Although quite related, poverty is different from inequality. Poverty is always with specific reference to the number of people who do not have access to a defined level of income or standard of living, be that level absolute or relative. This is a bit different from inequality, which is a comparison of the income level of people within or across countries. Poverty and inequality each has a measure, but my concern in this article is with the measurement of poverty.
Development organizations often measure poverty in either absolute or relative terms. The difference between these two is in the very fine details, but details that are very important nonetheless. Absolute poverty is a measure by a fixed number. In other words, absolute poverty is taken as not dependent on time or place. Relative poverty on the other hand is ‘free floating’ and depends on the country in which one lives, and the income inequality level – i.e. the disparity between income levels in a particular country and in a particular period. In that case, a society with a low inequality level would have a low relative poverty level, while one with a high inequality level would have a high relative poverty level.
An illustrative example is the case of Sweden, where poor families are those that cannot afford to buy their children new bicycles. An even finer measurement would see poverty in different parts of Sweden or Nigeria as dependent on income distribution in that part of the country. One could then have a poverty line in Lagos that is different from the one in Owo. Remember, it is all relative. I guess it is by now obvious how difficult it is to measure poverty.
That difficulty notwithstanding, one continues to read, for instance, of over three billion people living on less than 2.5 dollars per day. This is a large number, one that instantly grabs and retains attention. My problem with it, however, is that it conceals more than it reveals. I am interested in knowing the details of the lives of the people who are thus written together under the title of poverty. Do not get me wrong, there is poverty, but I believe that simply lumping people together under one single category does not do much to help us understand who they are, how they live, what they have or what they need. If anything, it renders them faceless, voiceless and unrepresented. Even if a relative poverty measure were used, it still would not tell us anything about the people whose lives are captured by those single numbers. Are you not sometimes curious?
These are probably some of the questions that went through the minds of Daryl Collins and Jonathan Morduch, co-authors of a recent study of the finances of people who live on less than two dollars a day. The study was carried out in India, Bangladesh and South Africa. Employing instruments like diaries in which they recorded the financial history of some of the people who live under two dollars a day in these countries, their incomes, expenditure, financial decisions and choices, they found that poor people live rather sophisticated lives. They make financial choices on what to spend their money on and what to hold off for the moment.
On the one hand, I find it a little surprising that this study needed to be done in the first instance. Is it not fairly obvious that the people who are supposed to be living in abject poverty somehow manage to stay alive? On the other hand, I found it refreshing to see that a study like this was done. Any study that lifts off the veil to peer underneath a statistical figure, and that gives faces, voices and agency to the people who are grouped together under a single category certainly deserves a mention.
When talking of poverty, it is important to remember that one is talking of people who have lived experiences, and not just numbers.