Learning to change poverty parameters

“New poverty index finds Indian states worse than Africa,” announced an Indian newspaper. “Half of India’s population lives below the poverty line,” proclaimed another.

The anxiety was occasioned by a new study of global poverty released last month by the Oxford Poverty and Human Development Initiative, a research centre at Oxford University.

The study includes an index that seeks to broaden conventional measurements of poverty, moving beyond purely economic indicators to include education, health and access to services like electricity and sanitation.

The study finds that the eight poorest states in India contain more poor people than 26 of the poorest African countries combined. It also estimates India’s poverty rate at about 55 per cent, twice the official figure calculated by the Planning Commission.

Lost in the din over the nation’s dismal results, however, was a more subtle — and perhaps more important — conceptual point about the nature of poverty. The Oxford study was just the latest in a series of efforts, going back at least two decades, to broaden the field of development beyond the narrow economic focus that has long predominated.

Just income

Conventional measurements define poverty with reference to national or individual income. Thus, a country’s level of development is gauged by its per capita gross domestic product, or according to the number of people living on less than $1.25 (or, sometimes, $2) a day.

Critics have long argued that this narrow focus is flawed for at least two reasons. First, because it overlooks the multiple factors — good health, for example, or personal liberties — that make up a complete human life. And, second, because it can encourage policy makers to foster economic growth without regard to the consequences — exacerbating social inequality in the process, for instance, or sacrificing environmental standards at the altar of rising incomes.

It was in the mid-1990s, the Indian economy was picking up, and much of the country (and, indeed, the world) was euphoric over the rising prosperity of the nation.

Amartya Sen sounded something of a cautionary note. Arguing for a more holistic view of development, he drew attention to the failures in education, women’s liberties and health that persisted despite India’s rapid growth. He exuded a broad-minded humanism that I found not only morally compelling, but accurate.

Sen — along with several others, notably the late Pakistani economist Mahbub ul Haq — was instrumental in developing the annual UN Human Development Reports. These reports, which include a range of noneconomic factors to measure development, have been hugely influential.

Across the world, from Bhutan (which promotes a notion of Gross National Happiness) to Mexico (which uses a version of the Oxford methodology) to France (where President Nicolas Sarkozy recently appointed a committee to “identify the limits of GDP”), policy makers now accept that income is a crude indicator of well-being.

The study measures not just absolute numbers of the poor, but also seeks to capture the intensity of their poverty. A country’s ranking is determined not just by how many poor people it contains, but how poor they are.

In India, the index points to specific groups (lower castes and religious minorities in particular) that have been left out of the economic boom. It also identifies which regions are poorest and allows policy makers to better understand the composition of their poverty.

After almost 20 years of economic reforms, it is becoming clearer that the human condition is more complex than can be accounted for by a simple dollar (or rupee) figure. More generally, it is becoming clearer that a broader, more inclusive process of development is required.