The poverty conundrum

In: Uncategorized

13 Dec 2009

Ravi Kanbur, a professor of economics at Cornell, tries to explain a contradiction in poverty statistics in an article in Finance & Development. Although the official statistics show that poverty is falling there is a widespread perception that the opposite is the case:

“Setting aside the effects of the crises of the late 2000s and looking back two decades from the mid-2000s, the broad facts can be classified into the following stylized patterns (Kanbur, forthcoming). Where there has been no economic growth, poverty has risen. This is true of many African and some Latin American countries. In a large number of countries, including the biggest ones, such as India and China, and even in some African countries, such as Ghana, there has been fast growth by historical standards, and poverty—the percentage of the population below the poverty line—has fallen, as measured by official data.

“What is interesting, however, is the disconnect between the optimistic picture painted by these official data on poverty and the more pessimistic view of grassroots activists, civil society, and policymakers more generally.”

Kanbur tries to explain this gap in terms of the limitations of the official statistics. He says part of the explanation lies in the limitations of household survey data. For example, they do not account for the value of public services of inequalities within households. He then goes on to endorse the non-material approach to poverty proposed by the Stiglitz-Sen commission (see 15 September 2009 post). For Kanbur it is necessary to look at “nonmarket services, gender inequalities within households, and non-income dimensions of well-being”. His forthcoming paper cited above will be published by the commission.

However, it seems to be that a key element of the “disconnect” he talks about is the prevalence of a profound social pessimism. This is not something he seems to consider.

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