Poverty

Poverty is disempowerment. I heard this, or something very close, a couple of months ago on the radio and thought it was a good, very succinct, definition.* It is reminiscent of Amartya Sen, Robert Chambers and others and, most importantly, gets away from the notion that poverty is simply a lack of money.

For the development economist, however, a problem is that power is difficult to measure, while money income is at least in principle easy to measure. The United Nations Development Program has come up with a lot of alternative measures, such as the Human Development Index, the Gender Development Index, the Gender Empowerment Index (how many women are in parliament, etc), the Human Poverty Index and so on. Each of these tackles poverty from a different angle without being able to provide a composite picture. Even the Gender Empowerment Index cannot tell much because it only gives the ratio of the average female to the average male. What if the average male is seriously powerless?

In classical political economy poverty was considered in relation to a minimum physical subsistence level. Both Malthus and Ricardo agreed that the standard of living of wage earners would be constantly driven down to the physical minimum by the combined pressures of population growth and scarce resources. Marx, on the other hand, had a more optimistic view that productivity could grow fast enough to enable working class living standards to rise over time - provided that workers could bargain an improvement through class struggle. Marx's version of the classical theory therefore leaves us with a view of poverty as at or below a 'socially acceptable minimum.' In a rich society, a poor person could be much more alive and kicking than a person in a similar situation in a much poorer society. If, for example, we take the poorest 10% of the population in Indonesia and Australia - on whichever measure (income, expenditure, educational attainment, health outcomes) - it is doubtful that the Indonesian group would agree that their Australian counterparts deserved the term 'poor'. Yet, in relation to other Australians they would surely be poor.

On the other hand, many people have observed the phenomenon of the 'smiling poor'. People can, it seems, be poor but happy. They might define poverty in relation to something other than their material circumstances. If they feel accepted and empowered by their community they are less likely to feel impoverished than if they feel rejected, neglected or otherwise unvalued.

If we were to define poverty as disempowerment rather than as an absence of material goods or money, or even of less tangible benefits such as education and health, I think we would be able to resolve some of these difficulties. A disempowerment definition would say, for example, that a person is poor if she is unable to exercise control over her access to a certain bundle of resources. The character of the bundle might vary from one society to another, but the key element of a definition of poverty is not so much the size or quality of the bundle itself (such bundles have different meanings and economic values for different people), but the power of individuals to access and to use it. Access that is contingent upon the agreement of another confers less control than independent access.

This view of poverty is very different from what you get in mainstream economics where the solution to poverty is usually seen in terms of increasing the size of the bundle available to a given individual and then encouraging that individual to make 'development-oriented choices'. If, for example, we increase a poor person's cash holdings, we'd hope they would invest in further income-generating activities rather than on buying an iPod. The person who chooses the iPod is supposed to have a high rate of discounting the future. Ultimately, then, development (or poverty) boils down to a series of individual choices based on given individual discount rates.

What if, instead, the increase in cash holding gave the person a choice between eating or starving. If she 'chose' to eat, would we then say she had a high rate of discounting the future? Actually a sensible person would say that there was simply no choice. Suppose now that the iPod purchaser was faced with a similar lack of choice, simply because she knew that no amount of investment would enable her to escape the poverty of her existence. There are plenty of real world reasons why this might happen - more powerful individuals could prevent her from conducting a business, for example. In some social contexts, the investment "choice" desired by the development economist could leave an individual worse off than before and the consumption "choice" would leave her better off. Choice them becomes a rather meaningless concept - apples versus oranges rather than poverty versus affluence.

There's a lot more to say about this problem, but this post is already long enough.

* Possibly it was in an interview with Jared Diamond who was otherwise talking twaddle.