Poverty, Inequality,

and Health
Justin White
GHS 201B, Fall 2018

Thanks to Jim Kahn for letting me borrow substantial material from past versions of this lecture.
Session Outline
1. Poverty measurement and trends
2. Poverty and health
3. Trends in economic inequality
4. Economic inequality and health
5. Seminar

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Poverty
Measurement
and Trends
Source: https://timesofoman.com/article/78972

3
 SDG Goal 1: No Poverty

Target 1.1. By 2030, eradicate extreme poverty for all people everywhere, currently measured as
people living on less than $1.25 a day.

Source: https://www.globalgoals.org/1-no-poverty 4
Primary Sources

8
How to Define Poverty?
• Income perspective: Gross national income (GNI) per capita is used to
identify poor countries, not poor people.
• Consumption: preferred measure of living standards in LMICs
• Typically less volatile than income
• More easily and accurately measured in places where large informal labor
market (e.g., many people self-employed in agriculture)
• But requires time-consuming consumption surveys
• Nutrition: calorie count
• Multidimensional perspective: consumption, education, access to
basic infrastructure (water, sanitation, electricity), health and
nutrition, security from crime and natural disaster
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Poverty Measures
• Poverty line: minimum income needed to meet basic needs
• Calculated (sub)nationally based on cost of basic needs or food-energy intake

• Poverty headcount: number of the population in poverty

• Poverty rate or headcount ratio: fraction of the population in poverty
• Poverty gap: multiply headcount ratio by avg fractional value by which
each poor person is short of the poverty line
• e.g., someone at half the poverty line would have a value of 0.5
• Gives more weight to those in more extreme poverty

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 Use of Income (vs. Consumption) to
International Poverty Line Measure Poverty, 2015

• SDG int’l poverty line: $1.90 a day per person

in 2011 PPP terms
• Roughly equal to $1.25 in 2005 PPP terms
• Lower middle income poverty line: $3.20 PPP
• Upper middle income poverty line: $5.50 PPP
• Revised from $1 a day
• PPP adjustment accounts for different living standards (different
prices) in different countries
• Societal poverty line, relative to median income of each country

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Absolute vs. Relative Poverty
• Absolute poverty (or absolute deprivation): measured relative to a
fixed standard of living that is constant across time, e.g., int’l poverty
line.
• Relative poverty (or relative deprivation): measured relative to living
standards in a particular society, and varies both across time and
between societies.
• Societal poverty line is one example.
• It can be considered a metric of inequality, because it measures distance b/w
those in the middle and bottom of income distribution.

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 Global Poverty and Number of Poor, 1990-2015

• 1.90 billion in extreme poverty in 1990,

down to 736 million in 2015
 A reduction of > 1 billion people
• 10% of world’s population in extreme
poverty in 2015
• For mesmerizing fun, check out:
http://worldpoverty.io/

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Source: World Bank (2018), “Piecing Together the Poverty Puzzle”
 Number of Poor, 1981-2008
Note: This is based on a
definition of $1 a day.

14
Source: Deaton (2013), The Great Escape
 Number of Poor by Region, 1990-2030
Forecast assumes historical
regional growth in GDP per capita.

15
Source: World Bank (2018), “Piecing Together the Poverty Puzzle”
 % Living in Poverty (< $5.50) by Region, 1990-2015

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Source: World Bank (2018), “Piecing Together the Poverty Puzzle”
 Share of Women and Men Living in Poor
Households, by Age Group, circa 2013

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Source: World Bank (2018), “Piecing Together the Poverty Puzzle”
 The Gender Gap in Food Consumption over
the Life Cycle, China, 1989-2009

Gender gap: ratio of

male-to-female
consumption

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Source: World Bank (2018), “Piecing Together the Poverty Puzzle”
 Caloric Shortfalls of Male Heads and Other
Household Members, Bangladesh

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Source: D’Souza and Tandon (2018)
 Share of Individuals in Multidimensional Poverty,
119 Countries, circa 2013
Dimension Indicator Weights
Monetary Income per capita 1/3
Education Child school enrollment 1/6
Education Adult school attainment 1/6
Infrastructure At least limited drinking water 1/9
Infrastructure At least limited sanitation 1/9
Infrastructure Electricity 1/9

Overall, 18.3% in multidimensional poverty

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Source: World Bank (2018), “Piecing Together the Poverty Puzzle”
 Share of Individuals in Multidimensional Poverty,
Selected Regions, circa 2013

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Source: World Bank (2018), “Piecing Together the Poverty Puzzle”
 Provincial Poverty Rates, Ecuador, 2013-14

• Income per capita • Income per capita

• Schooling • Schooling
• Infrastructure • Infrastructure
• Health (key health services, nutrition)
• Security (crime, natural disaster) 22
Source: World Bank (2018), “Piecing Together the Poverty Puzzle”
Avoiding Poverty Traps
• Poverty trap: growing income or wealth is limited for those who have too
little to invest, but expands greatly for those who can invest more.
• Important implications if poverty traps exist or not
• A poverty trap  a “big push” can lift people out of poverty (Jeff Sachs)
• No poverty trap  aid would be inefficiently spent
• Lessons from Banerjee & Duflo (2011):
1. Poor lack crucial pieces of information and may hold incorrect beliefs
2. The poor bear responsibility for far too much of their lives
3. There are good reasons why some markets are missing for the poor or work badly;
often, it makes sense to give things away.
4. LMICs are not doomed to failure; like everywhere, bad ideas/policies play a big role
in keeping them poor
5. Low expectations can be self-fulfilling prophecy
 Poverty Traps Are Not Always As They Appear
• Policies that emphasize quantity of food (most food aid) may be
misguided, in terms of the benefits they bring.
• The poor care about food quality too.
• Better idea to subsidize salt fortified with iron and vitamins, rather
than offering free grain.
• Make it easy to do the right thing, e.g., offer foods people like to eat that are
good for you

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Source: Banerjee & Duflo (2011), Poor Economics
 Cycle of Poverty and Decision Making
(Recall Scarcity Theory from Beh. Econ. Lecture)

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Source: Sheehy-Skeffingon & Haushofer (2014), “The Behavioural Economics of Poverty.” UNDP report.
National Poverty Traps
Paul Collier (2008) The Bottom Billion
1. Conflict / civil war
• Low income, stagnation or decline
• Hopelessness and destruction of social capital
• Reduces growth around 2.3%/year
2. Natural resources
• Being resource-rich can make democracy malfunction (e.g., oil-producing
countries) and may have limited sustainability
• Inhibit diversification of manufactured and service exports
3. Landlocked with bad neighbors
• Growth can spill over
4. Bad governance
Poverty and Health

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 Historical Improvements in Health
Life expectancy, 1850-2000 Mortality rates by age

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Source: Deaton (2013), The Great Escape
What Caused Historical Improvements in Health?
• McKeown thesis: Declining mortality in 19th century attributable to
rising living standards / improving economic conditions, i.e. better
nutrition
• Not better hygiene, public health measures, or improved medicine
• Fogel: Economic growth improved nutrition (“technophysio
evolution”)
• Public health improvements
• Szreter: state capacity

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 Fogel: Evidence of Improved Nutrition
Height of Men Who Reached Maturity, in cm
185

180

175

170

165

160
1750 1775 1800 1825 1850 1875 1900 1925 1950 1975
Denmark France Great Britain
Hungary Norway Sweden

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Source: Fogel (2004), The Escape from Hunger and Premature Death, 1700–2100
 Public Health Investments and Mortality:
Typhoid Fever Mortality per 100K, 1900-1936
• Clean water responsible for ½
of mortality reduction in big
cities and ¾ of infant mortality
reduction

• Social rate of return: 23 to 1

• Cost per person-year saved by
clean water of $500 in 2003
dollars

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Source: Cutler and Miller (2005, Demography), The Escape from Hunger and Premature Death, 1700–2100
 Preston Curve: Life Expectancy and GDP per capita
in 2010
GDP per capita, natural scale GDP per capita, log scale

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Source: Deaton (2013), The Great Escape
 Life Expectancy and GDP per capita in 1960 and 2010

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Source: Deaton (2013), The Great Escape
Framework for Historical Health Determinants
State capacity, political will,
Improved diet and incentives

Public health
Economic investments Health
growth improvements
Scientific Medical
innovation discoveries

Productivity
improvements
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Economic Growth, (Mostly) Necessary but
Not Sufficient for Health Improvements
• Consider key causes of mortality in LMICs:
• For TB, malaria, diarrhea, and lower respiratory infections, gov’t needs to
invest in health infrastructure to provide pest control and clean water and
sanitation.
• For maternal and child health and nutrition, there needs to be better ante-
and postnatal care
• These depend on public health spending, which is extremely low in
many LMICs
• Gov’ts choose to spend limited resources elsewhere.
• Citizens do not rank health as a top priority, and many people in LMICs report
being satisfied with their health.
• Gov’t capacity to deliver and regulate health care is often lacking.

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Chronic Stress and Allostatic Load:
How Poverty Gets “Under the Skin”
Allostatic load is the body’s response to challenges, carrying a
physiological toll that can be cumulative
• The toll (or load) can negatively influence a wide variety of health
outcomes.
• These outcomes are a result of dysregulation of multiple physiological
systems: neuroendocrine (cortisol), immune, metabolic,
cardiovascular.
• Load accumulates throughout the life course.
• Load does not represent poor health per se, but is a risk factor.

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Trends in Economic Inequality

Source: The Economist

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Inequality Is Not New
• Prehistoric and modern hunter-gatherer societies had unequal wealth
distribution
• Earliest known is Natufians of the Eastern Mediterranean ~ 14,500 years ago
• Agriculture enabled production of surpluses,
ownership of resources, and wealth accumulation
• This led to more elaborate hierarchies.
Inequality Is Not New
• The Gini coefficient during the Roman empire was 0.43, implying
more inequality than in the modern-day US.
 Life Expectancy among the Aristocracy and
General Population in England, 1550-1850

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Source: Based on Bernard Harris (2004, Social History of Medicine)
Types of Inequality
• Economic inequality: differences in economic well-being
• Income inequality: what you make
• Wealth inequality: what you and your family have in the bank and your assets
• Consumption inequality: what you spend

• Health inequality

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Income Share Held by Richest 10%, 2015

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 Shared Prosperity by Country, 2010-2015

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Source: World Bank (2018), “Piecing Together the Poverty Puzzle”
Wealth Inequality > Income Inequality, OECD

Since 1970, wealth is becoming more

concentrated in the US (Piketty & Saez, 2014).

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 Global Inequalities in Life Expectancy:
Toward a Convergence?

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Source: Deaton (2013), The Great Escape
 Figure 2 The Great Gatsby Curve: More Inequality is
Associated with Less Mobility Across Generations
More inequality at a point in time is associated with less generational earnings mobility in twenty two
countries with comparable estimates of the intergenerational elasticity between father and son earnings

.8
Intergenerational Earnings Elasticity

Peru Y-axis: Intergenerational earnings elasticity:

.6

China
Brazil For each 1% the parent earns, what % does
United Kingdom
Italy Chile the son earn?
United States Argentina
Pakistan Switzerland
Singapore
France 0 = high social mobility
.4

Spain
Japan 1 = no social mobility
Germany
New Zealand
Sweden Australia
.2

Finland Canada
Norway
Denmark

20 30 40 50 60
Inequality (Gini Coefficient)

Source: Corak
Source: (2016),
Published “Inequality
estimates collected by thefrom
author Generation to Generation:
as presented in Figure 1, and informationThe
from United States in Comparison”
the World Bank
Economic Inequality and Health
“Of all the forms of inequality, injustice in health care is the
most shocking and inhumane.” - Martin Luther King, Jr

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 Social Gradients of Under-5 Mortality

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Source: Victoria et al. (2003, Lancet), “Applying an equity lens to child health and mortality”
 The Whitehall Study: A Social Gradient in
British Civil Service Workers

• Relative social position predicts

mortality, even adjusting for age.
• If even executives are at risk, this
has strong political ramifications.
• But is this relationship robust? And
is it causal?

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Source: Underwood (2014, Science), “Can disparities be deadly?”
 Which Direction Is Causality in Whitehall?

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Source: Case and Paxson (2011, Economic Journal), “The long reach of childhood health and circumstance”
 Theories of Social Determinants of Health
• Psychosocial factors: perception and experience of personal status in
unequal societies lead to stress and poor health.
• Social production of disease/political economy of health: economic
processes and political decisions lead to systematic under-
investments in community infrastructure.
• Ecosocial, multi-level approach: one must account for biological
expressions of social relations as it relates to ecological and social
organization.
• Life course models: this focuses on critical periods of exposure or
accumulation of risk over time.
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Source: WHO Commission on Social Determinants of Health (2007)
 Relative poverty

Catastrophic Disempowerment/
Health Spending/ suboptimal
Diminished decision making
Opportunities

Disease Stress/Increased
allostatic load

Source: Jim Kahn

Does Foreign Aid Help?
Easterly: no
Sachs: yes, multi-component
Deaton: mostly no, but some forms of health aid help
Bendavid: yes, for health
Banerjee & Duflo: need to experiment with RCTs, yes for preventive care
Marmot: What Can Be Done?
The Marmot Review (2010), “Fair Society Healthy Lives”
• Early child development
• Education and lifelong learning
• Employment and working conditions
• “Minimum income for healthy standard of living”
• Healthy and sustainable communities
• Social determinants approach to prevention

Note: How many of these are typically thought of as health or medical interventions?
 A Parting Message on the Importance of
Institutions
“In the age of globalization—an ad hoc, temp-job, fiercely competitive age—hope is not a fiction. Extreme poverty is being alleviated
gradually, unevenly, nonetheless significantly. But as capital rushes around the planet and the idea of permanent work becomes
anachronistic, the unpredictability of daily life has a way of grinding down individual promise. Ideally, the government eases some of
the instability. Too often, weak government intensifies it and proves better at nourishing corruption than human capability.”
“The effect of corruption I find most underacknowledged is a contraction not of economic possibility but of our moral universe.”
“A cliché about India holds that the loss of life matters less here than in other countries, because of the Hindu faith in reincarnation,
and because of the vast scale of the population. In my reporting, I found that young people felt the loss of life acutely. What appeared
to be indifference to other people’s suffering had little to do with reincarnation, and less to do with being born brutish. I believe it
had a good deal to do with conditions that had sabotaged their innate capacity for moral action.
In places where government priorities and market imperatives create a world so capricious that to help a neighbor is to risk your
ability to feed your family, and sometimes even your own liberty, the idea of the mutually supportive poor community is demolished.
The poor blame one another for the choices of governments and markets, and we who are not poor are ready to blame the poor just
as harshly.
It is easy, from a safe distance, to overlook the fact that in under-cities governed by corruption, where exhausted people vie on scant
terrain for very little, it is blisteringly hard to be good. The astonishment is that some people are good, and that many people try to
be—all those invisible individuals who every day find themselves faced with dilemmas not unlike the one Abdul confronted, stone
slab in hand, one July afternoon when his life exploded. If the house is crooked and crumbling, and the land on which it sits uneven, is
it possible to make anything lie straight?”

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Excerpt from: Katherine Boo (2012), Beyond the Beautiful Forevers.