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Is $2 right measure for defining poverty?

Publication Date : 13-05-2014


Governments world over take measures to lessen poverty and develop such policies which ensure sustainable supply of necessary food and other livelihood goods to the vulnerable.

However, the main problem in the eradication of poverty is the definition of poverty. Many governments measure poverty by just setting a poverty line in terms of number of dollars earned by a person. For example, Finance Minister Ishaq Dar recently declared a person will be poor who earns less than US$2 per day. He said the previously held poverty benchmark of $1.25 income bracket has to be revised

The question is not how much dollar should be set as the benchmark for measuring poverty; nor do we have any doubt on the good intentions of the finance minister. We have just apprehensions about the methodology and the approach used by the minister to first define poverty and then steps taken to eradicate poverty. The mode to define poverty by dollar earnings is at least 30 years old whereas social scientists have now given new formats to understand and define poverty.

Poverty is a multithreaded phenomenon and it cannot be captured under just one dimension that is ‘earning per day’. The most valid definitions of poverty given by various development economists and the UN capture things like renunciation of choices and opportunities, lack of food and health facilities. Fundamentally, one can define poverty as a denial of choices, opportunities and a violation of human dignity. It means the lack of basic capacity to participate effectively in society and the economy. It also means not having enough to feed and clothe a family, not having a school or clinic to go and not having the sufficient resources to have sustainable supply of food for the whole family. This also includes low level of skill sets to do a job to earn one’s living and not having access to even minimum credit.

Development economist late Dr Mahbobul Haq was the person who first gave the idea of measuring the welfare of a society by estimating the wellbeing of its population. He introduced the idea of ‘Human Development Index’ to estimate the prosperity in a nation. Before the HDI, the prosperity of nations was measured by just per capita GDP and GNP.

As a matter of fact, according to 2013 ranking in HDI, Pakistan stands at 146th position right after Bangladesh and Kenya. Surprisingly in 1998 Pakistan’s standing was at 126th on HDI parameter.

The proposed benchmark that less than $2 earning a day will be considered as poor and the above $2 will not be considered as poor seems spurious and not factual. The decisions about such benchmarks require collective wisdom. Following the analogy of ‘one size does not fit all’, one is obviously dealing with a country of 200 million people with a lot of diversity in earnings, culture, demographics and education level.

This benchmark cannot work for the whole country when high income and inflation disparities exist across various areas and households. Setting such a low income poverty line will lead to poor living standards.

Our focus should be more on qualitative approach and not on merely the quantitative approach for measuring poverty. The HDI gives true picture of human development by focusing on issues like, life expectancy, literacy, education, standards of living and quality of life.

It would be a great service to the nation if present government can restore Pakistan’s ranking on HDI which it had held in 1998. The shift from one dimensional quantitative benchmark to combined quantitative and qualitative approach will pave the path for sustainable economic development. A better human and strategic strategy is required to cope up with the current challenges of sustainable economic development and prosperity.


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