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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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  • Caterina Ruggeri Laderchi, Ruhi Saith and Frances Stewart, "undated". "Does it matter that we don't agree on the definition of poverty? A comparison of four approaches," QEH Working Papers qehwps107, Queen Elizabeth House, University of Oxford.
  • Handle: RePEc:qeh:qehwps:qehwps107
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    1. Micklewright, John, 2002. "Social exclusion and children: a European view for a US debate," LSE Research Online Documents on Economics 6430, London School of Economics and Political Science, LSE Library.
    2. 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.
    3. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
    4. Sen, Amartya, 1997. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198292975.
    5. 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.
    6. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-231, March.
    7. 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.
    8. Dollar, David & Kraay, Aart, 2002. "Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
    9. Alkire, Sabina, 2005. "Valuing Freedoms: Sen's Capability Approach and Poverty Reduction," OUP Catalogue, Oxford University Press, number 9780199283316.
    10. Caterina Ruggeri Laderchi, "undated". "The Monetary Approach to Poverty: A Survey of Concepts and Methods," QEH Working Papers qehwps58, Queen Elizabeth House, University of Oxford.
    11. Lipton, M., 1988. "The Poor And The Poorest," World Bank - Discussion Papers 25, World Bank.
    12. Ravallion, M., 1998. "Poverty Lines in Theory and Practice," Papers 133, World Bank - Living Standards Measurement.
    13. 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.
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