What Is Poverty and Why Measure It

Poverty is an economic state where people are experiencing scarcity or the lack of certain commodities
that are required for the lives of human beings like food, drinking water, shelter. In other word, poverty is
"pronounced deprivation in well-being". Lack of command over commodities. So, the poor are those who
do not have enough income or consumption to put them above some adequate minimum threshold. This
view sees poverty largely in monetary terms.

Many people in different countries live in poverty, especially in developing areas of West and Sub-
Saharan Africa, Latin America, and some parts of Asia. There are different ways to measure poverty. The
World Bank says that extreme poverty is when someone has less than US$1 a day to live on.

Poverty comprises many dimensions. It includes low incomes and the inability to acquire the basic goods
and services necessary for survival with dignity. Poverty also encompasses low levels of health and
education, poor access to clean water and sanitation, inadequate physical security, lack of voice, and
insufficient capacity and opportunity to better one's life.

Poverty may also be tied to a specific type of consumption; for example, people could be house poor or
food poor or health poor. These dimensions of poverty often can be measured directly, for instance, by
measuring malnutrition or literacy.

In 1776 Adam Smith in the Wealth of Nations argued that "poverty is the inability to afford, "not only the
commodities which are indispensably necessary for the support of life but whatever the custom of the
country renders it indecent for creditable people, even of the lowest order, to be without".

Based on social, economic, and political aspects, there are different ways to identify the type of Poverty:

I. Absolute poverty.

II. Relative Poverty.

III. Situational Poverty.

IV. Generational Poverty.

V. Rural Poverty.

VI. Urban Poverty.

1
  Absolute poverty

Also known as extreme poverty or abject poverty, it involves the scarcity of basic food, clean water,
health, shelter, education, and information. The causes of urban poverty are due to the limited
employment opportunities, degraded environment, bad housing, and sanitation. It depends not only on
income but also on access to services. Those who belong to absolute poverty tend to struggle to live and
experience a lot of child deaths from preventable diseases.

 Relative Poverty

It is defined from the social perspective that is living standard compared to the economic standards of
population living in surroundings. Hence it is a measure of income inequality. For example, a family can
be considered poor if it cannot afford vacations, or cannot buy presents for children at Christmas, or
cannot send its young to the university. Usually, relative poverty is measured as the percentage of the
population with income less than some fixed proportion of median income.

 Situational Poverty

It is a temporary type of poverty based on occurrence of an adverse event like environmental disaster, job
loss and severe health problem.

 Generational Poverty

It is handed over to individual and families from one generation to the one. This is more complicated as
there is no escape because the people are trapped in its cause and unable to access the tools required to get
out of it.

 Rural Poverty

Occurs in rural areas with population below 50,000. It is the area where there are less job opportunities,
less access to services, less support for disabilities and quality education opportunities. People are tending
to live mostly on the farming and other menial work available to the surroundings. One of the biggest
causes of rural poverty is due to the fast-growing population rate. It places huge pressure on the
environment, causing problems such as erosion and flooding, which in turn leads to low agricultural
productivity.

2
  Urban Poverty

Occurs in the metropolitan areas with population over 50,000. These are some major challenges faced by
the Urban Poor.

Economic aspects of poverty focus on material needs, typically including the necessities of daily living,
such as food, clothing, shelter, or safe drinking water. Poverty in this sense may be understood as a
condition in which a person or community is lacking in the basic needs for a minimum standard of well-
being and life, particularly because of a persistent lack of income.

However, poverty remains a serious problem that hinders Bangladesh’s ambition of becoming a middle-
income country. Although there are many causes of poverty in Bangladesh, some of the main culprits are
calamitous weather, weak infrastructure and gender inequality that prevents women from contributing to
the economy.

 Calamitous weather

One of the factors that generate poverty is the prevalence of natural disasters. As a low-lying country
situated on the Bay of Bengal, Bangladesh is one of the most vulnerable countries to violent weather
patterns that regularly destroy crops, homes, and lives. Since agriculture supports 47 percent of the
population, the losses can be especially devastating: a massive blow from a flood or a cyclone can cut off
villages’ access to food, electricity, and water.

Additionally, Bangladesh has the disadvantage of being situated on active tectonic boundaries, making it
susceptible to earthquakes and tsunamis. A natural disaster can crush gradual progress in a community in
an instant. Floods and cyclone destroy various infrastructure such as residential places, road networks,
educational facilities, markets, and administrative offices as well. Natural disasters affect lives of people
either directly or indirectly, which become causes of poverty

With 80% of the country situated on the flood plains of the Ganges, Brahmaputra, Meghna and those of
several other minor rivers, the country is prone to severe flooding.

A positive relationship exists between flood risk and poverty as measured by household income, with
people living under the poverty threshold facing a higher risk of flooding, as measured by their proximity
to rivers and flood depth. Also, they tend to depend solely or largely on crop cultivation and fisheries for
their livelihood and thus are harder hit by floods relative to their income.

3
The above is problematic as it creates a vicious cycle for the poor of Bangladesh. Because the poor may
not be able to afford safer housing, they must live near the river which raises their risk of flooding. This
would result in greater damage suffered from the floods, driving the poor into selling assets and pushing
them further into poverty. They would be further deprived of sufficient resources needed to prevent
extensive damage.

 Gender inequality

Historically, socially prescribed roles have limited women’s access to economic resources, political
participation, and decision-making process. Women’s wages are about half of those of men and wage
levels per se are low. Women’s employment is often temporary. Not only must women depend on men to
provide them with household income, but also if a woman does have a job, she will not earn as much as
her husband would. But females earn significantly less relative to their male counterparts.

 Weak infrastructure

Another of the main causes of poverty in Bangladesh is the lack of infrastructure. As the densely
populated country continues to grow, reliable means to get to work becomes a necessity for people to earn
their day’s wages. Bangladesh only spends two percent of its GDP on infrastructure. Infrastructure
Development Index (IDI) suggest that the districts which are close to the capital city are having higher
IDIs than the districts which are far from the capital city.

Bangladesh's economic reform started with the implementation of investment friendly economic policies,
privatization of public industries, budgetary discipline, and liberalization of trade were among the key
elements behind acceleration of Bangladesh's economy. Since then, Bangladesh has been among the
fastest growing economies in the world, exceeding 6 percent growth annually between 2004 and 2015.
The GDP growth further accelerated exceeding 7 percent mark since then and is projected to gradually
exceed 10 percent growth until 2020.

Among Bangladesh's many economic and social achievements, dramatic reduction in poverty in often
considered a phenomenon among international organizations.

Many people live in remote areas that lack services such as education, health clinics, and adequate roads,
particularly road links to markets. An estimated 35 percent of the population in rural areas lives below
the poverty line. Another 29 percent of the rural population is considered moderately poor. Though they
may own a small plot of land and some livestock and generally have enough to eat, their diets lack
nutritional value. As a result of health problems or natural disasters, they are at risk of sliding deeper into
4
poverty. An estimated 21 percent of the population in urban areas lives below the poverty line. People
living in urban areas, like Sylhet, Dhaka, Chittagong, Khulna, and Rajshahi, enjoy a better standard of
living, with electricity, gas, and clean water supplies.

Poverty is a sign of underdeveloped country like Bangladesh, Burundi, Liberia etc. Ending poverty is not
only one of the twin goals of the World Bank, but also one of the Sustainable Development Goals. To
design and optimize projects for poverty reduction, we need to measure their impact on poverty. This is
quite difficult because changes in the poverty rate might take some time, and it is usually hard to attribute
the impact to a project, especially without conducting a randomized controlled trial (RCT). But even if we
manage to overcome these challenges, we need to measure poverty before the start of the project – as a
baseline and to understand whether the project adequately targets the poor – and at the end of the project
to assess its impact. And that is also not easy.

Not only underdeveloped countries, in the U.S. and in many other developed countries, it is important to
measure poverty because the poverty line is used to determine eligibility for federal, state, and local aid,
including food stamps and health insurance. In low- and middle-income countries, understanding poverty
levels is important for generating policy, targeting development initiatives, and monitoring and evaluating
economic progress over time.

It can be quite difficult to determine which people in each community live below the poverty line. People
who are poor frequently do not have documentation of their savings or purchases. Poverty measures are
derived from indicators that are captured at the household level. From the perspective of Bangladesh there
are four reasons to measure poverty:

 To Keep poor people on the agenda

It is easy to ignore the poor if they are statistically invisible. The measurement of poverty is necessary if it
is to appear on the political and economic agenda. Successful efforts to target policies and programs to
help poor people also require an understanding of why they are poor.

 Targeting Domestic and Worldwide Interventions

A reason for measuring poverty is to target interventions. Clearly, one can- not help poor people and
cannot know what facilities they need (health poor, food poor, education poor) without knowing who they
are. This is the purpose of a poverty profile, which sets out the major facts on poverty.

5
  Monitoring and Evaluating Projects and Policy Interventions

The third reason for measuring poverty is to be able to predict the effects of, and then evaluate, policies
and programs designed to help poor people. Rigorous analysis of this kind is needed both to improve the
design of projects and programs and to weed out ones that are not working. Information on poverty is also
helpful in understanding the politics of many government policies. By collecting information on
households and their economic status, one can assess who uses public services and who gains from
government subsidies.

 Evaluating the Effectiveness of Institutions

The fourth reason for measuring poverty is to help evaluate institutions. One cannot tell if a government is
doing a good job of combating poverty unless there is solid information on poverty. This does not only
apply to governments. “Our dream is a world free of poverty,” writes the World Bank, and its first
mission statement is “to fight poverty with passion and professionalism for lasting results.”

By measuring poverty, we learn which poverty reduction strategies work, and which ones do not. Poverty
measurement also helps developing countries gauge program effectiveness and guide their development
strategy in a rapidly changing economic environment.

Poverty is a complex and multidimensional phenomenon leading to different conclusions about its nature,
and with alternative measures sometimes providing conflicting indications about its size and evolution.
Any poverty measure is thus unlikely to satisfy the various demands addressed to it. But poverty measure
is necessary for well-being of poor people and eradicate it to make a developed country.