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Does it matter that we don't agree on the definition of poverty? A comparison of four approaches

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  • Caterina Ruggeri Laderchi, Ruhi Saith and Frances Stewart

Abstract

While there is worldwide agreement on poverty reduction as an overriding goal of development policy, there is little agreement on the definition of poverty. The paper reviews four approaches to the definition and measurement of poverty - the monetary, capability, social exclusion and participatory approaches. It points out the theoretical underpinnings of the various measures, and problems of operationalising them. It argues that each is a construction of reality, involving numerous judgements, which are often not transparent. The different methods have different implications for policy, and also, to the extent that they point to different people as being poor, for targeting. Empirical work in Peru and India shows that there is significant lack of overlap between the methods with, for example, nearly half the population identified as in poverty according to monetary poverty not in capability poverty, and conversely. This confirms similar findings elsewhere. Hence the definition of poverty does matter for poverty eradication strategies.

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Paper provided by Queen Elizabeth House, University of Oxford in its series QEH Working Papers with number qehwps107.

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Handle: RePEc:qeh:qehwps:qehwps107

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  1. Datt, Gaurav & Ravallion, Martin, 1998. "Why Have Some Indian States Done Better Than Others at Reducing Rural Poverty?," Economica, London School of Economics and Political Science, vol. 65(257), pages 17-38, February.
  2. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-31, March.
  3. Alkire, Sabina, 2002. "Valuing Freedoms: Sen's Capability Approach and Poverty Reduction," OUP Catalogue, Oxford University Press, number 9780199245796, September.
  4. John Micklewright, 2002. "Social Exclusion and Children: A European view for a US debate," CASE Papers case51, Centre for Analysis of Social Exclusion, LSE.
  5. Dollar, David & Kraay, Aart, 2001. "Growth is good for the poor," Policy Research Working Paper Series 2587, The World Bank.
  6. Miguel Szekely & Nora Lustig & Martin Cumpa & Jose Antonio Mejia, 2004. "Do we know how much poverty there is?," Oxford Development Studies, Taylor & Francis Journals, vol. 32(4), pages 523-558.
  7. Caterina Ruggeri Laderchi, . "The Monetary Approach to Poverty: A Survey of Concepts and Methods," QEH Working Papers qehwps58, Queen Elizabeth House, University of Oxford.
  8. Caterina Ruggeri Laderchi, 1997. "Poverty and its many dimensions: The role of income as an indicator," Oxford Development Studies, Taylor & Francis Journals, vol. 25(3), pages 345-360.
  9. Cornia, Giovanni Andrea & Jolly, Richard & Stewart, Frances (ed.), 1987. "Adjustment with a Human Face: Volume 1, Protecting the Vulnerable and Promoting Growth," OUP Catalogue, Oxford University Press, number 9780198286097, September.
  10. Ravallion, M., 1998. "Poverty Lines in Theory and Practice," Papers 133, World Bank - Living Standards Measurement.
  11. Lipton, M., 1988. "The Poor And The Poorest," World Bank - Discussion Papers 25, World Bank.
  12. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
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