Why redefining the 'poverty line' is necessary
As the new government in Bangladesh seeks to implement some of the promises it made during the last election campaign, this is an opportune moment for us to review some of our collective aspirations. The most important and urgent priority for the country is poverty elimination. Commendably, past administrations have always kept poverty alleviation as one of their primary goals. And we have succeeded somewhat in this difficult and uphill task. A few years ago, we embarked on an even more ambitious programme to eliminate extreme poverty by 2030. Our political leaders, not to mention every stakeholder engaged in this monumental undertaking, would definitely like to declare soon that "there is no poverty in our country."
At this point, let us take a pause and ask, what would we mean when we say in the near future that we have no poor people in this country? The UN Sustainable Development Goals (SDG) programme has developed certain measures to monitor the progress in reaching Goal One (SDG 1), which is poverty elimination. The UN has defined seven "Targets" and 14 "Indicators" for SDG 1. The targets specify the goals and the indicators represent the metrics by which the world aims to track whether these targets are achieved. Indicator 1.1.1 measures the proportion of population below the poverty level by sex, age, employment status and geographical location (urban/rural), and the aim is to lift the world's population above this level. Progress on all the other 16 goals is somewhat conditional upon the first one, elimination of poverty.
In Bangladesh, like many other countries, the poverty threshold is defined as USD 1.9 a day. Statistically, the number or percentage of people living below this level of income is counted and we evaluate our progress in terms of gradual reduction in these numbers. Currently, 16.2 million people, or roughly 10 percent of the population of the country, have a daily income of less than USD 1.90! The prime minister vowed to eradicate extreme poverty by 2021 when the country celebrates 50 years of independence. The PM must be commended for making this promise, which drastically curtails the timeline for poverty eradication for Bangladesh by 9 years compared with the SDG timeframe. And to be honest, even if we miss the deadline by a year or two, it would be a remarkable achievement measured by any standards.
This accelerated programme for poverty elimination raises three critical questions for the nation: 1) Will the government prioritise or "fast-track" poverty alleviation and marshal all our development resources to ensure a minimum income and employment for the poor? 2) What are some of the new initiatives that will lift the poor from the "sinkhole" of poverty? 3) If the government fast-tracks poverty elimination, how will it affect the existing five-year plans and investment? For example, will the government allocate more funding for healthcare? Will it guarantee housing for those who live in shanties or have recently become homeless?
A question that has gained currency in academic circles as well as in public discussions around the globe is: "Can we ever eliminate poverty?" Former World Bank President Jim Yong Kim made an interesting observation in a recent post on the bank's blog entitled, "We need to step up our efforts to end poverty in all of its dimensions." He observed that the poverty level is a relative term. Our basic needs change with time. For Bangladesh, the more fundamental issue is, can we ever reach such a point where everyone, including even those situated at the lowest rung of the income ladder, can have a square meal every day, send their children to school, and receive medical care when they are sick? As many op-eds published in this newspaper have rightly pointed out, ending poverty goes beyond ensuring a minimum income, and we need to "acknowledge the fact that we have a long way to go before we can effectively tackle multidimensional poverty." (The Daily Star, February 21, 2019)
In development economics, one of the latest problems facing policymakers and statisticians is how to measure the level of poverty in a country when the definition of poverty is not rigid. In other words, policymakers are grappling with a paradigm shift forcing them to design a programme to erase poverty, a moving target. For a very long time, a per capita income of USD 1.90 per day defined the international poverty line (IPL). It has been so since 2015. The idea of a specific IPL has its strengths. The concept of providing a certain minimum income to ensure basic human needs is powerful, and provides each government and development agencies with a singular objective, i.e. reducing the "poverty headcount". How many times have we seen the following statistics—"The proportion of the world's workers living with their families on less than USD 1.9 per person a day declined significantly over the past two decades, falling from 26.9 percent in 2000 to 9.2 percent in 2017"?
What Kim and others are now suggesting is that we should not sit complacently and relax knowing that the number of poor people who earn less than USD 1.9 per day will soon approach zero. International agencies have indicated that development practitioners also need to report poverty comparisons at two higher thresholds—USD 3.2 per day and USD 5.5 per day—which are typical standards in lower- and upper-middle-income countries. As Bangladesh approaches the middle-income status, we may now need to raise our minimum income to USD 3.2.
In other words, to really claim victory in our war against poverty, the government needs to raise the bar. Why so? "Measuring poverty also means measuring people's well-being. Our new multidimensional poverty measure takes into account deprivations in education, electricity, water, and sanitation. Often household resources are not distributed equally, leading to greater inequality—especially for women and children—so we need to look at how resources are distributed within households," to quote Kim.
Obviously, that presents a challenge. Imagine that you are playing a game of soccer. As we all know, each team in this game attempts to take the soccer ball between the goal posts and the crossbar of the opposing side. The goal post is permanent and each player knows exactly where it is located. Now think of a hypothetical situation, or a game, where the goal post is not fixed. After the game starts, the goal post suddenly shifts, and in an extreme case, it keeps on shifting.
However outlandish the above scenario might appear at first reading, it turns out that moving targets are not so exceptional after all. In war and sports, having a moving target is very well-known. One of the first lessons in rifle shooting practice or in military training is to aim at a "moving target". A moving target is, however, also a common phenomenon in other recreational sports, finance, and medicine. For example, last year, at the height of the flu season in the USA, a major newspaper in the Midwest ran a story with the headline, "Fighting flu is chasing a moving target."
Dr Abdullah Shibli is an economist and works in information technology. He is Senior Research Fellow, International Sustainable Development Institute (ISDI), a think-tank in Boston, USA.
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