Some Common Ways of Defining Poverty and Issues of Justice in Priority Setting
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Poverty can be defined in a variety of ways. A number of metrics of deprivation and inequality are discussed on the Metrics of Inequality page of this website. But the primary measure used by the World Bank - and therefore discussed widely in policy and philanthropic circles are income measures that gauge the number and percentage of persons who are in Extreme Poverty and the number who fall within a category just above that threshold line. The charts at the right are from the World Bank Research Group (see their website for more regional and countrywide data)
The first point is that poverty is measured in absolute terms, based on some lower boundary threshold level indicative of extreme deprivation, or a level of income insufficient to purchase the basic necessities for survival. The calculations are both complex and controversial, but they are typically anchored to estimates of the local currency requirements necessary for purchasing a bundle of consumer goods (purchasing-power parity) that is sufficient for meeting basic needs in a manner that enables the purchaser to meet nutritional requirements for good health and normal activities.
The European Union, by contrast, defines poverty using a relative standard. A relative standard attempts to identify the level of income that supports a sub-standard of living that is so much worse than the general standard of living in the country or region in which someone lives that she struggles to live a normal life and to participate in ordinary economic, social and cultural activities. The relative standard adopted by most of the the EU countries is 50-60% of the median income household income within a country. (For a brief summary of some issues in defining poverty in terms of absolute and relative income, see the discussion at poverty.org). Thus, richer countries tend to adopt much higher standards in their definitions of the poverty level used within their own countries than the standards that are employed in the definition of poverty levels globally. The higher standards provide a way of guiding their own domestic policies with an eye to limiting not only extreme poverty but extreme inequality that has "social exclusionary effects" among co-nationals.
Some poverty definitions attempt to combine both absolute and relative aspects into a single metric (Atkinson and Bourguignon 1982). Poverty on such multi-dimensional metrics is a matter of (a) not being able to meet one's basic survival needs for food, clothing, and shelter and (b) not having enough income to meet one's "social needs," defined relative to some judgment of what is required in some specific society for for satisfying some standard of "social inclusion" or other social goals (see the European Union's Joint Report on Social Inclusion for more detail).
Initially, the World Bank focused on the number of persons who in 1990 lived on less than $1 per day as the threshold of extreme poverty. The figure was chosen because it was the standard by which 8 of the world's poorest countries defined it. Arguably, the justification for adopting a standard so much lower than other developed nations use for its own policy purposes is that it is a standard set so low that most people would find it difficult to reject it.
Over time the extreme poverty line was adjusted to $1.25 calculated in 2005 estimates of purchasing-power parity with the US. As the charts above show, the absolute number of persons living in extreme poverty has fallen since 2005, and even more substantially since 1981. China alone accounts for more than half of the drop since 1981, inasmuch as it has taken 660 million people out of poverty as of 2008. The bad news is that more than 1 billion (often referred to as the 'Bottom Billion') of the nearly 1.274 billion persons living in extreme poverty are outside of China, and that number has declined only slightly from either 1981 or 2005 levels. See Chen and Ravallion 2008, "The developing world is poorer than we thought, but no less successful in the fight against poverty," Quarterly Journal of Economics, 125(4): 1577-1625.
Progress on the second category of poverty reduction, just above the extreme poverty line, has been slow as well. There has been only a small decline in the number of those who make less than $2 a day, from 2.59 billion in 1981 (with a peak of 2.92 billion in 1999) to 2.44 billion in 2008. As Chen and Ravallion note in their 2008 paper (cited above), while success in fighting extreme poverty has been impressive, though nonetheless largely due to China's economic performance, the persistence of the clustering of the world's poor between $1 and $2 per day remains troubling. They are at high risk of returning to extreme poverty and seemingly face steep odds against upward mobility in much of the world.
The World Bank reports usual focus is on headcounts - the numbers of persons in each of the two main poverty classifications. In the chart above, the focus is on numbers of persons falling below $1.25 per day. But quite often the public discussion, especially surrounding the Millennium Development Goals (MDGs) puts the focus is on percentages of the population of the world or of some country or region. In the chart above, the presentation of data for persons earning less than $2 per day is expressed in percentages. Both numbers are useful. Absolute numbers might well rise even as percentages fall, given the rise in population. We might want to know how much of the increase in poverty is due to increased birth rates in places where poverty is entrenched, and we might want to estimate the extent to which decreases in poverty correspond to decreases in birth rates.
The MDG discussion is framed in percentages. By 2010, the world reached the UN's “millennium development goal” of halving world poverty between 1990 and 2015. That goal was achieved five years early. But as we have seen, the total number of persons in either poverty group remains stubbornly resistant to change. And there are important differences in policy options and the moral issues surrounding each, depending on how we define the poverty reduction goal.
If the goal is to reduce the total number of persons in poverty, then policies designed to lower the birth rates in poor countries might be most cost-effective. But population policies, especially if driven by the developed world, of course, raise all sorts of familiar controversies!
If we want to reduce the percentage of persons who fall below the extreme poverty level, then we might adopt policies that maximize the number of persons who can be brought just above the cut-off line, for example, by targeting the most affluent of the extreme poor. But that means abandoning the poorest of the extreme poor in order to meet the quotas and declare success.
If instead we target the poorest of the extreme poor in order to address the most egregious human suffering, then the risk - as economists will tell us - is that we will be devoting scarce resources to perhaps the most difficult cases, where the reduction of per capita poverty is the least cost-effective, due to whatever might be the local cause of entrenched poverty.
The first point is that poverty is measured in absolute terms, based on some lower boundary threshold level indicative of extreme deprivation, or a level of income insufficient to purchase the basic necessities for survival. The calculations are both complex and controversial, but they are typically anchored to estimates of the local currency requirements necessary for purchasing a bundle of consumer goods (purchasing-power parity) that is sufficient for meeting basic needs in a manner that enables the purchaser to meet nutritional requirements for good health and normal activities.
The European Union, by contrast, defines poverty using a relative standard. A relative standard attempts to identify the level of income that supports a sub-standard of living that is so much worse than the general standard of living in the country or region in which someone lives that she struggles to live a normal life and to participate in ordinary economic, social and cultural activities. The relative standard adopted by most of the the EU countries is 50-60% of the median income household income within a country. (For a brief summary of some issues in defining poverty in terms of absolute and relative income, see the discussion at poverty.org). Thus, richer countries tend to adopt much higher standards in their definitions of the poverty level used within their own countries than the standards that are employed in the definition of poverty levels globally. The higher standards provide a way of guiding their own domestic policies with an eye to limiting not only extreme poverty but extreme inequality that has "social exclusionary effects" among co-nationals.
Some poverty definitions attempt to combine both absolute and relative aspects into a single metric (Atkinson and Bourguignon 1982). Poverty on such multi-dimensional metrics is a matter of (a) not being able to meet one's basic survival needs for food, clothing, and shelter and (b) not having enough income to meet one's "social needs," defined relative to some judgment of what is required in some specific society for for satisfying some standard of "social inclusion" or other social goals (see the European Union's Joint Report on Social Inclusion for more detail).
Initially, the World Bank focused on the number of persons who in 1990 lived on less than $1 per day as the threshold of extreme poverty. The figure was chosen because it was the standard by which 8 of the world's poorest countries defined it. Arguably, the justification for adopting a standard so much lower than other developed nations use for its own policy purposes is that it is a standard set so low that most people would find it difficult to reject it.
Over time the extreme poverty line was adjusted to $1.25 calculated in 2005 estimates of purchasing-power parity with the US. As the charts above show, the absolute number of persons living in extreme poverty has fallen since 2005, and even more substantially since 1981. China alone accounts for more than half of the drop since 1981, inasmuch as it has taken 660 million people out of poverty as of 2008. The bad news is that more than 1 billion (often referred to as the 'Bottom Billion') of the nearly 1.274 billion persons living in extreme poverty are outside of China, and that number has declined only slightly from either 1981 or 2005 levels. See Chen and Ravallion 2008, "The developing world is poorer than we thought, but no less successful in the fight against poverty," Quarterly Journal of Economics, 125(4): 1577-1625.
Progress on the second category of poverty reduction, just above the extreme poverty line, has been slow as well. There has been only a small decline in the number of those who make less than $2 a day, from 2.59 billion in 1981 (with a peak of 2.92 billion in 1999) to 2.44 billion in 2008. As Chen and Ravallion note in their 2008 paper (cited above), while success in fighting extreme poverty has been impressive, though nonetheless largely due to China's economic performance, the persistence of the clustering of the world's poor between $1 and $2 per day remains troubling. They are at high risk of returning to extreme poverty and seemingly face steep odds against upward mobility in much of the world.
The World Bank reports usual focus is on headcounts - the numbers of persons in each of the two main poverty classifications. In the chart above, the focus is on numbers of persons falling below $1.25 per day. But quite often the public discussion, especially surrounding the Millennium Development Goals (MDGs) puts the focus is on percentages of the population of the world or of some country or region. In the chart above, the presentation of data for persons earning less than $2 per day is expressed in percentages. Both numbers are useful. Absolute numbers might well rise even as percentages fall, given the rise in population. We might want to know how much of the increase in poverty is due to increased birth rates in places where poverty is entrenched, and we might want to estimate the extent to which decreases in poverty correspond to decreases in birth rates.
The MDG discussion is framed in percentages. By 2010, the world reached the UN's “millennium development goal” of halving world poverty between 1990 and 2015. That goal was achieved five years early. But as we have seen, the total number of persons in either poverty group remains stubbornly resistant to change. And there are important differences in policy options and the moral issues surrounding each, depending on how we define the poverty reduction goal.
If the goal is to reduce the total number of persons in poverty, then policies designed to lower the birth rates in poor countries might be most cost-effective. But population policies, especially if driven by the developed world, of course, raise all sorts of familiar controversies!
If we want to reduce the percentage of persons who fall below the extreme poverty level, then we might adopt policies that maximize the number of persons who can be brought just above the cut-off line, for example, by targeting the most affluent of the extreme poor. But that means abandoning the poorest of the extreme poor in order to meet the quotas and declare success.
If instead we target the poorest of the extreme poor in order to address the most egregious human suffering, then the risk - as economists will tell us - is that we will be devoting scarce resources to perhaps the most difficult cases, where the reduction of per capita poverty is the least cost-effective, due to whatever might be the local cause of entrenched poverty.
Poverty Traps
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The global poor are in some important ways heterogenous. Some of the global poor are persistently poor, or number among what is often called the chronic poor. Often individuals and groups are born into poverty and never escape. Some nations as well count among the sites containing more of the chronic poor, with the same countries appearing at the bottom of lists of the least well-off nations over many decades or longer. Other individuals, groups, and nations are intermittently poor, or number among the transient poor. They suffer poverty spells, and may may differ depending on whether they are usually poor, sometimes poor, or poor perhaps only on rare occasions but frequently escape poverty for sustained periods.
Consider a society in which the poor are mostly transient poor, and in particular, one in which the composition of the transient poor is not drawn from the same group, such as ethnic minorities. The primary policy option that seems most likely to satisfy modest standards of justice would be one that devoted appropriate resources to social safety nets. No one group seems to be "trapped" by some social structural force that needs direct reform, for example, enforcement of anti-discrimination laws or some sort of affirmative action to break the logjam of prejudice that holds back members of a disadvantaged group.
Compare that with a different society in which poverty is entrenched, and especially one in which the largest number of the poorest of the poor are drawn from sectors of society that labor under severe social structural disadvantages such that absent heroic hard work, great good fortune, or both, there is little chance of escape. Here we have potential problems of social structural injustice, both in terms of what makes nations poor and what makes individuals and groups poor. Often, social structural impediments to escape from poverty are known as poverty traps.
Identification of poverty traps within countries and across countries differs considerably. In the former case, we are likely to look first at the ways in which the major domestic institutions that shape life prospects of its citizens profoundly and pervasively are configured. Systemic factors such as the lack of social safety nets, differentially funded public schools, financial barriers to access to higher education, lack of health care and primary public health prevention programs, or more often, a combination of many of these are frequently cited as explanations of persistent clusters of poverty at the group level. Or we might look to what some call neighborhood effects such as the presence of gangs, lack of police protection, local social norms.
At the international level, we have to enter into the debate over why some nations are poor while others are rich. (For more on this debate, see The Causes of Poverty). On the one hand we have exogenous explanations - theories that point to social structural forces from outside of a country as the primary (or sole) cause of poverty (e.g.the enduring effects of colonialism, the shorter-term effects of the way that the global economic order is structured), such that issues of international justice then arise most prominently. On the other hand, we find endogenous explanations - theories that identify some internal factor, such as poorly functioning institutions, inadequate natural resources, too much natural resources (see The Natural Resource Curse), and so on, such that issues of domestic justice often take center stage.
Chronic, entrenched poverty, exhibiting cross-generational stability in the composition of the members of a group who are the poorest of the poor suggests structural explanations of some kind, and thus they show the need to identify the possible kinds of poverty traps that tend to lock in low life prospects for individuals, groups, and nations.
The language of poverty traps is familiar both within domestic political contexts, especially where the focus is on groups or the common features among individuals who experience chronic and severe poverty, and in international circles the focus is on the fates of the lesser developed nations. Jefrey Sachs, for example, argues that many of the world's poor are caught in a poverty trap in which poor health, poor education, and poor infrastructure reinforce one another, making escape exceptionally difficult (The End of Poverty). The UN Millennium Project also uses the language of poverty traps to describe the circumstances within nations that require its citizens to spend all or nearly all of their income just to survive.
At the level of nation-state explanation, Sachs focuses on persistent societal poverty that involves vicious circles related to violence, natural resources, landlockedness and other geographic factors, and poor governance.
Paul Collier, in The Bottom Billion, estimates that most of the bottom billion live in 58 countries, 70% of them in Africa and most of the rest in Central Asia. Most of them are caught in one or more of four traps: wars, in which 73% of the poorest have been caught at one time or another; the natural resource curse (e.g., oil-rich African nations), which accounts for about 30%; landlocked nations with bad neighbors, roughly 38%; and the bad-governance-in-a-small-country trap, perhaps over 75%.
Stephen C. Smith’s book Ending Global Poverty identifies 12 poverty traps at work at the national level! He notes that the term ‘poverty trap’ can evoke a number of connotations. “The phrase reminds us that where there is a trap, there is likely to be a trapper. Indeed, poverty traps are all too commonly set deliberately by the rich to ensnare the poor. Yet, the word "trap" also suggests that there is a way out. Indeed, there is — but like many traps, escape from poverty often requires some help from the outside.”
In part, the terminology drives some of the criticism of the very idea of poverty traps as explanations of country-level persistence of poverty. William Easterly, for example, asks whether the poorest countries in 1950 remained among the poorest countries fifty years later. What he found was that the identities of the poorest nations keeps changing over time. As he puts it, "If the identity of who is in the poverty trap keeps changing, then it must not be much of a trap." (The White Man's Burden, 41). Still, it is possible to show continuity of membership in the class of least well-off nations if a different baseline year is chosen. Jeffrey Sachs bases his poverty trap thesis on a baseline for comparison beginning in 1985. Also, as Easterly concedes, it is "still possible that some countries are in a poverty trap; it is just that the average poor country is not" (41). For more criticisms and citation of relevant literature on poverty trap explanations at the country-level see David McKenzie's review of Bowles et al.
There are a number of important things to keep in mind in assessing the debates about poverty traps:
Consider a society in which the poor are mostly transient poor, and in particular, one in which the composition of the transient poor is not drawn from the same group, such as ethnic minorities. The primary policy option that seems most likely to satisfy modest standards of justice would be one that devoted appropriate resources to social safety nets. No one group seems to be "trapped" by some social structural force that needs direct reform, for example, enforcement of anti-discrimination laws or some sort of affirmative action to break the logjam of prejudice that holds back members of a disadvantaged group.
Compare that with a different society in which poverty is entrenched, and especially one in which the largest number of the poorest of the poor are drawn from sectors of society that labor under severe social structural disadvantages such that absent heroic hard work, great good fortune, or both, there is little chance of escape. Here we have potential problems of social structural injustice, both in terms of what makes nations poor and what makes individuals and groups poor. Often, social structural impediments to escape from poverty are known as poverty traps.
Identification of poverty traps within countries and across countries differs considerably. In the former case, we are likely to look first at the ways in which the major domestic institutions that shape life prospects of its citizens profoundly and pervasively are configured. Systemic factors such as the lack of social safety nets, differentially funded public schools, financial barriers to access to higher education, lack of health care and primary public health prevention programs, or more often, a combination of many of these are frequently cited as explanations of persistent clusters of poverty at the group level. Or we might look to what some call neighborhood effects such as the presence of gangs, lack of police protection, local social norms.
At the international level, we have to enter into the debate over why some nations are poor while others are rich. (For more on this debate, see The Causes of Poverty). On the one hand we have exogenous explanations - theories that point to social structural forces from outside of a country as the primary (or sole) cause of poverty (e.g.the enduring effects of colonialism, the shorter-term effects of the way that the global economic order is structured), such that issues of international justice then arise most prominently. On the other hand, we find endogenous explanations - theories that identify some internal factor, such as poorly functioning institutions, inadequate natural resources, too much natural resources (see The Natural Resource Curse), and so on, such that issues of domestic justice often take center stage.
Chronic, entrenched poverty, exhibiting cross-generational stability in the composition of the members of a group who are the poorest of the poor suggests structural explanations of some kind, and thus they show the need to identify the possible kinds of poverty traps that tend to lock in low life prospects for individuals, groups, and nations.
The language of poverty traps is familiar both within domestic political contexts, especially where the focus is on groups or the common features among individuals who experience chronic and severe poverty, and in international circles the focus is on the fates of the lesser developed nations. Jefrey Sachs, for example, argues that many of the world's poor are caught in a poverty trap in which poor health, poor education, and poor infrastructure reinforce one another, making escape exceptionally difficult (The End of Poverty). The UN Millennium Project also uses the language of poverty traps to describe the circumstances within nations that require its citizens to spend all or nearly all of their income just to survive.
At the level of nation-state explanation, Sachs focuses on persistent societal poverty that involves vicious circles related to violence, natural resources, landlockedness and other geographic factors, and poor governance.
Paul Collier, in The Bottom Billion, estimates that most of the bottom billion live in 58 countries, 70% of them in Africa and most of the rest in Central Asia. Most of them are caught in one or more of four traps: wars, in which 73% of the poorest have been caught at one time or another; the natural resource curse (e.g., oil-rich African nations), which accounts for about 30%; landlocked nations with bad neighbors, roughly 38%; and the bad-governance-in-a-small-country trap, perhaps over 75%.
Stephen C. Smith’s book Ending Global Poverty identifies 12 poverty traps at work at the national level! He notes that the term ‘poverty trap’ can evoke a number of connotations. “The phrase reminds us that where there is a trap, there is likely to be a trapper. Indeed, poverty traps are all too commonly set deliberately by the rich to ensnare the poor. Yet, the word "trap" also suggests that there is a way out. Indeed, there is — but like many traps, escape from poverty often requires some help from the outside.”
In part, the terminology drives some of the criticism of the very idea of poverty traps as explanations of country-level persistence of poverty. William Easterly, for example, asks whether the poorest countries in 1950 remained among the poorest countries fifty years later. What he found was that the identities of the poorest nations keeps changing over time. As he puts it, "If the identity of who is in the poverty trap keeps changing, then it must not be much of a trap." (The White Man's Burden, 41). Still, it is possible to show continuity of membership in the class of least well-off nations if a different baseline year is chosen. Jeffrey Sachs bases his poverty trap thesis on a baseline for comparison beginning in 1985. Also, as Easterly concedes, it is "still possible that some countries are in a poverty trap; it is just that the average poor country is not" (41). For more criticisms and citation of relevant literature on poverty trap explanations at the country-level see David McKenzie's review of Bowles et al.
There are a number of important things to keep in mind in assessing the debates about poverty traps:
- If 'trap' connotes inevitability, then indeed there are few, if any, plausible poverty trap explanations at any level of explanation. The fact that some persons, groups, or nations escape is not what matters. Nor does the fact that, on average, the trap does not automatically result in the severest form of poverty, say, when social structural barriers retard the robust realization of well-being, but not so much that it leaves every member of the affected class at some absolute low level.
- What's at stake in this debate, in terms of justice, is not the claim that some potential poverty trap is unjust because it guarantees some highly unequal outcomes or results ineluctably in profound deprivation, but because they are unfair impediments to escape from poverty, burdens that are unfair even when some escape through hard work, sacrifice and luck that others did not have to rely upon for realizing a better life.
- Individual-level explanations, group-level explanations, and country-level explanations should be distinguished. Any particular individual may be trapped in a vicious cycle of poverty because of personal characteristics or past decisions. Group-level explanations are useful only in describing statistical probabilities that its members will be trapped in a vicious cycle. In fact, the proximate cause of poverty for any individual member of a group caught up in a poverty trap need not be the social-structural forces that in general impede the well-being of the group, but largely personal considerations. Similarly, the relevant poverty trap explanation applicable to nations may be less of a factor in explaining the disproportionate persistence of severe, entrenched poverty of some disadvantaged minority population.
- Horatio Alger stories or other stories of statistically improbable, even heroic efforts that allow individuals, groups, or nations to overcome of the odds are just what they seem to be: exceptions that do not disprove the rule, and which don't mitigate the injustice of unfair hurdles.
Economic Definitions of Poverty and their Relation to Non-Economic Conceptions of Deprivation
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Causes of poverty are one kind of issue; the characteristics of a life of chronic poverty are another matter. Intermittent poverty can be grinding, cruel, and the fact of vulnerability, even for a short time, can increase the overall (but not necessarily individual) probability that persons who fall into the class of the intermittently poor will wind up in chronic and extreme poverty. But it is important not to lose sight of what else follows in the wake of not having a sufficient level of income necessary to meet one's basic needs on a secure basis.
There are 28 essay contributors to this edited volume, each offering a particular perspective on the causes of poverty, policy options for poverty reduction, and discussion of gaps in the way economists often define or characterize poverty. Nonetheless, there are important cross-cutting themes in many of the essays. Poverty is best understood as a multidimensional concept, which tracks many overlapping, mutually reinforcing non-economic aspects of what it is like to be poor. The poor tend to be malnourished, illiterate, politically and socially powerless, lacking in access to the protections and remedies of a well-run, non-corrupt legal system, socially marginalized and stigmatized as inherently inferior to others within a single society, and vulnerable not only to cascading deprivations in each dimension of well-being. As a result of compounded deprivation of various dimensions of well-being and the presence of other social structural barriers, are they are also disadvantaged in the sense that low-cost opportunities for improvement in well-being available to others are truncated or denied altogether to some groups and individuals. Because the poor whose poverty is most entrenched are trapped in circumstances providing them with very few options, they often use whatever natural resources they have unsustainably - e.g., destruction of trees for firewood - and deplete every last accumulated economic resource in an emergency, leaving them even more vulnerable to greater losses.
The multi-dimensional account articulated in many of these essays mirrors the first of two central theses of a theory of social justice proposed by colleague Ruth Faden and I, in an earlier book, Social Justice, and being extended for global application in two books in progress. Our theory also links up with the poverty trap debate discussed in the entry immediately above, inasmuch as it takes a as a separate aim of justice the task of combatting unfair social structural impediments to well-being in addition to the aim of securing a basic threshold level of well-being. More details can be found in The Twin Aims of Justice, but the two central theses regarding the importance of prevention of certain forms of deprivation in well-being and the removal of disadvantaging social impediments are as follows:
Aim 1: just social arrangements should insofar as possible secure a threshold level of each of six core elements of well-being necessary for a decent human life. Four of these elements are: health; knowledge and understanding; personal security from physical and psychological harm, as well as the threat of harm; and personal associations. The fifth element is social and political standing in which individuals and groups are recognized by others as worthy of equal respect. The sixth element is leading a self-determining life, one in which individuals shape its broad contours and have some significant say over its general course.
Aim 2: just social arrangements should combat serious forms of disadvantage that are unjust because they are unfair. While the first aim focuses on the injustice of failures in the realization of a threshold level of the core elements of well-being, the second aim focuses on the injustice of creating and maintaining serious social impediments to sufficient levels of well-being. These impediments are wrong on our account even if some systematically disadvantaged individuals and members of disadvantaged groups manage to escape the adverse consequences to their well-being that most others so disadvantaged predictably experience.
There are 28 essay contributors to this edited volume, each offering a particular perspective on the causes of poverty, policy options for poverty reduction, and discussion of gaps in the way economists often define or characterize poverty. Nonetheless, there are important cross-cutting themes in many of the essays. Poverty is best understood as a multidimensional concept, which tracks many overlapping, mutually reinforcing non-economic aspects of what it is like to be poor. The poor tend to be malnourished, illiterate, politically and socially powerless, lacking in access to the protections and remedies of a well-run, non-corrupt legal system, socially marginalized and stigmatized as inherently inferior to others within a single society, and vulnerable not only to cascading deprivations in each dimension of well-being. As a result of compounded deprivation of various dimensions of well-being and the presence of other social structural barriers, are they are also disadvantaged in the sense that low-cost opportunities for improvement in well-being available to others are truncated or denied altogether to some groups and individuals. Because the poor whose poverty is most entrenched are trapped in circumstances providing them with very few options, they often use whatever natural resources they have unsustainably - e.g., destruction of trees for firewood - and deplete every last accumulated economic resource in an emergency, leaving them even more vulnerable to greater losses.
The multi-dimensional account articulated in many of these essays mirrors the first of two central theses of a theory of social justice proposed by colleague Ruth Faden and I, in an earlier book, Social Justice, and being extended for global application in two books in progress. Our theory also links up with the poverty trap debate discussed in the entry immediately above, inasmuch as it takes a as a separate aim of justice the task of combatting unfair social structural impediments to well-being in addition to the aim of securing a basic threshold level of well-being. More details can be found in The Twin Aims of Justice, but the two central theses regarding the importance of prevention of certain forms of deprivation in well-being and the removal of disadvantaging social impediments are as follows:
Aim 1: just social arrangements should insofar as possible secure a threshold level of each of six core elements of well-being necessary for a decent human life. Four of these elements are: health; knowledge and understanding; personal security from physical and psychological harm, as well as the threat of harm; and personal associations. The fifth element is social and political standing in which individuals and groups are recognized by others as worthy of equal respect. The sixth element is leading a self-determining life, one in which individuals shape its broad contours and have some significant say over its general course.
Aim 2: just social arrangements should combat serious forms of disadvantage that are unjust because they are unfair. While the first aim focuses on the injustice of failures in the realization of a threshold level of the core elements of well-being, the second aim focuses on the injustice of creating and maintaining serious social impediments to sufficient levels of well-being. These impediments are wrong on our account even if some systematically disadvantaged individuals and members of disadvantaged groups manage to escape the adverse consequences to their well-being that most others so disadvantaged predictably experience.
The Relation Between Economic Growth Rates and Poverty Reduction
click image for larger view: source: Chen and Ravallion, 2012
A deeply cynical interpretation of the World Bank's linguistic shift from "structural adjustment programs" to "Poverty Reduction Strategy Papers" would view the change as largely cosmetic. For after all, the Bank, especially when viewed as the IMF's junior partner in implementing the shock therapy approach to integration of lesser developed nations into the global economy, has come in for its share of criticism. Criticisms of the sister institutions have been increasingly difficult to separate as the missions became co-mingled and muddled. Even though the IMF's official mission is macroeconomic stability, and the Bank's mission pertains to structural features of economic development, as William Easterly observes, the IMF mission expanded and claimed poverty reduction as part of its own portfolio. In addition, both the Bank and the IMF often speak of free trade, rapid economic growth, and pro-poor policies in the same breath and they act in concert in the intervention in the economic and political affairs of client nations. It's little wonder then that critics of any one part of the common institutional legacy find it difficult to draw clear distinctions.
But one thing is clear, whatever geopolitical purposes the leadership of the Bank has advanced, and whatever complicit role it has had in propping up the deeply undemocratic agenda of the IMF - and US Treasury - the Bank has had a long history of recruiting a dedicated core of first-rate economists who have sought to understand the causes of poverty with an eye to identifying policies that promote its eradication. Indeed, the inscription prominently displayed in the lobby of the World Bank is: "Our dream is a world without poverty."
What then do pro-growth policies have to do with pro-poor goals? Quite a lot, actually. Put aside for the moment the very real set of worries about the limits to economic growth modeled along the familiar carbon-intensive, resource-depleting form of development that has been the norm for the West. Whatever the proximate causes of poverty - colonialism, being land-locked, corrupt institutions, natural resource curse, maldistribution of wealth, and so on - much of the prospects for improvement in the lives of the poorest of the poor depends on increasing productivity and generating new and more efficient sources of economic activity so that there is more to go around.
Of course, economic growth alone does not guarantee that the newly acquired economic gains will not cluster in the hands of a few. Indeed, this is what tends to happen in countries afflicted by the natural resource curse, countries whose economic development plan is heavily weighted toward commodity export instead of diversified production of high-value goods, and societies in which the principal form of external economic assistance consists of "tied aid' such as large-scale dam building and water treatment projects that give construction contracts to US firms and management contracts to European firms. There is no doubt that the World Bank is due its share of criticism for its participation in these schemes that all too often serve the larger interests of the donor nations with only minor benefit to the client nations.
Thus, it is important to understand why so much has been made within World Bank circles and within the development community as a whole of the linkage between economic growth and poverty reduction. A growing body of empirical literature has shown that in nearly all countries extreme poverty falls with rising incomes and rises with falling incomes (Ravallion and Chen 1997, "What Can New Survey Data Tell Us about Recent Changes in Distribution and Poverty?" Much of the long-term and short-run variation in poverty (97% and 70% respectively) has been linked to changes in rates of per capita GDP growth (Kraay 2004, "When Is Growth Pro-Poor? Cross-Country Evidence."
In addition, recent research shows that as GDP growth rate increases, the proportion of absolutely poor ($1.25 per day extreme poverty standard) declined even though the proportion of persons in relative poverty (details of the calculation omitted here) did not show similar declines with increases in GDP growth rates. In fact, 80% of the relatively poor in 1981 were absolutely poor as measured by the $1.25 per day standard, but by 2008 the proportion of relatively poor who remained in the category of extreme poverty had fallen to less than half. Chen and Ravallion, 2012, "More relatively-poor people in a less absolutely-poor world."
Thus, it seems that current empirical evidence points to the conclusion that GDP increases are positively associated with reduction of extreme poverty, but the impact of increased GDP growth rates has a very different impact on relative poverty - how the poorest of the poor compare to the mean distribution of per capita GDP. In fact, what Chen and Ravallion show is that the total number (not proportion) of absolute poor in the extreme poverty category fell from around 1.9 billion in 1981 to around 1.3 billion in 2008, while the number of people who remained in relative poverty within their societies actually rose from around 1.3 billion to 2.8 billion.
In short, increased GDP growth rates appear to reduce extreme poverty but relative poverty within societies is not reduced as the benefits of growth are not widely shared and many who have left the ranks of the extreme poor are huddled in the $2.00 per day category. Economic growth matters, at least insofar as reduction of extreme poverty is the primary goal of development.
But one thing is clear, whatever geopolitical purposes the leadership of the Bank has advanced, and whatever complicit role it has had in propping up the deeply undemocratic agenda of the IMF - and US Treasury - the Bank has had a long history of recruiting a dedicated core of first-rate economists who have sought to understand the causes of poverty with an eye to identifying policies that promote its eradication. Indeed, the inscription prominently displayed in the lobby of the World Bank is: "Our dream is a world without poverty."
What then do pro-growth policies have to do with pro-poor goals? Quite a lot, actually. Put aside for the moment the very real set of worries about the limits to economic growth modeled along the familiar carbon-intensive, resource-depleting form of development that has been the norm for the West. Whatever the proximate causes of poverty - colonialism, being land-locked, corrupt institutions, natural resource curse, maldistribution of wealth, and so on - much of the prospects for improvement in the lives of the poorest of the poor depends on increasing productivity and generating new and more efficient sources of economic activity so that there is more to go around.
Of course, economic growth alone does not guarantee that the newly acquired economic gains will not cluster in the hands of a few. Indeed, this is what tends to happen in countries afflicted by the natural resource curse, countries whose economic development plan is heavily weighted toward commodity export instead of diversified production of high-value goods, and societies in which the principal form of external economic assistance consists of "tied aid' such as large-scale dam building and water treatment projects that give construction contracts to US firms and management contracts to European firms. There is no doubt that the World Bank is due its share of criticism for its participation in these schemes that all too often serve the larger interests of the donor nations with only minor benefit to the client nations.
Thus, it is important to understand why so much has been made within World Bank circles and within the development community as a whole of the linkage between economic growth and poverty reduction. A growing body of empirical literature has shown that in nearly all countries extreme poverty falls with rising incomes and rises with falling incomes (Ravallion and Chen 1997, "What Can New Survey Data Tell Us about Recent Changes in Distribution and Poverty?" Much of the long-term and short-run variation in poverty (97% and 70% respectively) has been linked to changes in rates of per capita GDP growth (Kraay 2004, "When Is Growth Pro-Poor? Cross-Country Evidence."
In addition, recent research shows that as GDP growth rate increases, the proportion of absolutely poor ($1.25 per day extreme poverty standard) declined even though the proportion of persons in relative poverty (details of the calculation omitted here) did not show similar declines with increases in GDP growth rates. In fact, 80% of the relatively poor in 1981 were absolutely poor as measured by the $1.25 per day standard, but by 2008 the proportion of relatively poor who remained in the category of extreme poverty had fallen to less than half. Chen and Ravallion, 2012, "More relatively-poor people in a less absolutely-poor world."
Thus, it seems that current empirical evidence points to the conclusion that GDP increases are positively associated with reduction of extreme poverty, but the impact of increased GDP growth rates has a very different impact on relative poverty - how the poorest of the poor compare to the mean distribution of per capita GDP. In fact, what Chen and Ravallion show is that the total number (not proportion) of absolute poor in the extreme poverty category fell from around 1.9 billion in 1981 to around 1.3 billion in 2008, while the number of people who remained in relative poverty within their societies actually rose from around 1.3 billion to 2.8 billion.
In short, increased GDP growth rates appear to reduce extreme poverty but relative poverty within societies is not reduced as the benefits of growth are not widely shared and many who have left the ranks of the extreme poor are huddled in the $2.00 per day category. Economic growth matters, at least insofar as reduction of extreme poverty is the primary goal of development.
The Relation Between Economic Growth and Millennium Health and Nutrition Goals
click image for larger view
What happens with regard to the other Millennium Goals when economic growth rates increase? Given the way in which extreme poverty thresholds are determined, in part by reference to the adequacy of an income in a country for purchasing a bundle of basic survival goods that enables a purchaser to meet nutritional requirements for good health and normal activities (see first entry on this page) one would hope to see similar progress on MDGs for hunger, for example. What do we know about that issue is troubling.
The Millennium Goals consist of 8 goals, 21 targets, and 60 indicators of progress. Goal number 1 is to reduce extreme poverty (the $1.25 per day standard) and extreme hunger by half from 1990 levels by 2015. The most recent 2012 UN progress report shows that for the 9 targeted regions of the world, in 5 regions the hunger goals are already met, 2 are not making sufficient progress toward achievement if current trends continue, and 2 are making no progress or are deteriorating.
The regions showing slow and insufficient progress include Sub-Saharan Africa and Southern Asia, and the stable or deteriorating regions are Western Asia and Oceana. In one way, this seems predictable, given what we know about the uneven trends of extreme poverty reduction discussed earlier - take China and a couple of highly successful East Asian nations out of the picture and extreme poverty is stubbornly persistent. We should expect extreme hunger to be persistent in those regions as well.
In addition, however, there is some evidence that extreme poverty reduction within individual countries correlates imperfectly with reduction in hunger and improved nutrition. See FAO 2005, The State of Food Insecurity in the World; World Bank, 2007, World Development Report 2008: Agriculture for Development; Gentilini and Webb, 2008, "How are we doing on poverty and hunger reduction: a new measure of country performance"; FAO 2012, The State of Food Insecurity in the World.
There are many possible explanations and they are the source of continuing empirical inquiry, but the normative uptake is that ultimately, our concern for poverty reduction is rooted in the more basic concern for non-economic dimensions of well-being (discussed earlier on this page) and whatever policies we adopt and progress reports we rely upon with respect to poverty reduction is answerable to these more basic considerations. In fact, some argue that among the various ways of increasing GDP within poor countries, money spent in the agriculture sector is more beneficial to the bottom 9 income deciles than most of the alternative sectoral investment strategies (see Money Well Spent and Dalberg Global Investment Advisors, the original source of the graphic shown above).
The Millennium Goals consist of 8 goals, 21 targets, and 60 indicators of progress. Goal number 1 is to reduce extreme poverty (the $1.25 per day standard) and extreme hunger by half from 1990 levels by 2015. The most recent 2012 UN progress report shows that for the 9 targeted regions of the world, in 5 regions the hunger goals are already met, 2 are not making sufficient progress toward achievement if current trends continue, and 2 are making no progress or are deteriorating.
The regions showing slow and insufficient progress include Sub-Saharan Africa and Southern Asia, and the stable or deteriorating regions are Western Asia and Oceana. In one way, this seems predictable, given what we know about the uneven trends of extreme poverty reduction discussed earlier - take China and a couple of highly successful East Asian nations out of the picture and extreme poverty is stubbornly persistent. We should expect extreme hunger to be persistent in those regions as well.
In addition, however, there is some evidence that extreme poverty reduction within individual countries correlates imperfectly with reduction in hunger and improved nutrition. See FAO 2005, The State of Food Insecurity in the World; World Bank, 2007, World Development Report 2008: Agriculture for Development; Gentilini and Webb, 2008, "How are we doing on poverty and hunger reduction: a new measure of country performance"; FAO 2012, The State of Food Insecurity in the World.
There are many possible explanations and they are the source of continuing empirical inquiry, but the normative uptake is that ultimately, our concern for poverty reduction is rooted in the more basic concern for non-economic dimensions of well-being (discussed earlier on this page) and whatever policies we adopt and progress reports we rely upon with respect to poverty reduction is answerable to these more basic considerations. In fact, some argue that among the various ways of increasing GDP within poor countries, money spent in the agriculture sector is more beneficial to the bottom 9 income deciles than most of the alternative sectoral investment strategies (see Money Well Spent and Dalberg Global Investment Advisors, the original source of the graphic shown above).
The Relation Between Poverty Reduction and Inequality
click image for larger view
Much of the current focus of international development policies and the literature on global justice is on the importance of reducing extreme poverty. But a flurry of policy reports and academic studies suggests that inequality itself, and the clustering of wealth and income at the top, independent of the problem of insufficiency of resources at the bottom, represent major threats in their own right.
The World Economic Forum's (WEF) recent report, Global Risks 2013, ranked what their members saw as the major threats to economic growth and stability in the year ahead and at the top of the list is economic inequality. The World Economic Forum is made up of the folks who sponsor the little get-together in Davos each year, and in their survey of a panel of 1,000 industry and government experts, the WEF ranked threats as shown in the report's graphic shown on the left.
Of course, given the lack of perspicacity in the deliverances from their collective crystal balls in the recent past, a dose of caution is warranted. But they are not alone in their assessment of what risks wealth concentration at the top poses for the rest of us. There are a variety of distinct concerns that have been expressed. While political rhetoric in the US tends to focus on the risk that higher taxes on the richest individuals and corporations will kill the goose that laid the golden egg, much of the emerging empirical evidence points to the prospect that the reverse of what is feared is more likely. The argument now gaining traction is that current levels of extreme inequality are in fact economically damaging and inefficient.
Recent IMF working papers suggest that extreme wealth concentrations have a number of adverse effects, including the fact that it limits the overall amount of growth, often does not produce economic benefits that eventuate in the widely touted economic gains to the middle classes, stifles innovation and the diffusion of technology, and increase the risk of dangerous political instability and civil unrest.
A simple point illustrates one obvious implication of economic concentration. If the same pool of economic resources were spread more evenly spread across the population it would give more people more spending power that would stimulate economic growth. Among the very rich, there is not the same need for consumer expenditures, and much evidence shows that the main sources of economic and technological innovation are not found among the very wealthiest.
Another possible explanation of the connection some studies show between slow growth, and the corresponding impediment to poverty reduction, and growing inequality within a society is the increased ability of the wealthy elites to control the political processes, ward off taxation, capture the agencies of government (rent-seeking behavior) in order to gain monopolies or erect barriers to new market entrants, or otherwise act to retain the new economic gains of increased rates of per capita GDP for themselves. (Acemoglu, Johnson, and Robinson, 2001, "The Colonial origins of comparative development: An empirical investigation".
Whatever the best explanation of the linkage between growth and inequality may be, emerging evidence suggests a number of conclusions that Chen and Ravallion emphasize in their recent work (2008, cited above). First, high levels of inequality can also impede economic growth and (hence) impede poverty reduction. So if poverty reduction is your primary goal, then you have additional reasons to care about rising inequality, even if in principle inequality in itself does not trouble you. (Also see, World Bank, 2006, World Development Report 2005/06: Equity and Development. Second, pro-poor growth-promoting reforms, esp., policies that make markets work better for the poor, especially credit and land and labor reforms, along with pro-poor redistributive policies, which can improve efficiency, may be the best way to reduce extreme poverty, increase rates of GDP growth, and limit the socially and economically destructive effects of increased inequality.
Recent assessments by Joseph Stiglitz, in his book, The Price of Inequality, and an I.M.F. Staff Discussion Note,” by Andrew G. Berg and Jonathan D. Ostry also argue that the investment decisions of the rich are not only often not socially beneficial but systemically destabilizing and contribute to added risks of global crises. Not only is it the case that the very rich may not in fact be doing for us the very great and indispensable service as they and their publicists often claim, for example, in terms of job creation and socially useful investment capital accumulation, they may as well be a major cause of other systemic economic problems we can expect in the near term.
In light of the considerations pointing to the multiple adverse effects of wealth concentration, Oxfam has called for an end of extreme wealth by 2025. For a skeptical view of this emerging body of economic literature, see the op-ed piece by Scott Winship from the Brookings Institute.
The World Economic Forum's (WEF) recent report, Global Risks 2013, ranked what their members saw as the major threats to economic growth and stability in the year ahead and at the top of the list is economic inequality. The World Economic Forum is made up of the folks who sponsor the little get-together in Davos each year, and in their survey of a panel of 1,000 industry and government experts, the WEF ranked threats as shown in the report's graphic shown on the left.
Of course, given the lack of perspicacity in the deliverances from their collective crystal balls in the recent past, a dose of caution is warranted. But they are not alone in their assessment of what risks wealth concentration at the top poses for the rest of us. There are a variety of distinct concerns that have been expressed. While political rhetoric in the US tends to focus on the risk that higher taxes on the richest individuals and corporations will kill the goose that laid the golden egg, much of the emerging empirical evidence points to the prospect that the reverse of what is feared is more likely. The argument now gaining traction is that current levels of extreme inequality are in fact economically damaging and inefficient.
Recent IMF working papers suggest that extreme wealth concentrations have a number of adverse effects, including the fact that it limits the overall amount of growth, often does not produce economic benefits that eventuate in the widely touted economic gains to the middle classes, stifles innovation and the diffusion of technology, and increase the risk of dangerous political instability and civil unrest.
A simple point illustrates one obvious implication of economic concentration. If the same pool of economic resources were spread more evenly spread across the population it would give more people more spending power that would stimulate economic growth. Among the very rich, there is not the same need for consumer expenditures, and much evidence shows that the main sources of economic and technological innovation are not found among the very wealthiest.
Another possible explanation of the connection some studies show between slow growth, and the corresponding impediment to poverty reduction, and growing inequality within a society is the increased ability of the wealthy elites to control the political processes, ward off taxation, capture the agencies of government (rent-seeking behavior) in order to gain monopolies or erect barriers to new market entrants, or otherwise act to retain the new economic gains of increased rates of per capita GDP for themselves. (Acemoglu, Johnson, and Robinson, 2001, "The Colonial origins of comparative development: An empirical investigation".
Whatever the best explanation of the linkage between growth and inequality may be, emerging evidence suggests a number of conclusions that Chen and Ravallion emphasize in their recent work (2008, cited above). First, high levels of inequality can also impede economic growth and (hence) impede poverty reduction. So if poverty reduction is your primary goal, then you have additional reasons to care about rising inequality, even if in principle inequality in itself does not trouble you. (Also see, World Bank, 2006, World Development Report 2005/06: Equity and Development. Second, pro-poor growth-promoting reforms, esp., policies that make markets work better for the poor, especially credit and land and labor reforms, along with pro-poor redistributive policies, which can improve efficiency, may be the best way to reduce extreme poverty, increase rates of GDP growth, and limit the socially and economically destructive effects of increased inequality.
Recent assessments by Joseph Stiglitz, in his book, The Price of Inequality, and an I.M.F. Staff Discussion Note,” by Andrew G. Berg and Jonathan D. Ostry also argue that the investment decisions of the rich are not only often not socially beneficial but systemically destabilizing and contribute to added risks of global crises. Not only is it the case that the very rich may not in fact be doing for us the very great and indispensable service as they and their publicists often claim, for example, in terms of job creation and socially useful investment capital accumulation, they may as well be a major cause of other systemic economic problems we can expect in the near term.
In light of the considerations pointing to the multiple adverse effects of wealth concentration, Oxfam has called for an end of extreme wealth by 2025. For a skeptical view of this emerging body of economic literature, see the op-ed piece by Scott Winship from the Brookings Institute.
The Relation Between Inequality, Health and Nutrition, and Other Non-Economic Goods
click image for link
The last few years have produced a large volume of literature on the issue of the relationship between health and income inequality. One of the most influential works is the short volume, Is Inequality Bad for Our Health? The authors, Norman Daniels, Bruce Kennedy, and Ichiro Kawachi - a team composed of a philosopher and two public health academics, begin their argument by noting that "We have long known that more affluent and better-educated members of a society tend to live longer and healthier..." The belief that lower rates of premature mortality and excess morbidity are associated with almost any way you might try to identify an indicator of differences in socioeconomic status, a relationship that has come to be known as "the social gradient of health hypothesis."
But the authors want to press another line of argument. Not simply is poverty bad for the health of those who are poor, but social inequality - in income and wealth - are bad for the health of all members of a society, except perhaps for a small segment of the best-off social class who tend to be unaffected largely by how others fare. This is sometimes referred to as the relative income hypothesis (not to be confused with James Duesenberry's famous relative income hypothesis from the 1940s, which holds that people make decisions, including savings and consuming, based not on on absolute income but on relative income). The relative income hypothesis holds that inequality in itself is a fundamental cause of poor health status of populations. The main debates among those who subscribe to the hypothesis concerns the precise causal pathways, and among the candidates is the idea that inequality induces harmful emotional stress, alters behavior in unhealthy ways, undermines the quality of social relationships for both poor and non-poor, and so on.
If the relative income hypothesis is accurate, then it's good news for philosophers who defend the theoretical adequacy of theories of justice, most notably that of John Rawls, for whom attention to such things as equal liberties, fair equality of opportunity, and some guarantee of a share of income and wealth is all that is required for a just society. In particular, it would respond to critics who view the theory as inadequate because it contains no explicit, distinct principle of distribution of health care goods and services or other public health measures. If accurate, it means that such a theory can achieve the theoretical aims of its critics without having to add on a separate principle of justice in health policy, inasmuch as the inequality-compressing principles of fair equality of opportunity and basic income distribution would do the job anyway.
Moreover, it would be good news for policy makers who struggle to find ways to make persuasive arguments for redistributive income policies and other social programs designed to reduce economic inequalities. Presumably, an argument that tells us that all of us (or nearly all of us) have a stake in something as important as health now have reason to see that they have a stake in inequality reduction, a commitment that many are likely to hold, if at all, only out of a commitment to justice, rather than a prudential motivation.
Alas, the evidence, although conducted across and within many countries, is quite mixed, and the debates continue.
But the authors want to press another line of argument. Not simply is poverty bad for the health of those who are poor, but social inequality - in income and wealth - are bad for the health of all members of a society, except perhaps for a small segment of the best-off social class who tend to be unaffected largely by how others fare. This is sometimes referred to as the relative income hypothesis (not to be confused with James Duesenberry's famous relative income hypothesis from the 1940s, which holds that people make decisions, including savings and consuming, based not on on absolute income but on relative income). The relative income hypothesis holds that inequality in itself is a fundamental cause of poor health status of populations. The main debates among those who subscribe to the hypothesis concerns the precise causal pathways, and among the candidates is the idea that inequality induces harmful emotional stress, alters behavior in unhealthy ways, undermines the quality of social relationships for both poor and non-poor, and so on.
If the relative income hypothesis is accurate, then it's good news for philosophers who defend the theoretical adequacy of theories of justice, most notably that of John Rawls, for whom attention to such things as equal liberties, fair equality of opportunity, and some guarantee of a share of income and wealth is all that is required for a just society. In particular, it would respond to critics who view the theory as inadequate because it contains no explicit, distinct principle of distribution of health care goods and services or other public health measures. If accurate, it means that such a theory can achieve the theoretical aims of its critics without having to add on a separate principle of justice in health policy, inasmuch as the inequality-compressing principles of fair equality of opportunity and basic income distribution would do the job anyway.
Moreover, it would be good news for policy makers who struggle to find ways to make persuasive arguments for redistributive income policies and other social programs designed to reduce economic inequalities. Presumably, an argument that tells us that all of us (or nearly all of us) have a stake in something as important as health now have reason to see that they have a stake in inequality reduction, a commitment that many are likely to hold, if at all, only out of a commitment to justice, rather than a prudential motivation.
Alas, the evidence, although conducted across and within many countries, is quite mixed, and the debates continue.
Positional Goods Problems: When 'Enough' of something depends on how much others have
Image reproduced from The Economist article cited herein
One philosophical underpinning for the focus on the reduction - indeed, eradication - of extreme poverty can be found in theories of justice that bear the ungainly name of "sufficientarian," or simply sufficiency theories. Sufficiency theories constitue a family and not a homogeneous philosophical position. Two differences are significant.
First, there are questions of sufficiency of what, for what? We might answer the first part of that question in terms of income, for example, and perhaps the answer to the second part might be constructed along the lines of what the World Bank definition of extreme poverty had in mind in tying the economic standard to the income needed within a particular country to meet one's nutritional and health needs within a budget adequate for meeting other basic survival needs. Or we might adopt a standard that is cashed out in terms of the non-economic aims of the sort described above as multidimensional elements of well-being, and the relevant point of comparison is not sufficiency of what money can buy within a particular culture in order to meet the most basic essentials of bare survival. Instead, the standard might be a sufficiency of all of the dimensions of well-being that are necessary for something like a decent human life or a dignified human life. Thus, sufficientarians answer questions regarding sufficiency of what, and for what quite differently.
The second issue is whether a principle of sufficiency on its own is all that justice requires, or perhaps it is a necessary but not complete specification of what justice demands. We might think, for example, that even a fairly high standard of what sufficiency demands needs to be supplemented with other moral principles, such as some sort of principle that sets limits to various forms of disadvantage, even if, as argued already, the social-structural barriers to realizing well-being are not thwarted in all cases and to the very great degree that some fall below whatever sufficiency threshold the theory sets.
Thus, a sufficientarian theory of justice might well think that eradication of extreme poverty is not only the minimal requirement of global justice, but that it is the exclusive requirement. As long as everyone has enough (of whatever, for whatever purpose), then the job of justice is done. An exclusive focus on extreme poverty reduction as the sole intrinsic requirement of justice would be in line with a single-principle sufficientarian theory that sets the absolute standard of well-being low - at around survival level - and adopts no other ancillary principle regarding corrosive, disadvantaging inequalities as marking anything that is unjust simply because unfair. Now, such a view could endorse reduction of certain forms of inequality, not because they are unjust on their own, but simply for instrumental reasons of the sort that some of the above empirical evidence supports - namely that structural inequalities undermine economic growth, and economic growth is causally necessary for extreme poverty reduction. Such an argument allows the most modest version of sufficientarianism to bootstrap a commitment to reducing inequality without assuming anything about its unfairness.
Many sufficientarians endorse neither single-principle theories nor theories that interpret its sufficiency requirement so modestly. In particular, if a theory shifts from something like a commitment to a sufficient level of income necessary for survival to a sufficiency in the multiple dimensions of well-being necessary for a decent human life, then the conceptual integrity of the minimum commitment to some absolute standard or floor of well-being becomes shaky.
The problem is one known as the positional goods problem, and it is at home originally in discussions of the adequacy of economic measures of poverty. Take for example, the issue of how much income and wealth is required to meet the needs for shelter and food. If the affluent have so much more money to spend for housing than the low income population, then the marginal costs of obtaining the housing the affluent want is so insubstantial that it does not figure heavily in their purchase decisions. (For an excellent and accessible discussion of positional goods and recent debates about what's wrong with inequality - and source of the image shown above, see the 2011 article from the Economist, "Inequality is rising. Does it matter—and if so why?"
Take Washington, DC as an example. The gap between the incomes of the top decile and the bottom decile is enormous. High income earners drive up the price of even the most modest, geographically desirable but otherwise dismal housing stock such that the low income residents are priced out of the market. That's one reason DC has one of the longest work commutes in the country! The task of defining an absolute standard is inherently plagued by the need to calculate how much one needs in order to meet basic necessities by recourse to comparative data about how one person fares in relation to others. The problem is also known as the problem of competitive utilization, signaling the fact that the ability to get even a small bit of what one wants is frustrated by the ability of others to commandeer virtually the entire stock of some goods.
Still, social context-dependency of absolute standards of economic well-being does not undermine entirely the idea of some independently definable absolute standard simply because the non-relative part of the standard is supplied by the concept of the universal requirements of survival. The minimum requirements for nutrition and health are not society-relative; nor are the requirements of shelter from the elements. What is society-relative is the resource bundle necessary to satisfy the requirements of an absolute well-being standards established by reference to universal facts about human beings.
But what happens when minimal standards of well-being get cashed out in terms of non-economic dimensions of well-being? What if we include as part of the minimum various considerations of the sort Banerjee et al (see above) identify? They include concerns about powerlessness and non-stigmatized, non-marginalized social standing that are treated as dimensions of well-being that matter in their own right. Here we see that how much is enough depends on how much others have. One cannot lead a sufficiently self-determining life in the context of deeply asymmetrical power relations - how much power you have to influence your own fate depends heavily upon others not having too much. One cannot enjoy the good of a life of equal social standing unless others do not enjoy an elevated social standing, for by definition, such forms of social relationship are not ones that have the value they have for individuals simply because they are equal.
While the positional goods problem does not undermine the very idea of pursuing some threshold standard of well-being, defined along multiple dimensions, it does suggest that the pursuit of an absolute standard of how much of anything - money, personal power - is enough is more problematic than often supposed. It is especially problematic as we move out of the realm of defining our most urgent moral priorities (extreme poverty reduction) into the more complicated business of determining the minimal level of well-being that justice demands. For one thing, it means that determinations of how much is enough of some non-economic dimension of well-being is inflected by the need to evaluate the likely causal role any distribution of resource bundles might have on the ability to be self-determining, enjoy equal social status, and have sufficient cognitive attainment necessary to function on terms comparable with others with whom stands in various sorts of economic and political relations.
In a sense, the focus on extreme poverty has offered an ecumenical moral goal for priority setting. It seems to be a goal that few people find it reasonable to reject. It does not raise immediate issues of inequality. Its appeal is often enhanced by calculations of just how small a percentage of the developed nations's GDP would be required to eliminate extreme poverty. It doesn't start to get dicey until empirical evidence starts to accrue, suggesting that even attainment of that modest goal is in jeopardy unless a campaign against corrosive forms of inequality is mounted, initially within the developing countries at least.
Things get dicier still when reflections on developing nations occasion further reflection on the place of inequalities within developed nations inasmuch as it seems to present us with the unwelcome prospect of counseling against inequalities abroad while counseling quite the contrary at home. And things get even dicier when it is argued that many of the ultimate objectives of a multidimensional account of non-economic elements of well-being should become our new moral minimum, inasmuch as issues of how much is too much enter the debate along side issues of how much is too little. It's not only the distribution of money that is at stake, but the distribution of power, status, intellectual authority and more.
First, there are questions of sufficiency of what, for what? We might answer the first part of that question in terms of income, for example, and perhaps the answer to the second part might be constructed along the lines of what the World Bank definition of extreme poverty had in mind in tying the economic standard to the income needed within a particular country to meet one's nutritional and health needs within a budget adequate for meeting other basic survival needs. Or we might adopt a standard that is cashed out in terms of the non-economic aims of the sort described above as multidimensional elements of well-being, and the relevant point of comparison is not sufficiency of what money can buy within a particular culture in order to meet the most basic essentials of bare survival. Instead, the standard might be a sufficiency of all of the dimensions of well-being that are necessary for something like a decent human life or a dignified human life. Thus, sufficientarians answer questions regarding sufficiency of what, and for what quite differently.
The second issue is whether a principle of sufficiency on its own is all that justice requires, or perhaps it is a necessary but not complete specification of what justice demands. We might think, for example, that even a fairly high standard of what sufficiency demands needs to be supplemented with other moral principles, such as some sort of principle that sets limits to various forms of disadvantage, even if, as argued already, the social-structural barriers to realizing well-being are not thwarted in all cases and to the very great degree that some fall below whatever sufficiency threshold the theory sets.
Thus, a sufficientarian theory of justice might well think that eradication of extreme poverty is not only the minimal requirement of global justice, but that it is the exclusive requirement. As long as everyone has enough (of whatever, for whatever purpose), then the job of justice is done. An exclusive focus on extreme poverty reduction as the sole intrinsic requirement of justice would be in line with a single-principle sufficientarian theory that sets the absolute standard of well-being low - at around survival level - and adopts no other ancillary principle regarding corrosive, disadvantaging inequalities as marking anything that is unjust simply because unfair. Now, such a view could endorse reduction of certain forms of inequality, not because they are unjust on their own, but simply for instrumental reasons of the sort that some of the above empirical evidence supports - namely that structural inequalities undermine economic growth, and economic growth is causally necessary for extreme poverty reduction. Such an argument allows the most modest version of sufficientarianism to bootstrap a commitment to reducing inequality without assuming anything about its unfairness.
Many sufficientarians endorse neither single-principle theories nor theories that interpret its sufficiency requirement so modestly. In particular, if a theory shifts from something like a commitment to a sufficient level of income necessary for survival to a sufficiency in the multiple dimensions of well-being necessary for a decent human life, then the conceptual integrity of the minimum commitment to some absolute standard or floor of well-being becomes shaky.
The problem is one known as the positional goods problem, and it is at home originally in discussions of the adequacy of economic measures of poverty. Take for example, the issue of how much income and wealth is required to meet the needs for shelter and food. If the affluent have so much more money to spend for housing than the low income population, then the marginal costs of obtaining the housing the affluent want is so insubstantial that it does not figure heavily in their purchase decisions. (For an excellent and accessible discussion of positional goods and recent debates about what's wrong with inequality - and source of the image shown above, see the 2011 article from the Economist, "Inequality is rising. Does it matter—and if so why?"
Take Washington, DC as an example. The gap between the incomes of the top decile and the bottom decile is enormous. High income earners drive up the price of even the most modest, geographically desirable but otherwise dismal housing stock such that the low income residents are priced out of the market. That's one reason DC has one of the longest work commutes in the country! The task of defining an absolute standard is inherently plagued by the need to calculate how much one needs in order to meet basic necessities by recourse to comparative data about how one person fares in relation to others. The problem is also known as the problem of competitive utilization, signaling the fact that the ability to get even a small bit of what one wants is frustrated by the ability of others to commandeer virtually the entire stock of some goods.
Still, social context-dependency of absolute standards of economic well-being does not undermine entirely the idea of some independently definable absolute standard simply because the non-relative part of the standard is supplied by the concept of the universal requirements of survival. The minimum requirements for nutrition and health are not society-relative; nor are the requirements of shelter from the elements. What is society-relative is the resource bundle necessary to satisfy the requirements of an absolute well-being standards established by reference to universal facts about human beings.
But what happens when minimal standards of well-being get cashed out in terms of non-economic dimensions of well-being? What if we include as part of the minimum various considerations of the sort Banerjee et al (see above) identify? They include concerns about powerlessness and non-stigmatized, non-marginalized social standing that are treated as dimensions of well-being that matter in their own right. Here we see that how much is enough depends on how much others have. One cannot lead a sufficiently self-determining life in the context of deeply asymmetrical power relations - how much power you have to influence your own fate depends heavily upon others not having too much. One cannot enjoy the good of a life of equal social standing unless others do not enjoy an elevated social standing, for by definition, such forms of social relationship are not ones that have the value they have for individuals simply because they are equal.
While the positional goods problem does not undermine the very idea of pursuing some threshold standard of well-being, defined along multiple dimensions, it does suggest that the pursuit of an absolute standard of how much of anything - money, personal power - is enough is more problematic than often supposed. It is especially problematic as we move out of the realm of defining our most urgent moral priorities (extreme poverty reduction) into the more complicated business of determining the minimal level of well-being that justice demands. For one thing, it means that determinations of how much is enough of some non-economic dimension of well-being is inflected by the need to evaluate the likely causal role any distribution of resource bundles might have on the ability to be self-determining, enjoy equal social status, and have sufficient cognitive attainment necessary to function on terms comparable with others with whom stands in various sorts of economic and political relations.
In a sense, the focus on extreme poverty has offered an ecumenical moral goal for priority setting. It seems to be a goal that few people find it reasonable to reject. It does not raise immediate issues of inequality. Its appeal is often enhanced by calculations of just how small a percentage of the developed nations's GDP would be required to eliminate extreme poverty. It doesn't start to get dicey until empirical evidence starts to accrue, suggesting that even attainment of that modest goal is in jeopardy unless a campaign against corrosive forms of inequality is mounted, initially within the developing countries at least.
Things get dicier still when reflections on developing nations occasion further reflection on the place of inequalities within developed nations inasmuch as it seems to present us with the unwelcome prospect of counseling against inequalities abroad while counseling quite the contrary at home. And things get even dicier when it is argued that many of the ultimate objectives of a multidimensional account of non-economic elements of well-being should become our new moral minimum, inasmuch as issues of how much is too much enter the debate along side issues of how much is too little. It's not only the distribution of money that is at stake, but the distribution of power, status, intellectual authority and more.
The Multidimensionality of Poverty
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My colleague Ruth Faden and I argue for a multi-dimensional account of well-being that should be the proper outcome metric of a theory of both domestic and global justice. Six core elements are claimed to be the central concerns of domestic political institutions and should guide international development policies and institutions and relations among nation-states.
The core dimensions include health, reasoning or cognition, personal security, personal attachments, self-determination, and the respect of others. We argue also that justice does not necessarily require equality in human well-being but a sufficient level of each core element.
Each core element is thus a matter of separate moral salience by which the justice of nations, social practices, and global institutions and patterns of international interaction should be judged whenever any of these institutions or practices exert a profound and pervasive impact on the core elements that significantly determine whether individuals live decent human lives.
Moreover, each dimension on our list matters additionally because it has a significant causal impact on the ability of persons to realize other elements on the list. Education and health are familiar examples of causal interdependence. Ill health undermines educational attainment and lack of educational development contributes heavily to ill health.
A similar trend in developmental economics further illuminates how we see the importance of recognizing significant causal linkages between dimensions of well-being. While the genesis of our theory lies in a concern for social justice, and much of the social science literature that informs our own approach is drawn from studies of deprivation and disadvantage within single societies, there is a practical analogue that bears directly on our rationale for explicit extension of our theory to problems of global justice found within recently devised measures of poverty used by developmental economists. An example is the multidimensional poverty index (MPI) developed in 2010 by Sabina Alkire, James Foster, and colleagues from the Oxford Poverty and Human Development Initiative (Alkire, Sabina, and Sumner, Andy 2013. “Multidimensional Poverty and the Post-2015 MDGs,” with Development 56(1) 46-51.
They argue that poverty, or more precisely deprivation, is better understood when standard household income measures are replaced by an index designed to capture what they aptly describe as the multidimensionality of poverty. The purpose of the MPI is to understand the nature, number, and geographic location of deprivations experienced by those who are multidimensionally poor. They proceed by devising a list of indicators that reveal “deprivations in core functioning” and “rudimentary services.” Core functioning deprivations are measured by indicators of health such as child mortality and nutrition, and measures of education such as total years of schooling and percent of children enrolled. Rudimentary service indicators include living standards such as access to water, electricity, cooking fuel, and toilet facilities.
The core functionings identified by the MPI and our list of core dimensions are generated for somewhat different purposes. In our case, it is for the purpose of developing of a theory of social justice that tracks a fairly comprehensive list of morally salient forms of deprivations that might be overlooked by political philosophers. The purpose of the MPI is a better understanding of the complexity of poverty and the ways in which the nature and impact of a few key types of deprivations are easily overlooked by economists and policy makers. However, there are two points of significant agreement.
First, the creators of the MPI and we start from the assumption that there are distinctly salient dimensions of deprivation that should be highlighted, and in fact some of the same dimensions figure in both approaches. Ours is more inclusive for the sake of capturing elements we take to be on a moral par in evaluating whether social arrangements are just. Theirs is less inclusive for the sake of focusing on a few key variables for which there is ample cross-national data.
Second, both approaches assume that an important part of the rationale for the choice of the core dimensions in the respective theories is the role each plays, not only as a dimension of distinct theoretical salience, but each is a dimension that is crucial to capture also because it has significant impact on other core dimensions of well-being, and ultimately, significant impact on the realization of well-being that is specific to personal conceptions of a worthwhile life for particular persons.
The core dimensions include health, reasoning or cognition, personal security, personal attachments, self-determination, and the respect of others. We argue also that justice does not necessarily require equality in human well-being but a sufficient level of each core element.
Each core element is thus a matter of separate moral salience by which the justice of nations, social practices, and global institutions and patterns of international interaction should be judged whenever any of these institutions or practices exert a profound and pervasive impact on the core elements that significantly determine whether individuals live decent human lives.
Moreover, each dimension on our list matters additionally because it has a significant causal impact on the ability of persons to realize other elements on the list. Education and health are familiar examples of causal interdependence. Ill health undermines educational attainment and lack of educational development contributes heavily to ill health.
A similar trend in developmental economics further illuminates how we see the importance of recognizing significant causal linkages between dimensions of well-being. While the genesis of our theory lies in a concern for social justice, and much of the social science literature that informs our own approach is drawn from studies of deprivation and disadvantage within single societies, there is a practical analogue that bears directly on our rationale for explicit extension of our theory to problems of global justice found within recently devised measures of poverty used by developmental economists. An example is the multidimensional poverty index (MPI) developed in 2010 by Sabina Alkire, James Foster, and colleagues from the Oxford Poverty and Human Development Initiative (Alkire, Sabina, and Sumner, Andy 2013. “Multidimensional Poverty and the Post-2015 MDGs,” with Development 56(1) 46-51.
They argue that poverty, or more precisely deprivation, is better understood when standard household income measures are replaced by an index designed to capture what they aptly describe as the multidimensionality of poverty. The purpose of the MPI is to understand the nature, number, and geographic location of deprivations experienced by those who are multidimensionally poor. They proceed by devising a list of indicators that reveal “deprivations in core functioning” and “rudimentary services.” Core functioning deprivations are measured by indicators of health such as child mortality and nutrition, and measures of education such as total years of schooling and percent of children enrolled. Rudimentary service indicators include living standards such as access to water, electricity, cooking fuel, and toilet facilities.
The core functionings identified by the MPI and our list of core dimensions are generated for somewhat different purposes. In our case, it is for the purpose of developing of a theory of social justice that tracks a fairly comprehensive list of morally salient forms of deprivations that might be overlooked by political philosophers. The purpose of the MPI is a better understanding of the complexity of poverty and the ways in which the nature and impact of a few key types of deprivations are easily overlooked by economists and policy makers. However, there are two points of significant agreement.
First, the creators of the MPI and we start from the assumption that there are distinctly salient dimensions of deprivation that should be highlighted, and in fact some of the same dimensions figure in both approaches. Ours is more inclusive for the sake of capturing elements we take to be on a moral par in evaluating whether social arrangements are just. Theirs is less inclusive for the sake of focusing on a few key variables for which there is ample cross-national data.
Second, both approaches assume that an important part of the rationale for the choice of the core dimensions in the respective theories is the role each plays, not only as a dimension of distinct theoretical salience, but each is a dimension that is crucial to capture also because it has significant impact on other core dimensions of well-being, and ultimately, significant impact on the realization of well-being that is specific to personal conceptions of a worthwhile life for particular persons.