Social assistance

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Social assistance

• Marcin Kawinski

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Poverty

• Definitions
• Measures
• Reasons of poverty
• Responslibility for poverty

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Poverty - definitions

• Absolute poverty (destitution) occurs when people
  cannot obtain adequate resources (measured in
  terms of calories or nutrition) to support a
  minimum level of physical health. Absolute
  poverty means about the same everywhere, and can
  be eradicated as demonstrated by some countries.
• Relative poverty occurs when people do not enjoy
  a certain minimum level of living standards as
  determined by a government (and enjoyed by the
  bulk of the population) that vary from country to
  country, sometimes within the same country.
  Relative poverty occurs everywhere, is said to be
  increasing, and may never be eradicated.

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Income-based definitions

• A specifc level of income per capita in a
  household below which the basic needs of the
  family cannot be satisfied.
• It does not take into account variation in costs
  of similar goods for different consumers.
• Non-market household production and
  non-monetarized exchanges in poor families is not
  counted.

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Basic needs approaches

• A set of minimal conditions of life,
• usually involving
• the quality of the dwelling place,
• degree of crowding,
• nutritional adequacy and water supply are
  specified and the proportion of the population
  lacking these conditions is used to estimate the
  degree of poverty.
• Different conditions can be specified appropriate
  to different settings.
• Reduction of comparability of estimates in
  different sites.
• Not taking into account the willingness of people
  to accept various tradeoffs deliberately.

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Basic needs

• The Fraser Institute's list of necessities for
  living creditably in Canada includes
• food,
• shelter,
• clothing,
• health care,
• Personal care,
• furniture,
• transpportation,
• communication,
• laundry,
• home insurance.
• It is criticized for not including any
  entertainment items like cable television, daily
  newspapers, and tickets to movies or sporting
  events Poverty in Canada 2006 20006 Update,
  Fraser Institute, November 2006, URL accessed 14
  February 2008

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Participatory definitions

• Respondents from communities are themselves
  identifying their perceptions of their needs,
  priorities and requirements for minimal secure
  livelihood.
• Problems with comparability

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Definitions of poverty

• Chambers (2006 3-4) clusters poverty definitions
  into five groups
• Income poverty (or its common proxy, consumption
  poverty).
• Material lack or want besides income, this
  includes absent, limited or low quality assets
  (such as shelter, clothing, furniture, personal
  means of transport, radio, etc.), and inadequate
  access to services.
• Capability deprivation, referring to what can or
  cannot be done, or can or cannot be. It includes
  human capabilities, such as skills and physical
  abilities, and also self-respect in society.
• Multidimensional deprivation, with material lack
  or want as only one of several mutually
  reinforcing dimensions.
• The multiplicity of the meanings of poverty
  identified by the poor themselves.
• Chambers, R. (2006) What is poverty? Who asks?
  Who answers? In Poverty in focus What is
  poverty? Concepts and Measures. UNDP,
  International Poverty Centre. http//www.undp-pove
  rtycentre.org

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The Copenhagen Declaration

• Absolute poverty is "a condition characterised by
  severe deprivation of basic human needs,
  including food, safe drinking water, sanitation
  facilities, health, shelter, education and
  information."
• The World Summit for Social Development, held
  in March 1995 in Copenhagen

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The Copenhagen Declaration

• Food Body Mass Index must be above 16.
• Safe drinking water Water must not come from
  solely rivers and ponds, and must be available
  nearby (less than 15 minutes' walk each way).
• Sanitation facilities Toilets or latrines must
  be accessible in or near the home.
• Health Treatment must be received for serious
  illnesses and pregnancy.
• Shelter Homes must have fewer than four people
  living in each room. Floors must not be made of
  dirt, mud, or clay.
• Education Everyone must attend school or
  otherwise learn to read.
• Information Everyone must have access to
  newspapers, radios, televisions, computers, or
  telephones at home.
• Access to services The complete panoply of
  education, health, legal, social, and financial
  (credit) services.

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The European Unions working definition of poverty

• Persons, families and groups of persons whose
  resources (material, cultural and social) are so
  limited as to exclude them from the minimum
  acceptable way of life in the Member State to
  which they belong.

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The Millennium Development Goals
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Poverty measures

• The World Bank measures
• being in "poverty live on less than less than
  US2 a day (32 of the world's population in
  2005),
• being in "extreme poverty live on less than
  US1 a day (21 of the world's population in
  2005).

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Food poverty measurement

• Monetized minimum nutritional subsistence (2,100
  Kcal/day), below this level defined as absolute
  poverty
• Monetized minimum nutritional subsistence (2,100
  Kcal/day calculated as 67 plus 33 non-food
  essentials (soap, shoes and clothing, shelter)

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National Consumer Basket

• Minimum adequate consumption measurement
• Quantification of inputs monetized in national
  currency
• food (meat, eggs, oil, fruits and vegetables)
• non-food (housing, energy, health care and
  medicines, etc.)

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Purchasing Power Parity

• PPP is P (/) P if the exchange rate that
  equalizes the value of a dollar of purchasing
  power (the PPP exchange rate) ? (/) P/P
• If a "representative" consumption basket costs
  1,500 in the U.S. and 150,000 Japan the PPP
  exchange rate would be 0.010/ .
• If the actual spot rate was 0.011/ this would
  indicate that the yen is overvalued or
  equivalently the dollar is undervalued.

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Poverty measures

• Inequality
• The Gini-coefficient
• The Decile Dispersion Ratio
• Vulnerability
• Indices
• Human Development Index
• Human Poverty Index

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The Decile Dispersion Ratio

• It expresses the income of the rich as a multiple
  of that of the poor.
• To calculate a decile dispersion ratio, the
  average income of the top 10 of income makers is
  divided by the average income of the bottom 10
  of income makers.
• If the top 10 of the population make an average
  of 100,000 a year and the bottom 10 make an
  average of 10,000 a year.
• The dispersion ratio is equal to about 10 the
  rich make 10 times as much as the poor.

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Lorenz curve of U.S. inequality statistics, 1978.
The Gini-coefficient is calculated by dividing A
by AB.
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Wade, R.H. (2001) The rising inequality of world
income distribution. Finance and Development
38/4. IMF, Washington, DC.
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Vulnerability

• Vulnerability - the probability or risk today of
  being in poverty or falling into deeper poverty
  in the future
• Risk factors of vulnerability
• Environmental risk (droughts, floods, and
  others)
• Market risk (price fluctuations, wage
  variability, and unemployment)
• Political risk (changes in subsidies or prices,
  income transfers, and civil strife)
• Social risk (reduction in community support and
  entitlements)
• Health risk (exposure to diseases that prevent
  work).

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NADEL (2007) Working with a sustainable
livelihoods approach, Zurich and SDC, Bern
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Measures - HDI

• The HDI, is based on life expectancy at birth,
  education (based on adult literacy rates and
  school enrollment ratios), and GDP per capita.
  Using these, a decimal value between 0 and 1 (the
  HDI) is computed, the closer to one the better.

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HPI-1

• The HPI-1 for developing countries
• The HPI-1
• The probability of not surviving to the age of
  40,
• the adult illiteracy rate,
• an average of the percentage of the population
  without clean water
• the percentage of babies born underweight
• The closer to 0, the better.

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HPI-2

• HPI-2 for industrialized countries
• The HPI-2
• the probability of not surviving to age 60,
• the percentage of adults without functional
  literacy skills,
• the percentage of the population below the income
  poverty line (50 of the median household
  income),
• the long-term unemployment rate.
• HPI-1 and HPI-2 CANNOT be directly compared.

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Ch. Murray, Toward Decisions on a Pre-Transfer
Poverty Measure, American Enterprise Institute,
12 October 2004
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European Union (Laeken) indicators
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Gross Domestic Product by PPP
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Big Mac Index (as of July 2008)

• Five most expensive
• Norway - USD 7.88
• Sweden - USD 6.37
• Switzerland - USD 6.36
• Iceland - USD 5.97
• Denmark - USD 5.95

• Five most affordable
• Malaysia - USD 1.70
• Honk Kong - USD 1.71
• China - USD 1.83
• Thailand - USD 1.86
• Sri Lanka - USD 1.95

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Big Mac Index (as of July 2008)

• Ten fastest earned
• Tokio, Japan - 10 minutes
• Los Angeles, United States - 11 minutes
• Chicago, United States - 12 minutes
• Miami, United States - 12 minutes
• New York, United States - 13 minutes
• Auckland, New Zealand - 14 minutes
• Sydney, Australia - 14 minutes
• Toronto, Canada - 14 minutes
• Zurich, Switzerland - 15 minutes
• Dublin, Ireland - 15 minutes

• Ten slowest earned
• Bogota, Colombia - 97 minutes
• Nairobi, Kenya - 91 minutes
• Jakarta, Indonesia - 86 minutes
• Lima, Peru - 86 minutes
• Caracas, Venezuela - 85 minutes
• Mexico City, Mexico - 82 minutes
• Manila, Philippines - 81 minutes
• Mumbai, India - 70 minutes
• Sofia, Bulgaria - 69 minutes
• Bucharest, Romania - 69 minutes

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The poverty gap

• The poverty gap is the summation taken over all
  poor individuals. The poverty gap equals the
  share of the poor timmes the average normalised
  distance of the wealth of the poor to the poverty
  line
• z poverty line
• yi income of individual i
• pg weight in the poverty distance (z - yi)/z
• PG (1/N)?(z - yi)/z (1/N)?(1 - yi/z)

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The Poor Law

• The Poor Law Act 1601 also known as the
  Elizabethan Poor Law and Old Poor Law
• The impotent poor could not look after themselves
  or go to work.
• The able-bodied poor normally referred to those
  who were unable to find work - either due to
  cyclical or long term unemployment in the area,
  or a lack of skills.
• The vagrants' or 'beggars', sometimes termed
  'sturdy rogues', were deemed those who could work
  but had refused to.
• A collectivist national system, paid for by
  levying local rates (or property taxes)
  functioning wothoin parishes
• After 1834 amendment indoor relief

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Reasons of poverty

• A problem of income distribution
• Poverty of the overall economy