MONITORING ADB’S POVERTY REDUCTION IMPACT
Appendix 1Poverty Definition,Measurement, and Analysis
A.A.A.A.A.Defining PDefining PDefining PDefining PDefining Poveroveroveroveroverty ty ty ty ty
1.Introduction: Poverty Definitions, Concepts, and the Poverty Line
n the view of the Asian Development Bank (ADB), poverty is a deprivation of essential assetsand opportunities to which every human is entitled. Everyone should have access to basiceducation and primary health services. Poor households have the right to sustain themselvesby their labor and be reasonably rewarded, as well as having some protection from externalshocks. Beyond income and basic services, individuals and societies are also poor—and tend toremain so—if they are not empowered to participate in making the decisions that shape theirlives. Poverty is, thus, better measured in terms of basic education, health care, nutrition, waterand sanitation, as well as income, employment, and wages. Such measures must also serve asa proxy for other important intangibles such as feelings of powerlessness and lack of freedom toparticipate.To better understand the nature of poverty, several related poverty concepts are employed.These include:
Human poverHuman poverHuman poverHuman poverHuman poverty:ty:ty:ty:ty: The lack of essential human capabilities, notably literacy and nutrition.
Income poverIncome poverIncome poverIncome poverIncome poverty:ty:ty:ty:ty: The lack of sufficient income to meet minimum consumption needs.
Absolute poverAbsolute poverAbsolute poverAbsolute poverAbsolute poverty:ty:ty:ty:ty: The degree of poverty below which the minimal requirements for survivalare not being met. This is a fixed measure in terms of a minimum calorific requirementplus essential nonfood components. While absolute poverty is often usedinterchangeably with extreme poverty, the meaning of the latter may vary, dependingon local interpretations or calculations.Vulnerability and poverty are concepts that overlap, but, are not identical. Vulnerability canbe defined as the susceptibility of an individual, household, or community to external shocksand fluctuations. Vulnerability can be grouped into five categories by major risk factors, including:•Environmental risk (droughts, floods, and pests);•Market risk (price fluctuations, wage variability, and unemployment);
This section draws from the ADB, Economics and Research Department. 2006.
Poverty and Development Indicators: StatisticsGlossary
. Available: www.adb.org/Statistics/Poverty/glossary.asp.
Please refer to ADB (2004) and World Bank (2004) for an extensive discussion of poverty lines and their computation.