Poverty:definitions and dynamic factors

ByMr. Julio Rosado

Social Affairs OfficerECLAC Subregional Headquarters for the

Caribbean

Definitions of poverty

• Welfarist approaches to measuring poverty– more objective; easy to quantify; and cheaper and quicker

to collect. They omit intangible concepts and non-market activities

• Non-welfarist approaches to measuring poverty– more emphasis on the ends or outcomes of policies rather

than the means. More useful to get medium or longer term well-being assessments. Data that is required to develop these measures are more expensive and difficult to collect.

• Other approaches

Different definitions of poverty

There is a distinct emphasis underlying different poverty concepts, which can be categorized into three principle groups:

i) Poverty concept referring to material need

ii) Poverty is considered as a description of people’s economic circumstances

iii) Focuses on the relationship between social relationships and poverty

Different definitions of poverty (cont’d)

Spicker, 2007

Dynamic factors of poverty

a) to take poor people out of poverty

b) to avoid non poor people from becoming poor

• poverty mitigation and preventive actions

• poverty alleviation and reduction actions

Two main goals of poverty reduction strategies

– transitory poverty

– chronic poverty

– stochastic factors of poverty

– structural factors of poverty

Dynamic factors of Poverty

Hulme and Shepard, 2003 (Adapted from Jalan and Ravallion. 2000).

• Chronic poverty: occurs when a household’s inter-temporal average welfare is below a minimum level established in a given poverty line

• Transitory poverty: difference between chronic and total poverty in individual periods

Chronic and transitory poverty

Carter and Barret, 2006.

• Role of assets– Assets: stock of capitals that can be utilized directly, or

indirectly, to generate the means of survival of the household or to sustain its material wellbeing at the different levels above survival

• Nature and extension of poverty are important variables, not only the magnitude – Distinction between stochastic and structural poverty

addresses the nature of the causes that keep people below the poverty line

Structural and stochastic factors

Using the Asset Poverty Line to Decompose Poverty Transitions

Carter and Barret, 2006.

Carter and Barret, 2006.

• Vulnerability i) defenselessnessii) insecurityiii) exposure to risk, shocks and stress

• Vulnerability: magnitude of the threat of poverty or low wellbeing (understood as the probability of life in a poverty situation in the future and the severity of it in such a case), measured ex-ante, before the veil of uncertainty has been lifted

– sensitivity (“magnitude of a system’s response to an external risks”)– resilience (“the ease and rapidity of a system’s recovery from stress”)

• Ex-ante and ex-post strategies against vulnerability

Vulnerability

• Some considerations

• Conclusions– Public policy implications

Conclusion

Thank you