations, since they have progressed beyond the point where people are no more struggling for basic survival needs.

Definition of Relative Poverty in Europe

Relative poverty is when some people’s way of life and income is so much worse than the general standard of living in the country or region in which they live that they struggle to live a normal life and to participate in ordinary economic, social and cultural activities.” – European Anti Poverty Network (EAPN)

The EU’s Relative Poverty Standard

“People falling below 60% of median income are considered to be at-risk-of poverty.”

Capability Poverty

The capability approach of Amartya Sen puts people at the center and discusses development and poverty from people’s perspective. It is perhaps the most comprehensive approach and expresses poverty in terms of deprivation of people’s capabilities – referring to what they can or cannot do, can or cannot be. It sees income, resources and public facilities as mere means to achieve or expand human capabilities. In laymen’s language, Sen’s development approach aims to make people more capable in terms of their skills, physical and mental abilities – it is a kind of holistic approach.

Expanding capabilities increase well-being and shrinking capabilities decrease well-being. The set of capabilities needed to escape poverty is rather limited. The capability poverty is typically lack of capabilities related to satisfying basic needs of food, nutrition, health, shelter, etc. In this approach, expansion of people’s capabilities is the prime goal: income, resources and facilities have no meaning unless they enhance human capabilities.

Consider this simple example: Having a cell phone can enable the capability of connectivity, but only if the person uses it properly. Mere ownership of the cell phone doesn’t tell what the person can do with it; a blind and deaf person may not be able to use it. Therefore, the important point is not the possession of a commodity or its features, but the capability to use it.

Personal freedom to lead the life one values is the central theme of Sen’s theory of development. Cultural and psychological aspects also affect people’s capabilities, so they are also important considerations and account for individual differences.

As mentioned above, when Adam Smith argued that leather shoes became social necessity in order to avoid shame in the public, he was referring the capability of avoiding public shame. As societies get richer and richer, the list of commodities required to “avoid shame” also increase. Being poor in such societies mean lacking the capability to “avoid shame” because the poor lacks the capability to “afford” all those commodities. There is certainly a strong psychological component here because the “needs” are dictated by social customs (and people’s degree of obeisance).

The Human Development (HD) Approach

It was developed in the 1980s when it was noted that handing over economic growth to market forces alone (free market economy) and curtailing the role of government in the economic activities led to increased poverty. It combines the elements of the basic needs and capability approaches and defines the human development as a process of enlarging people’s choices. The most critical choices relate to leading a long and healthy life, to be educated and to enjoy a decent standard of living. Other choices include political freedom, guaranteed human rights and self-respect.

The HD idea revolves around the basic theme: “People are the real wealth of a nation.”  And the basic objective of development is to create an enabling environment for people to live long, healthy and creative life. It was stated in the first Human Development Report (HDR) published in 1990. This is a paradigm shift in developmental thinking: it puts the focus on people and makes them the target of development; incomes and resources are seen as means, not ends goals.

The HD approach offers several advantages: It goes beyond the basic needs of material, services and physical conditions to give importance to other aspects of life like freedom, environment and society. It simplifies the concept of capability approach to include “choices” and “freedom” and sees development as widening human choices. It is open ended, and considers everything that might affect human life, so that different societies can focus on what is important for them. Poverty is just the opposite – people with badly limited choices.

The HD approach has been attracting people who are seeking human-focused and humane alternatives to the usual “economic growth” as development. It also offers an alternate measure of development in the form of the human development index (HDI) which combines life expectancy, literacy and adjusted income. The HDI is an important milestone in efforts to measure human well-being in terms other than per capita GDP or income.

Since the first HDR in 1990, every year a different human development theme is picked up for the report and the global scenario is presented. These reports have greatly impacted the national policies and provide fresh perspective to look at poverty. It has brought into focus the importance of issues like lack of women empowerment and illiteracy, income inequalities, non-inclusive growth, social exclusion etc as major impediment to human development.

It paved the way to look at poverty from a multidimensional perspective. Thus, in 2010 a multidimensional poverty index (MPI) that analyses poverty through a set of 10 indicators was launched. It has been adopted as an effective policy-making tool by many countries around the world.

The Way Forward

Do we really need experts and poverty research in order to eradicate poverty? Why not ask the poor themselves. It would give perhaps the most useful perspective. They see themselves mostly as deprived, marginalized, excluded and vulnerable. They are people without much voice and choice. To be meaningful for them, the development process must empower them so that they come out of these disadvantages.

As professor Muhammad Yunus, the Bangladeshi Nobel laureate of 2006 and better known for the micro-credit movement, puts it “The poor themselves can create a poverty-free world… all we have to do is to free them from the chains that we have put around them.”

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About Goodpal

I am a firm believer in healthy people (mind and body both), healthy societies and healthy environment. Please feel free to comment, share and broadcast your views -- I like rational and intellectual discussions. Thanks for stopping by. Have a Good Day!
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2 Responses to Understanding Poverty, Beyond Lack of Income

  1. Another master piece. The best part about this blog is things are so simple to understand.
    I don’t understand what Indian politicians have achieved in 60 years of independence. India is a welfare state, how long can we afford to be a welfare state? How long can we suppress poor? All the poverty eradication schemes are too centralised in planning. Such centralised planning is very ineffective I think. We need demand driven welfare schemes, rather than top down model. We need more and more effective decentralisation to local bodies to devise schemes. We need inclusive growth rather than redistribution of income. Only then India can eliminate poverty.
    Thanks Goodpal sir for sharing

  2. Goodpal says:

    Thanks Rushikesh, for sharing.

    There is nothing wrong n being a welfare state! The problem we had for last six decades is the bad design and hopeless implementation of government programs for the poor. Corruption was created, rather inbuilt, into the schemes so that middlemen connected to higher ups get rich.

    Grass root democracy and decentralization, as you pointer out, are the answer. Moreover, all pro-poor programs must revolve around empowering the poor, rather than the charity model.

    And lastly, we need to learn to think with our own heads – in place of looking for ready answers from the West.

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