The main tools most governments use to measure poverty grossly underestimate the scale of the problem and must be reset. This includes ‘poverty lines’, the minimum amounts of money people in a given place need to avoid poverty.
City mayors and national governments, the World Bank and the United Nations all use poverty lines to set policy. The Millennium Development Goals, for instance, use US$1.25 a day as the line that marks extreme poverty. The post-2015 Sustainable Development Goals will probably do the same.
But this poverty line and most other lines are fatally flawed. They only measure part of what it means to be poor, and that means they undercount, particularly in urban areas.
Under counting the poor
In recent years researchers have reviewed the accuracy of poverty lines in cities in Argentina, Egypt, India, Sri Lanka, Vietnam and Zambia, where many people live in informal settlements characterised by poor-quality, overcrowded housing and a lack of infrastructure and services.
These studies, which are available to download from the links below, show how the proportion of the urban population ‘living in poverty’ is much higher than the proportion defined as poor in official statistics based on poverty lines.
– In Colombo, Sri Lanka, official statistics suggest that only 3.6 per cent of people are poor, yet around half of the city’s population live in informal settlements
– According to the official poverty line in Pune, India, less than two per cent of the population are poor, yet nearly 40 per cent of the people live in slums
– Most studies suggest that 5-10 per cent of people in Cairo, Egypt are poor, but up to two-thirds live in informal settlements.
It’s a similar story across much of Africa, Asia and Latin America, where official figures for who is poor do not reflect at all who lives in poverty. Interviews with women from informal settlements in Buenos Aires, Argentina found, for instance, that only one had a household income below the official poverty line. Yet most of the women lived in houses built with second–hand materials. They struggled to feed their families, pay school fees and access healthcare. Half of them had no water, sanitation, gas or electricity. But according to the official poverty line, these women were not poor.
Putting a price on poverty
Two poverty lines used in Vietnam suggest either 0.3 per cent or 8.3 per cent of the urban population are poor. But, as in most other countries, these poverty lines do not reflect the real costs of life in a big city. That includes not only the increasingly expensive food, but also non-food costs such as adequate accommodation and basic services. As one respondent to the research there noted, people need at least US$50 to survive for a month in Hanoi. This is twice the official urban poverty line.”