Question

Some developing countries are being advertised among policy makers as exemplary in reducing their poverty rates, but the picture appears to be less rosy upon closer scrutiny. What might be the reasons for these false advertisements? A complete answer would utilize the axioms of absolute poverty measures, and the less than honest practices by policy makers.

Answer 1

Developing countries are under constant pressure to show better poverty indicators due to following reasons:

1. Domestic political pressure.

2. International commitments on poverty reduction

3. Budgetary compliances related to poverty reduction

4. International organizations such as World Bank make it a criterion for giving loans to countries.

5. The criterion of poverty calculation may be fraught with misrepresentation

6. Fudged data points

7. Trying to apply new definitions of poverty

Absolute Poverty is a condition of abject poverty. Basic income is so low that a household is unable to even attain basic necessities. Starvation, squalor, inhuman living conditions, sustained long periods of unemployment, low levels of health conditions, large families, high mortality rates and short lifespans are some of the co-horts of absolute poverty.

Measures to combat absolute poverty are:

1. Minimum Wage programs

2. Negative Income Tax

3. Social Security measures

4. Transfer Payments

5. Public Distribution Systems

These measures are often non implementable due to lack of data on poor people; especially on absolute poverty.

An indicative list of less than honest practices adopted by Governments is mentioned below:

1. Selection of biased data sets; not selecting areas of high poverty / Selective showing of data on improved poverty stats.

2. Selection of wrong Base Year. Deliberate selection of wrong reference periods

3. Survey errors - Sample survey and its problems are not informed to public

4. Changing definitions of Poverty / Income levels

5. Data published with huge time lags. usually, the time lag is between 3 to 5 years from data collection to publication

6. Appointment of private parties in enumeration.