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POVERTY/ What does it really mean and how can it be measured?

What definition of poverty should be considered to increase welfare policy efficiency? Welfare measure must tackle its multiple levels, lest it should fail, argues LORENA PAPAMANCI

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The social and political agenda in the UK has been polarised over the past several weeks on the issue of welfare reform, with the Government supporting work-centred measures as a method of poverty relief, while different organisations and societal actors argue that these proposed measures would push even more people into poverty. This debate begs the question – what definition of poverty do the two parts uphold? And even more so, what definition should they uphold to increase welfare policy efficiency?

For the past two decades the international community has, quite rightly, taken an increased interest in the issue of poverty. In September 2000, world leaders adopted the United Nations Millennium Development Goals (MDGs), the first of which being a firm commitment to halve world poverty and hunger by 2015. Furthermore, this Spring the UK and other developed countries have renewed their commitment to alleviating the world’s poorest, whilst the Government’s Welfare Reform agenda sets out to tackle poverty in our own country.

In order to evaluate the programmes and efforts involved thus far, however, policy-makers and academics alike have yet to establish the proper method of understanding and measuring poverty. Scholars define the concept of poverty through numerous mechanisms, which focus primarily on basic human needs and individual access to the goods and services that ensure them. Consequently, indicators have been developed according to three leading theories: income-based, consumption-based and capabilities-based.

Income is universally accepted as an objective measure of poverty and it is generally understood that the level of income in a household determines its degree of wealth. Academics also argue that income is one-dimensional and thus allows for precise calculations and estimates. But despite the important advantages of computability and objectivity, income-based indicators are eminently abstract and do not reflect the reality of those living in poverty. Such measures provide only a number where a more personable understanding and empathy is needed. Consequently, welfare measures directed solely at increasing household income will never solve the issue, but rather postpone its solution.

On the other hand, the World Bank (WB), endorsed by the UN as ‘official poverty scorekeeper’, uses the poverty-line index corroborated with the Purchase Power Parity (PPP). This ‘line’ describes the minimum amount an individual has to spend daily in order to ensure basic human needs, based on the least costly basket of goods the poor report in their consumption (both food and non-food spending). By counting households where consumption per person is below this poverty-line, thereby obtaining a 'headcount index' of poverty. Focusing on consumption rather than income, this indicator reveals a much deeper understanding and therefore a more reliable estimation of poverty, understood as low quality of life, through limited access to consumer goods and services.