“ CONCEPTS OF HUMAN DEVELOPMENT AND POVERTY : A MULTIDIMENSIONAL PERSPECTIVE “ 16595 AUTOR : Anand, Sudhir, 1946- Sen, Amartya FOTOCOPIADO DE : Human Development Papers 1997--.New York: The United Nations Development Programme : Oxford University Press, 1997. p. 1-19. CATEDRA : Economia de las Politicas Sociales PROFESOR : Osvaldo Larraiiaga SEMESTRE : Otofio’2006 “ USO EXCLUSIVO ALUMNOS FACEA , PARA FINES DE DOCENCIA E INVESTIGACION “Concepts or HuMAN DEVELOPMENT AND POVERTY: A MUuLtipiMenstonaL PERSPECTIVE Sudhir Anand and Amartya Sen human development has been'much discussed in the previous Human Development Reports. This paper is concerned with a different distinc- tion: that between (1) concentrating specifically on the living conditions of the poor, and (2) the more traditional broader approach of looking at the condi- tions of all the people in the society, The Human Development. Index (HDI) belongs to the latter —- more inclusive — approach. As Human Development Report 1997 is aimed at the conditions specifically of the poor, there is a need for a more focused approach concentrating specifically on the lives of the poor. T: contrast between a commodity-focus view and the approach of Human Development and Human Poverty The process of development in the contemporary world can be scen in two rather different ways. It can be characterized in terms of the progress being made by different groups in each community, Putting weight on the fortunes of the rich as well as the poor, the well-provided as well as the deprived. This “conglomerative perspective” can be contrasted with an alternative, more specialized, viewpoint in which development is judged by the way the poor and the deprived, in particular, fare in each community. This “deprivation Perspective” is specifically concerned with those who are forced to live deprived lives. In this accounting of the process of development, lack of Progress in reducing the disadvantages of the deprived cannot be “washed away” by large advances — no matter how large — made by the better-off people. There are reasons for taking an interest in the process of development 1from both the perspectives. At a very basic level, the lives and successes of. everyone should count, and it would be a mistake to make our understanding of the process of development completely insensitive to the gains and losses of those who happen to fare better than others. It would go against the right of each citizen to be counted, and also clash with the comprehensive concerns of a universalist ethic. Yet a part — a big part — of the general interest in the progress of a nation concentrates specifically on the state of the disadvantaged. ‘The reasoning behind public concem with development relates particularly to the advancement of those who are less privileged than others and who are forced to live distinctly reduced lives. This deprivational focus contrasts sharply with the conglomerative perspective, in which even a sharp regress in the conditions of the poor can be, quite possibly, outweighed by a suitably large surge in the fortunes of the affluent. To see a “great advance” — on aggregative grounds — even as the devil takes the hindmost cannot really be very convincing. The rationale of the present paper relates to this general recognition. The conglomerative and the deprivational perspectives are not, in fact, substitutes of each other. We need both, for an adequate understanding of the process of development. The plurality of our concerns and commitments forces us take an interest in each. The specialized focus of the deprivation Perspective is needed to supplement — not to supplant — the universalist solicitude of the conglomerative approach. The Human Development Reports, which have been published every year since 1990, have been generally concemed with the removal of disadvan- tages and the creation of opportunities to lead worthwhile lives. Right from the beginning, these reports have taken a special interest in poverty and depriva- tion, and have tried to provide a wide range of information — in various tables and commentaries — on relevant features of the misery and restricted lives of the worst off. However, the specific index of progress in the form of Human Development Index (HDI) has taken a conglomerative perspective. For exam- ple, a rise in the life expectancy of any group — no matter how affluent — is reflected in a corresponding increase in the average life expectancy of that nation, and this in tum enhances the HDI, since average life expectancy is one of the constitutive components of HDL The particular approach of “human development”, with its focus on human lives and the quality of living, with which these reports have been concerned, can of course be fruitfully combined with the deprivational perspective. While that connection has been explored in terms of particular investigations of the conditions of impoverished people, it has not, up to now, been reflected in any specific index of the burden of deprivation. 2 Human Development Papers 1997Focusing on the conglomerative HDI has not, of course, been pointless, even in understanding the nature of deprivation. The disadvantages of the worst off have inter alia figured in the index. Given its general concentration on the quality of life and substantive opportunities of all people, the HDI has played a role in broadening evaluative attention from such gross measures of economic progress as the gross national product (GNP) per head (or the average national income) to lines of analysis that are sensitive to the removal of deprivation of different kinds as well as expansion of opportunities in general. Indeed, the reports have contributed to a substantial change in the nature of public discussion and debate on the successes and failures in the process of development. The focus has been on development in a very broad sense, not just on the expansion of real income per head, but on the enhance- ment of some. of the central features of the quality of life of those who lead diminished — and often physically shorter — lives. Nevertheless, the possibility of reflecting in a usable and uncompli- cated index the bearing of “human development” on the “deprivational per- spective” — concentrating specifically on people who are particularly de- prived — has not been, so far, pursued. To undertake that task would require the development of an index of “human poverty”, which would focus exclu- sively on the specially deprived and impoverished. This is part of the exercise undertaken in the 1997 Human Development Report, and calls for a Human Poverty Index (HPI). In devising such an index, it is important that the purpose of its contribution and the motivation behind it are properly understood. In particular, some possible pitfalls must be avoided. First, the Human Poverty Index HPI must not be seen as a substitute for the Human Develop- ment Index HDI. As has been already discussed, both perspectives — depriva- tonal and conglomerative — have their own interests and complement each other. Perhaps the motivational distinction between the HDI and HPI can be explained with an analogy, drawn from the income-based evaluation of economic success. The growth rate of GNP per head gives an account of Progress seen in the conglomerative perspective — everyone’s income counts in the GNP total. In contrasi, the reduction of an income-based poverty index (such as the diminution of the proportion of the population below the poverty- line income), while also based on income information, uses the deprivational perspective, concentrating specifically on the incomes of the poor (in contrast with GNP's interest in the incomes of all). Within the income-based perspec- tive, it would make little sense to argue that since GNP is already based on income information, any income-based poverty measure must be a substitute for the GNP. Nor would it be sensible to suggest that the availability of the GNP as an indicator makes it redundant to seek a measure of income poverty. Concepts of Human Development and Poverty . 3Table 1 Income information Information on human living Conglomerative {GNP per head Human Development Index Deprivational —_| Income Poverty Measures Human Poverty Index The GNP and the income poverty measures use the income information in different perspectives, with the GNP taking a conglomerative view, while the income-poverty measures focus specifically on the income-poor. The relationship between HDI and HPI has to be seen in a similar way. Both have to use the rich categories of information that are associated with “human development”: characteristics of human lives and quality of living that go much beyond what income information can provide. But while these characteristics are used’ by HDI in the conglomerative perspective, the HPI must use them in the deprivational perspective. The availability of GNP measures does not obviate the need for an income-based poverty indicator (using income information), and similarly, the presence of the HDI measure does not eliminate the need for a Human Poverty Index (HPI) (using informa- tion related to the deprivation in human lives). The relationship between these different measures can perhaps be usefully seen in the form a table (above) where the rows distinguish between the conglomerative and deprivational perspectives, while the columns discrim- inate between the use of income information and that of characteristics of living associated with human development. A second misunderstanding to avoid relates not to the relationship between the HDI and the new HPI, but between income-based poverty measures and the new HPI (that is, the contrast between the columns rather than the rows in Table 1). Both the HPI and the income-poverty indicators share the deprivational perspective, but while the latter sees nothing in poverty other than low-ness of incomes, the HPI must take a much broader view, in line with the approach of human development. It would, in fact, be useful to see how the values and rankings of HPI relate to the results of income-based poverty analysis. Multidimensionality of Poverty Poverty is, in many ways, the worst form of human deprivation. It can involve not only the lack of necessities of material well-being, but also the denial of Opportunities of living a tolerable life. The lives could be prematurely short- 4 Human Development Papers 1997ened, made hard, painful or hazardous, deprived of understanding and commu- nication, and robbed of dignity, confidence and self-respect. It is ultimately in the poverty of the lives that people can lead that poverty manifests itself. Income-based poverty measures concentrate exclusively on deprivation in one variable in particular, viz. income. It has the advantage of simplicity in refraining from taking an interest on different aspects of deprivation. A similarly rudimentary approach cannot be used in developing an index of “human poverty”, since the lives of human beings can be blighted and impoverished in quite different ways. Someone can, for example, enjoy good health and live quite long, and yet suffer from being illiterate and remain cut off from leaming as well as communication and interactions with others that rely on literacy. Another person may be literate and quite well educated, but in fact be particularly prone to premature mortality because of the epidemiologi- cal characteristics of the region or country. If illiteracy were our only criterion, the first person would be seen as deprived, but not the second, whereas with proneness towards premature mortality as the only criterion, the second would be seen as handicapped, but not the first. But both are, in important ways, quite deprived, and it would be a mistake to concentrate only on one of the two types of information and ignore the other. When we consider several other ways in which a person can be severely deprived, we find other dimensions of disadvantage. This line of reasoning also throws light on the inadequacy of income- based poverty measures. A person with an above-poverty-line personal income may still be deprived in the sense of being illiterate, or being subject to epidemiological vulnerabilities that can lead to premature mortality, or being without crucial services (such as safe water or health care) which are often provided by public provisioning (going well beyond what is purchased by personal incomes). The need for a multidimensional view of poverty and deprivation not only guides the search for an adequate indicator of human poverty, it also clarifies why an income-based poverty measure cannot serve the sarne purpose. The HPI must, therefore, use a multidimensional procedure in assess- ing poverty. This is entirely in line with the “human development” approach. The Human Development Index examines different features of the quality of life and arrives at an aggregate judgement on the extent of overall human development. In the same way, the Human Poverty Index must examine different features of deprivation in the quality of life, and then arrive at an aggregate judgement on the extent of overall deprivation of the impoverished. In getting an adequately broad view of deprivation (including its different aspects), this multidimensionality is important and inescapable, and despite Concepts of Human Development and Povert . 5 za ythe complications of dealing with several variables at the same time, taking a multidimensional approach must, ultimately, be seen as an asset rather than a liability. This is not to deny that any reduction of a multidimensional indicator into a numerical index, such as the HPI, must involve an exercise in weighting. The exercise of specifying usable weights supplements the evaluative task already involved in making a selection of the particular dimensions of depriva- tion on which to concentrate. These evaluative decisions have to be guided not only by practical considerations of measurability and data availability, but also by the reading of the prevailing values as to what counts as deprivation and how this is to be recorded, Since any choice of weights should be open to questioning and debating in public discussions, it is crucial that the judge- ments that are implicit in such weighting be made as clear and comprehensible as possible, and thus be open to public scrutiny. After proposing a particular system of weighting, we must supplement it by a thorough and transparent investigation of its properties and implications. Context Dependence and Deprivation in Poor Countries The identification of principal deprivations tends to vary with social and economic conditions of the community in question. Premature mortality is an extensive problem in impoverished countries in a way it may not be in highly developed countries where most people live quite long. Also, illiteracy may be a frequent form of significant deprivation in many countries with educational backwardness, but not in others. The choice of the indicators to be used in the Human Poverty Index cannot but be sensitive to the context of the evaluation, and in particular to the characteristics of the countries for which this index is primarily intended. For example, an index that concentrates on illiteracy and premature mortality may be able to discriminate between, say, Sri Lanka and Pakistan much more easily than it can between, say, Germany and France. To some extent this problem is also present for the Human Develop- ment Index itself, and the case for having more specialized indicators in the conglomerative perspective may well be worth considering. But the difficulty is particularly immediate and powerful in characterizing poverty and in examining the condition of the deprived. Issues of poverty in the developing countries crucially involve such matters as hunger, illiteracy, epidemics, lack of health service or of safe water, but these deprivations may not be at all common in the more developed countries, where hunger is rare, literacy is close to being universal, most epidemics are well controlled, health services are typically widespread, and safe water is easy to access. Not surprisingly, studies of poverty in the more affluent countries have tended to concentrate on 6 Human Development Papers 1997other variables, such as social exclusion, or inability to take part in the life of the community. These too can be quite forceful sources of deprivation of human lives and very hard to eliminate, but they involve different types of deprivation. There is no real possibility of getting an index of human poverty that would be equally relevant in the different types of countries. Given the peculiar importance of poverty in poor countries, the HPI to be presented here is aimed at that context, The variables chosen reflect that, The nature of poverty in rich countries deserves a separate study — and a more specialized index, focusing on those deprivations that are particularly relevant for these countries. This motivational point has to be borne in mind in interpreting and examining the HPI, in the light of its context, Deprivation in Survival and in Education Of the three basic components of the Human Development Index, two deal respectively with survival aiid education. The aspect of survival in the quality of life is captured in the Human Development Index through the use of life expectancy at birth. This draws on the age-specific mortality rates that cur- rently obtain. A weighted average of survival years is calculated, using this information. Different people do, of course, die at different ages, but the pattern of ages at death can be calculated by using the prevailing age-specific mortality rates, and the life expectancy gives the statistical expectation of an average person's length of life at the prevailing mortality rates, The average value of life expectancy uses a firmly conglomerative approach, and is an average over the entire community. The deprivational perspective applied to survival makes us concentrate on vulnerability to death at a remarkably carly age. By using the same age-specific mortality rates, it is possible to calculate the proportion of people who can be expected to die before a specified age (such as 40 years), at the prevailing rates. That proportion is a measure of vulnerability to having a substantially shortened life and reflects the incidence of serious deprivation in terms of length of life. Turning now to education, it is reasonable to argue that illiteracy is indeed a strikingly sharp educational deprivation. The proportion of illiteracy expresses the incidence of this kind of deprivation in the population. The illiteracy rate can, thus, be used for the educational component in deriving a human poverty measure HPI. The consequent narrowing from the broad coverage of the educational component in the Human Development Index to the specific concentration on illiteracy in the Human Poverty Index should be an appropriate move. ‘There is an issue of data availability and reliability which also deserves attention here. The narrowing of the education focus from a general educa- Concepts of Human Development and Poverty . 7 "pmtional index in the HDI to just illiteracy in the HPI will probably be an improvement in terms of data access and quality, since, comparatively speak- ing, the literacy data tend to be better than the data on enrolment at educational establishments at different levels.’ So far as survival is concerned, the calculation of life expectancy and that of non-survival to a specified age (such as 40 years) have to draw on the same informational base, viz. the prevailing age-specific mortality rates. The latter needs a little less, since it is independent of mortality rates beyond the specified age (40 years). However, doubts about the quality of mortality Statistics that are available apply to both, and this should be taken into account in making use of the results of the HPI calculation (just as it is relevant for using the HDI results as well). Deprivation in Economic Provisions The third component ‘of the Human Development Index HDI is based on income, and concentrates on per-capita national income or GNP. It is used at an aggregative level for each country, and reflects not only the average personal incomes of individuals but also the provision of public services (such as public health care) paid out of the aggregate national income. The income component of HDI is, thus, an amalgam of private and public facilities, attempting to reflect overall economic provisioning. In adapting this aspect of living standard in the measurement of poverty, the focus has to be disaggrega- tive and oriented towards individual life experiences. In line with the general idea behind the use of the income variable in HDI (as an indicator of overall economic provisioning), the HPI must pay attention to personal affluence as well as public services. One of the problems in assessing the prevalence of income poverty is that the use of the same cut-off poverty line in different countries can be very misleading. Adam Smith noted in the Wealth of Nations, as early as 1776, that, depending on the prevailing consumption patterns in the respective societies, the minimum income needed to achieve the same elementary freedom from deprivation would vary from one community to another. In Adam Smith's example, a person who cannot afford to buy a linen shirt or leather shoes in England may well be ashamed to appear in public, but that inability may not be seen as a crucial deprivation in a society where.linen shirts or leather shoes are not widely worn. This variation of “necessary” commodities between one society and another makes the use of the same poverty line in different countries (with diverse levels of general opulence and disparate consumption patterns) ex- tremely deceptive. Depending on the prevailing patterns of observable con- 8 Human Development Papers 1997sumption (of clothing, accommodation, means of communication and interac- tion such as radios, televisions, telephones, etc.), many provisions are taken to be essential for social participation in one community without being treated to be so in another. As a result, the minimum income needed to escape social estrangement can be quite different in different communities. Given the social pressure generated to fulfil these felt “needs”, they may compete — for relatively poor people — even with the provision of resources for food, nutrition and health care, which can be significantly squeezed — often for the children — as a result of this socially induced influence (and a corresponding sense of cultural compulsion). This can, in fact, help to explain the observed presence of hunger and undernourishment even in societies such as the United States in which the general income levels are very high, but where inequalities generate a heavy burden of “necessity” in the direction of socially obligated consumption, often to the detriment of nutritional and health expenditure. ‘Thus, the assessment of poverty on the basis only of the level of income, with the same cut-off point in different societies, can record little or no poverty in generally affluent societies, even when the relatively poor in these societies may lack social participation and — more starkly — may suffer even from hunger and undernourishment (because of the competing pressure of “social necessities”).* An altemative is to use different poverty lines in different countries. But it is not easy to decide what the appropriate variations would be and how the respective poverty lines could be estimated. The officially published national “poverty lines” cannot, obviously, serve this Purpose, since those variations reflect other influences, particularly the impact of politics and Pressures. The general need for a variable cut-off line of poverty is easy to appreciate, though it may be hard to find an adequate procedure for determin- ing the appropriate values of a variable poverty line in different communities. A more practical possibility in dealing with the component of eco- nomic deprivation in the HPI is to choose to be less ambitious and to concentrate on material deprivation in the form of hunger and undernourish- ment in particular, rather than on income in general. Since a very high Proportion of personal income is expended on acquiring food and nourish- ment, this is not a tremendously severe departure for poor countries. We can either use information on the intake of food and nutrition, or go by estimates of Prevailing undernourishment. The former relates more closely to personal incomes, but the latter incorporates also the influence of other variables that affect nourishment, such as metabolic rates, climatic conditions, activity patterns and epidemiological circumstances. Since our ultimate concern is with the nature of the lives that people can lead, there is a case for going Concepts of Human Development and Poverty : 9straight to the prevalence of undernourishment, rather than to the intake of calories and other nutrients.’ This is what has been done in the Human Poverty Index, concentrating specifically on the undernutrition of children, which is easier to diagnose (by such criteria as weight for age) and on which useable data are easier to get. So far as specifically public provisions are concerned, access to health service and to safe water have been chosen as the indicators to be used. The absence of access to health service or the unavailability of safe water can indeed be seen as a significant deprivation. Combining these two access variables with the prevalence of undernutrition, we get a fairly broad picture of the deprivation of economic provisioning — private and public ~~ to supple- ment the information on survival and literacy. These, then, are the basic informational ingredients of the HPI. It must be emphasized that there is some inescapable arbitrariness in any such choice. The choice was made on the basis of balancing considerations of relevance, on the one hand, and the availability and quality of data on the other. There are inevitable compromises here. Even though some variables could not be used because of the quatity of data seemed particularly bad (information on access to sanitation was a variable that was considered seriously, but could not ultimately be used given the limitations of the available data), it would be idle to pretend that even the variables that have been included have high-quality data for every country. There has been an attempt, in these selections, to strike a balance between the demands of relevance and the need for tolerably useable data, and these choices would certainly remain open to criticism and public scrutiny. Weighting and Aggregation There are two distinct problems of weighting in moving from this diverse and multidimensional informational base to a combined index of human depriva- tion in the form of HPI. While two of the three components to be dealt with have clear numerical values (viz. proportion of population expected to die by the age of 40 and the proportion of illiteracy), the description of economic deprivation includes disparate elements in the form of undernourishment, lack of access to health care and lack of access to safe water. These sub-components are, however, themselves numerically specific, and we can identify the percentage of population without access health care (h), the percentage without safe water (w), and the percentage of children who are undernourished (n). In the absence of any clearly agreed way of discrimi- nating between the respective importance of these three sub-components, the economic provisioning component has been chosen to be simply the mean of 10 ‘Human Development Papers 1997these three deprivations, that is the unweighted average of these three percent- age deprivations: ¢ = (1/3)[h+w+n]. It should be pointed out, to make the scrutiny of the implicit assumptions easier, that this procedure amounts to assuming that the three deprivations act additively and have the same relative values vis-a-vis each other throughout. There is now the further problem of moving from this three- dimensional indication of human poverty to a numerical index of human poverty HPI. The three components are reflected respectively by: (1) survival deprivation (s), given by the expected incidence of mortality by age 40 (that is, the proportion that would be expected to die before becoming 40 years old at the current age-specific mortality rates); (2) deprivation of education and knowledge (k), given by the percentage of people who are illiterate; (3) economic deprivation (e), given by the mean of the three sub-components already discussed, While these three components of human poverty are all important, it is not unreasonable to assume, given their dissimilarity, that the relative impact of the deprivation of each would increase as the level of deprivation becomes sharper. For example, as we consider higher and higher percentages of people who may perish before the age of 40, this deprivation will become more and more intense per unit, compared with other deprivations. This is, of course, equivalent to assuming that as the incidence of early death diminishes (and, correspondingly, as there is more plentiful survival prospects), the relative value of this consideration will diminish. A simple, symmetric and regular way of reflecting this requirement is through the formula: H = [(1/3)s" + (1/3)k° + (1/3)e"]", if we choose a value of a more than 1." This is in line with a general procedure we had recommended for constructing indices in earlier Human Development Reports (see, for example, Anand and Sen 1995 on the construction of gender-sensitive development index, GDI), and this general approach has indeed been used in Human Development Reports already (see, for example, UNDP 1995). The procedure is discussed in. the accompanying Technical Note, which also examines the properties of this type of weighting and their implications. Concepts of Human Development and Poverty . itTechnical note 1. Properties of the human poverty index ‘This techncd not states, establishes and dizcuses some important properties ofthe human porn index Iecnded a a ad o understanding the inde, these properties are derived with respect to 4 more genera definition of the hunan poverty index Pf) than tht actly wed in this Report. This allows the pons tht the weights onthe tree poverty sbindices may fe, 0 that P(a)is «weighted mean of order a of P, , and P ‘Ths eting > Obe the weight on P20) ford 1, 2,3, we define the severlited mean Pla) as w ry-(stkeateent) ‘The weighted mean reduces to the ordinary mean of order auwhen w= 1 for very, Wiha = tt, = 1, we have sims ele Be Chl ‘The mean of order 1 (a = 1) the simple weighted or unweighted arth: metic mean ofP, Py and P,. Thus roe Eater sLer en) where, = 1 os Can the human poverty index P(a) be interpreted as headcount oc inci> dence of poverty? While P,P, and Pare the headcount orincidence of porerty in cach of three separate dimensions, P(a) cannot be generally thought of #5 the headcount ratio with respect toa povery line (hyperplane) drawn in the prodhct space of the three variables. Instead, P(a) isan average albeit of order 4, of the thee subindices P,P, and P,. If the incidence of poverty happened tobe thesameinevery dimension, then P(a) would clestlybe equal to this eom- ‘mon aumber, since [=e +u,Pla)* + w, Play = Pla) +{ shes wyPs 6 wsPe r ‘This observation allows ust interpretP(a) asthe degree of overall poverty that is equivalent to having « headcount eatio of P(a)% in every dimension. ‘The first property of Pa) that we establish is central to understanding is samean of P,P, andP,, Thispropertyis that P(a) alway esberween the all- ext and largest values of P, for = 1,2, 3. ‘Paoposrriok sin .8, 8] Pa ma 2,8,2 PROOF. By definition of Pla), we have waa 0) Pat = tw, tw, ate ew, 12 But foreach = 1,2,3, min (R.%.R} sR < male. 885) ects > [ref Using the rght-hand-side inequality for each Pin equation 3 gives sf em oat ay st FF a roe fray Similarly, Pay o[min fr rai fois {2.%,0)f tar s[maxle. 2.7} Sree > 0, follows ht win 7,8} sRensmale,.2.8) 0 ‘The generalized mean Pla) is constructed for valves of 2 limiting value when @ and P,. proposition 7 we show that the lrg i, the larger Pt) wil be. For expos tional reasons, iis convenient to demonstrate st this stage that ov tenls Infinite limiting value of P(g) is mex (P,, Py, Py) Prorosmox 2, Ave, Proprius} PROOE. Let P, be the largest—or in the case of tes, one ofthe lagest—P, fori = 1,2, 3. Thus cax{t. 2.24) ‘Then from proposition 1, for any & > 0, we have w ads, aunt, %.8) Now Pe era art area tothe since P, is one of ,,Pyor?,, Human Development Papers 1997‘Therefore, since @ > 0, Letting a => =, sothat lim PladzP,. Dat or equines have ati fod ene ig 007, «ne .7,.8) homo: the ine “The next property of Pla) that we demonstrate that the indes geneous of degree {inthe subindices P,P, and Py. In other words, dence of poverty in each dimension is haved (mukipled by A > C), the value ofthe aggregate index Pa) will be halved {changed to hmipled by Pla) PRoposmnon 3. P(a) ishomogencous of degree Lin (Py, PP) Poor, Let > 0 be sclar number, and et P(a) be the value ofthe human poverty index corresponding ta (P,. Then ‘The value of the human poverty index corresponding to (IP, LP, AP, Jig then venby | ee ea [seen ara || pay =a. Oo ‘The next propesty of P(a) that we derive i that P(Q) fe manetonic increas: ing ineach P, ford 1,2, 3. ProFOsttion 4, For each =1,2,3, an) ® >a Proor. From the definition of the generalized mean Pa) we have (ue, $10, +14) Pea =e Rays tay Difernsiating parially with respect to P, ama) ay, te, ty) Pg) PE) yep tay tes) PO ca Concepts of Human Development and Poverty Therefore a), ‘ 1 a, “eta, re, Far D0 becmusew,>0, Inthe unit weights case We, = 1, for# = 1,2, 3) this reduces to ane) af 2 J 3) Fa Moreover, for c= 1, so that P(t) is simply the weighted or unweighted arith metic mean of P, we have yw, eR a) ey For an aggregate poverty index Pla) composed of distinct povery subindices P,P, and Pit seems early desirable that Pla) should be increns ingin each F, Also desirable is tha P(a) should increase at an inereasing rte hin other words, that Pla) should be conver with respect to P,. Thi lent to saying that Pla) decreases with reductions in P, and tir ihngrate. Thenon propio exebshe tat ouragerepior anton Ma), fora > 1, does saishy tis property. Prorostmow 5. For each? = 1, 2,3, ame 0. PRoor, 2 Pla) 9 [aPiad a | OF eof from equation 5 a fk [7] 928] / Bw, ie, Fay $y) Pra J 4 alt =ta-v4 Pave arta substituting for 220. fromm equation 5 whos a (uy +10, +0, )PI0I* 13Hee a, AA gay sey itar ut] BPE (w, 4, #w, ayer Cee a >o because o> 1 and (w, +0, +u))Plal*—w,P* = Ju, P2>0. 0 ‘The next propery we consides isthe effect onthe azareate index Pa) of increasing the weight w, on 1 pacticular poverty subindes P, We expec that increasing the weigh onthe largest subindee, max (P, P,P) wil inrease (a), while increasing the weight on th snlicstsubindse, min (Py Py P,)y will reduce P(o), But wha: would be the effect of increasing the weigh on 4 ‘middle? The answer depends onthe relationship between P, and Pa). Provosmion 6, For any, aPa) PO sons 7, 3 Pa) Be, BOE Pe Proor From the defition of (a) we have (u, 0 40, )PCa) = uF + PE +0, Pe Differentiating both sides panially with respect ow, Bie) uy, $40, +, aPCaye! 2), playe = pe (uy, +, aPtaye' Play = Therefore Peay. Sb avg-b uo arta! PLD (uy yt wy yartaye Hence, sinee @> 0, apa) 2D) so as po , Te, BO Pe wR that is, 2 2Ro) O Fora = Iwehave mo. 2, mPa, Souk PI ‘The nem property we consider isthe effect on P(a) af xsing the pararne- ter vahieo forgiven values af the rubindicesP, for = 1, 2,3 It shows th the value of the aggregate index will be higher when a higher-order mean ia formed of P,P, and P,, In particular, men of order a> 1 will reeul in Plot) thai greater than P(), the simple arkmetic mean of P,P end Py 14 Pnorosmont 7, For given Py P, and P, that ae not equal, fa > 7> 0, ther, Pla) > Phy PROOF. Let «> ¥> 0. By definition of Pla) and Pr, we have and Pet ae — Py, Raising both sides of the second equation to the power (a/7) (> 1 because a>y> 0) (owt (orton tasting tt : eat" Now fi) = 27s a sccly convex function, since Fors (a/y) xr wd ewatarvifary ifm 30 bso Hence, by Jensen's inequality applied to atric convex umetions ((), since Py P, and P, are not equal, wehave the strict inequality { py pr, <4 — 109) 2 pn, 97), Using he seen fain fs) = ge (ool athe arate Marea ae, roi 1, we have the corallay that we 40 ,Py + wy? the simple weighted arithmetic mean of P,P, and P,. Human Development Papers 1997‘We next investigate the “decomposability” of the human poverty index simon aronp sithin county Suppor the popstion of county dived ino m mtu exclusive and exeustve groups, The groupe may be dened invterms of seat (rbun ral eon (ys province det org dle female. Let be the si of poping for = 1,2... ara er be hese of the toed popitin ofthe county Then wis LetP,, P, and P, be the values ofthe thrce poverty subindices Py, and Py for groupy, where = 1,2. 7m. Finally, let P(@) denoce the mean f order tof P,P, and , for groups. By defnition, we have WP 4 WPS ty ro ES ‘Wha isthe rclaonship bervcen Pa) sd the PO) for 1,2. Sic decomposbiity ofthe index Pa) woud equ that (a) be» pops Non-wcghted verge of th a, the population weighs being, But sit decompoisblity does nat generally obtain, “Thecelutionshipberwcen the values of ive obindes fo diferent groups (Gor example, Py, for = 1.2,.. andthe overal vale ofthe uhindex or cxample Pi Ssightfooward enough. As the indices are simple headcourts of power have Epon, £4 But when the c-averages of Py P, and Py ate formed for each to give Pa), the population-weighied average ofthe Pas exceeds Pa) PROPOSITION &. For 2 1 ¥ rtarr ra Proof. Foreschj = 1, 2 wm, wehave Concepts of Human Development and Poverty Applying Minkowsk's inequality (Hardy, Litlewood and Paya 1952, p.30) to GnnDPya nly bnedP,, fori = 1,2, 4m yds tw 5 2 Home Tele Et rman o ‘The wae i een vibe si age ues ee STEER LEER Aoachogcs ng ‘A simple exarnple with aon proportionality ofthe group povery subindices shows why decomposbily(qualtyin propestion 8) docs not chtsinforck> 1. Suppore the population is divided into two rurualy exclosive and exhaustive of equa size rn =n fn ="), vith values ofpoverysubindices (yy Pyy Py) = 025,0.5,079), and (Phy Py Py) = (0.75, 05, 025). Hence (P,, Py Py) = (05,05, 0.5), sod obvious Poa) = 05, Now for group t Pa) » ((4)0.25) + (110.5) + (1,075 03, by proposition 7 since a> f, and for group 2 Poy = (10.75) + (Y,NO.% + (4, 10.257) > 05, by proposition 7 since & > I ‘Therefore Cia cay + CIP gay > (03) + (4903) 705 = Pla) “Taking the group arithmetic means of each poverty subindex tends to reduce or leave unchanged the relative disparity among the thece poverty subindices. As eslt of his feature te @-averge ofthe arithmetic meens of ‘rou sobindices is smaller than she arithmetic mean of averages of group subindices. Finally forgiven value of (21), we discuss che degree of subsivatabil: 15iy berwees the poverty subindices P,P, and P, in the aggregate measure PCa) The ehstcty af substitution bervezn, Say, P, and P, along an iso-P(a) curve (helaing P, constant) is defined asthe percemage change i (P/P,) fra uit percentage change in the stope ofthe tangent along thir curve (projected onto PeP, space athe given value ofP), For the index P(a) the elaiciy of subs stitution isconstant along each level set of P(a) and the same fo different level sets. By proposition 3, Pa) is homogeneous of degree | in Py, P,P), and therefore its leve sets are homotheti. Propesinox 9. The elasticity of substitution & berseen any twa sbindices of a, thatis between any two ofP,Pyand®,, constant and equal to 1A0-1) Poor. Consider the elasticity of substuson berween P, and P, holding P, ‘constant, Te slope of the tangent along an iso-P(a) curve in P,P, space ie ven by ara) Jara oR fa, By definition, the elasticity of substation @ berseen P, and Py is Alogi, /P,) Blogs From equation 5 in proposition 4 we have ama Jane (PY aR fw, LP Therefore Pole AL (ey atu and Hence the elasiciy of substation Alog(h,/P,) Dee 16 ‘Thus, if = 1, thee is infinite, or perfect, subsitutailiy between Py & Py, And st "+ , there is no aubetutabiy between P, and PAs increas fron 1, the elasticity of substitution decreases tmonotonicll ec wt00. Ifwe choose a= 1 (the ese of perfect substhabilty), the aggregate iné Pa) isthe simple aritsetic meanof the three subindicesP, P,P, Aster Lo infinity, che substitutability becomes zero, and the agereyate index tends the maximum of the three subindces, max (Py, Py P,) In general, the el ticity of substitation berween any s40 ofthe subindies, holding the other ce stant, so = 1a With a = 1 and infinite subsituabiig the impact on Pla) from a increase (or decreas) of any subindex i the same, irespective ofthe vel deprivation ia the eliferent dimensions. This contradicts the usual assum tion that as the extent of deprivation in any dimension Increases (given ¢ cthers}, the weight on farther additions to deprivation in that dimensi Should alo inesease, For this we need & > 1, The vale of azo influenc ccomespondingy, he elative weigh to be placed on deprivation in the dif ‘ent dimensions. Consider, for example, P, = 60% and P, = 30% (with « , = 435%) In this case, for any the relative impact of @ unit increase in ‘compared with a unt increase in P, which i given in general by (P,/P,)* equals 2°, With ct = 1 the relative impact i given by 1, As was remark cealies, 160 tends to infinity, P, becomesthe only determinant of Pa), so its impact is infrtely larger than that of unit increase InP, which has, this ease, no impact at all. “The relative impact ineveases 2 is rised Fow 1. With = 3, the relat impact is 4, giving the dimension of doubly greater deprivation (P,) mu greater weight. The elatve impact iss ver fast with the raising ofa, esiscle from the formula Fora = 5, she elatve impact of a unit increase in P is much a8 16 times that of a eit increat in P or calculating the human pavery index, & = 3 has been chosen. TI ives an elasticity of substitution of "and places greater weight on the dimensions in which deprivation ts lnget. It docs not, however, heve ¢ extremism of zero substitutability (given by c tending to infinity), nor t very high values af relive impact that are generated as is essed (ince: ing the relative impact, in the eate discussed shove, from 4 10 16 48. ge from } 405}. Theve is an inescapable arbitrariness in the choice of &. T Fight way co deal with tissue isto explain clearly what is being assume 15 has been aitempied here; so that public ertcism of this assumption iit should be mentioned thatthe vat corresponds exactly fo the weighting used to ealeulate the geneb telated development index (GDM. Human Development Papers 1997" Notes 1, See Dréze and Sen (1995). 2. On this question of interdependence, see Sen (1992). 3. On these and related issues, see the important study of Peter Svedberg (1997). He also provides extensive comparison of the levels of nutritional deprivation respectively in sub-Saharan Africa and in South Asia. 4. 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