Conceptualizing and Measuring Poverty as Vulnerability: Does It Make a Difference?

Date: October 2005
Type: Papers and Briefs
Country:
Subject:
Series: ERD Policy Briefs
ISSN: 1655-5260 (print)

Description

The first UN Millennium Development Goal (MDG) calls for the eradication of "extreme" poverty and hunger by 2015. In quantitative terms, the associated target for this MDG is the reduction by 50% of the proportion of people whose income is less than a $1-a-day over the period 1990-2015. This goal is reflective of the income (or monetary) approach to conceptualizing poverty. Many consider the $1-a-day and other similar measures of income poverty to be conceptually incomplete, the argument being that these measures are inherently static, hence, potentially misleading.

In order to really understand the effects of economic growth and other policy interventions on poverty rates, one needs to focus not just on statics but also on dynamics, i.e., on movements in and out of poverty. In this dynamic view, poverty is not just seen as a form of deprivation but also as a form of vulnerability, where vulnerability refers to the risk of future poverty. The poor are not simply those with lower income and consumption but, more often than not, also face a more constrained and difficult environment within which choices are made (Banerjee 2004).

The inimical effect of this risk manifests itself both in keeping some people poor over time, as well as pushing some of the current nonpoor into poverty in the future. According to proponents, this focus on vulnerability is important as it improves our understanding of the micro-level binding constraints to poverty reduction.

Contents

  • Measuring Vulnerability
  • Does Vulnerability Make a Difference, and Why?
  • Conclusions
  • References