The Concept Of Chronic Poverty Its Value For Poverty Analysis And For Pro Poor Policy Making

Seminar paper from the year 2008 in the subject Politics - Topic: Development Politics, grade: merit, University of Manchester (Institute for Development Policy and Management), course: Poverty and Livelihoods: Analysis, Policy and Action, language: English, abstract: Poverty reduction stands in the centre of the current development agenda of governments and aid agencies and is seen as an overarching aim of development intervention. There is a danger that those suffering the severest forms of poverty will not be reached by the recent poverty agenda. It gets increasingly obvious that even in countries that perform well in terms of poverty reduction, there remains significant numbers of people in deprivation which is a sign that certain forms of poverty are not addressed by the current development agenda (Green and Hulme, 2005). The concept ‘chronic poverty’ is an attempt to understand and address those forms of poverty. Chronically poor are defined as “people who remain poor for much of their life course, who may ‘pass on’ their poverty to their children, and who may die of easily prevent-able deaths because of the poverty they experience” (CPRC, 2004: 3) . Conservative estimates speak of 300 to 420 million chronically poor worldwide (ibid.). The following three sections attempt to answer the question of whether the concept of ‘chronic poverty’ adds value to current poverty analysis and development policy. Sec-tion 2 introduces the concept ‘chronic poverty’ and section 3 gives an overview about current poverty analysis and its critiques, with a focus on current approaches and un-derstandings of poverty which influence the current poverty reduction agenda. Section 4 presents the analysis of whether the concept adds value to poverty analysis and the implications this may have for pro-poor policy making. It will be argued that the concept of ‘chronic poverty’ has advantages on the conceptual level of poverty analysis and on the practical level of development policy and intervention. Those levels are highly interdependent: which measures are taken to fight poverty is dependant on how it is analysed and defined by academics, donors, societies and national decision makers. Therefore section four is divided into two parts: The first part will discuss the influences for conceptualising poverty and the second part will concentrate on practical implications for development policy and intervention. [..]

Based on a decade of research by the Chronic Poverty Research Centre, this volume includes material on inter-generational transmission, the importance of assets and vulnerability, and conflict, and new thinking about the close relationship between social exclusion and adverse incorporation.

This book discusses critical policy issues that need to be addressed if India wishes to achieve the SDG 1 based elusive goal of ending poverty in the country. In its nine chapters, it takes the readers through trends and estimates of poverty in India, explains changes in the way it has been measured over time and the factors that lead to persistence of poverty, draws attention to the fact that hunger is both a cause and an effect of poverty and has gender and age dimensions too. The book revisits strategies that were successful in addressing poverty emanating from situations of conflict, presents a discussion on migration as a critical coping mechanism among poor, analyses the links between ill health and poverty as well as education and poverty to draw attention to the policy imperatives that need attention. India’s report card on poverty remains dismal even though there is recognition of the importance of reducing or eliminating or ending it at both national and global levels. Despite rapid economic growth and improvement on a range of development indicators, an unacceptably high proportion of India’s population continues to suffer poverty in multiple dimensions. SDG 1 or “ending poverty in all its forms everywhere” cannot be achieved unless policies and poverty alleviation programmes understand and address chronic poverty and its dynamics. This requires that we estimate and understand the extent of poverty, the factors that lead to people getting stuck in it and the ways this can be addressed. It also requires understanding the dynamic nature of poverty or the fact that many of those who are poor are able to move out of poverty as well as the fact that many others who are not poor become impoverished. These are the issues that are comprehensively examined and addressed in this book. In addition to students, teachers and researchers in the areas of development, economic growth, equity and welfare, the book is also of great interest to policy makers, planners and non‐government agencies who are concerned with understanding and addressing poverty-related issues in the developing countries.

Why Poverty Persists significantly advances our understanding of the temporal dimensions of poverty. Its judicious mix of new evidence and improved methods offers new insights into why some people remain mired in poverty and the forces that keep them there. All those interested in combating poverty - academics, donors and those working in the non-governmental organizations - will learn from the carefully constructed African and Asian case studies presented. John Hoddinott, International Food Policy Research Institute, Washington DC, US Ten years ago Bob Baulch and John Hoddinott drew our attention to the phenomenon of poverty dynamics" - an insight into the unpredictability of poor peoples livelihoods that had profound implications for poverty thinking and policy, forcing a rethink of static conceptualisations and measurement and raising challenges for targeting anti-poverty programmes. In this new volume, Baulch and colleagues enrich this understanding with rigorous analysis of panel datasets from six countries in Africa and Asia. Most impressively, this illuminating collection by technical microeconometricians is equally accessible to non-technical readers, which effectively communicates its important messages to development policy-makers and practitioners. Stephen Devereux, University of Sussex, UK This volume on poverty dynamics in developing countries, whose authors include the leaders in this field, is a must for analysts and research students. It advances the literature by addressing three important issues - measurement error, attrition, and tracking. For each of these questions, the volume leads by example, showing how they can be handled in specific cases. The results show that escape from poverty is a diverse phenomenon, and establish the importance of country and context specificity. The volume provide an analytical platform for careful policy assessment of policy alternatives. Ravi Kanbur, Cornell University, US At the beginning of the 2000-2010 decade, Bob Baulch (with John Hoddinott) was setting the micro-econometric agenda on poverty dynamics and chronic poverty and producing work that "non-economists" had to read if they wanted to conduct serious research on these issues. In this volume - though his analytical excellence, the pursuit and methodological rigour, extraordinary energy, and his ability to lead such a distinguished network of colleagues - Bob Baulch has set the research agenda on poverty dynamics and chronic poverty for the next ten years. - From the foreword by David Hulme, University of Manchester,UK

What are the underlying causes of chronic poverty? Can ‘development beyond neoliberalism’ offer the strategies required to challenge such persistent forms of poverty, particularly through efforts to promote citizenship amongst poor people? Drawing on case-study evidence from Africa, Latin America and South Asia, the contributions critically examine different attempts to ‘govern’ chronic poverty via the promotion of particular forms and notions of citizenship, with a specific focus on the role of community-based approaches, social policy and social movements. Poverty is seen here as deriving from underlying patterns of uneven development, involving processes of capitalism and state formation that foster inequality-generating mechanisms and particularly disadvantaged social categories. Sceptics tend to deride the emphasis under current ‘inclusive’ forms of Liberalism on tackling poverty through the promotion of citizenship as inevitably depoliticising and disempowering for poor people, and our cases do suggest that citizenship-based strategies rarely alter the underlying basis of poverty. However, our evidence also offers some support to those optimists who suggest that progressive moves towards poverty reduction and citizenship formation have become more rather than less likely at the current juncture. The promotion of citizenship emerges here as a significant but incomplete effort to challenge poverty that persists over time. This book was published as a special issue of the Journal of Development Studies.

This collection of essays provides a state-of-the-art examination of the concepts and methods that can be used to understand poverty dynamics. It does this from an interdisciplinary perspective and includes the work of anthropologists, economists, sociologists, and political scientists. The contributions included highlight the need to conceptualise poverty from a multidimensional perspective and promote Q-Squared research approaches, or those that combine quantitative and qualitative research. The first part of the book provides a review of the research on poverty dynamics in developing countries. Part two focuses on poverty measurement and assessment, and discusses the most recent work of world-leading poverty analysts. The third part focuses on frameworks for understanding poverty analysis that avoid measurement and instead utilise approaches based on social relations and structural analysis. There is widespread consensus that poverty analysis should focus on poverty dynamics and this book shows how this idea can practically be taken forward.

The way poverty is measured shapes the types of policy solutions perceived to be possible and appropriate to address poverty, as poverty measurement produces information about who is poor, how many people are poor, and why they are poor. The traditional approach to measuring poverty in the United States suffers from two serious shortcomings, which limit the usefulness of the data produced to inform poverty policy. First, the official federal poverty measure (OPM) traditionally used to determine who qualifies as poor is based on consumption data from the 1960s and does not reflect current living patterns or costs of basic needs. Second, poverty in the United States is typically measured on an annual basis, using a cross-sectional analysis approach, which fails to capture information about the duration of poverty, though short-term poverty and long-term poverty have been shown to have different demographics, and long-term poverty is associated with more severe impacts on life outcomes. This study addresses these two shortcomings, by using an alternative poverty measure recently developed by the U.S. Census Bureau and U.S. Bureau of Labor Statistics, the Supplemental Poverty Measure (SPM), in place of the OPM to determine who qualifies as poor, and by analyzing poverty from a longitudinal rather than cross-sectional perspective, examining chronic or long-term poverty and transient or short-term poverty as distinct phenomena. Prior research has examined poverty in the U.S. using alternative poverty measures including the SPM, but only from a cross-sectional perspective. Other research has examined U.S. poverty from a longitudinal perspective, but using the OPM or a closely derived poverty measure. This study thus fills a gap in the existing research on poverty in the United States, by measuring poverty longitudinally using the better-grounded Supplemental Poverty Measure. Data for this study were drawn from the Panel Study of Income Dynamics (PSID), a comprehensive nationally representative longitudinal dataset. Data included detailed household income, benefit, housing, and expense information used to construct annual poverty status using the SPM, as well as individual and household demographic variables, collected biennially from 1998 to 2008, thus representing six data years. Descriptive analysis was conducted using individuals as the unit of analysis (n= 8,375) while multivariate regression analysis was conducted using households as the unit of analysis (n=4,188). Complex survey weights were used in all analyses to adjust for differential sampling and attrition. Multiple imputation was used to impute missing values for one of the components used to construct SPM poverty status and for one of the demographic covariates. Chronic poverty was defined as poor under the SPM in more than half of the years examined (i.e. 4 or more of 6 years), while transient poverty was defined as poor under the SPM in at least one year but not more than half of the years (i.e. 1 to 3 of 6 years). Nonpoor was defined as not poor under the SPM in any year. Descriptive analysis was used to examine the prevalence and demographics of chronic and transient poverty, to compare the demographics of chronic and transient poverty using the Supplemental Poverty Measure versus using the official federal poverty measure, and to examine the impact of existing government benefits, private resources, and household expenses on chronic and transient poverty rates. Results showed that chronic poverty was a rare phenomenon, affecting only 2.1% of the sample or approximately 1 in 50 individuals, while transient poverty was fairly common, affecting 18.9% of the sample or approximately 1 in 20 individuals. The demographics of chronic and transient poverty were somewhat different, with groups that experienced high rates of transient poverty generally demonstrating even more disproportionately high rates of chronic poverty. Thus chronic poverty was more concentrated among particularly disadvantaged groups, while the population affected by transient poverty was still disadvantaged but more similar to the overall sample. The rates of chronic and transient poverty calculated using the SPM were statistically significantly different from the rates calculated using the official federal poverty measure, for both the overall sample and for many demographic subgroups. In general, chronic poverty rates were lower, and transient poverty rates were higher, when using the SPM versus using the OPM. Finally, government benefits were shown to have a substantial impact on both chronic and transient poverty rates, reducing the overall transient poverty rate from 23.9% to 18.9%, a difference of 5.0 percentage points, and reducing the overall chronic poverty rate from 10.8% to 2.1%, a reduction of 8.7 percentage points. One observed effect of government benefits was to increase household resources just enough to shift some individuals out of chronic poverty into transient poverty. The impact of government benefits on chronic and transient poverty rates was different for different demographic subgroups. Seniors experienced the greatest reduction in transient and especially chronic poverty rates, essentially due to Social Security, while children experienced less of a reduction. For immigrants, the dominant effect of government benefits was to shift individuals out of chronic into transient poverty. Multivariate regression, specifically multinomial logistic regression, was used to examine the predictors of transient and chronic poverty. Analysis specifically examined whether the predictors of each type of poverty, versus nonpoor status, corresponded to economic theory which posits that transient poverty is driven by temporary reductions in income (e.g. job layoff), while chronic poverty is driven by an inadequate long-term base of human and material assets needed to generate income (e.g. lack of education or presence of disability). Results showed that chronic poverty was significantly associated with asset limitations, including particularly non-high school graduate status, immigrant status, and long-term disability in a high housing cost area. Transient poverty was significantly associated with one variable linked to short-term income disruption, namely short-term unemployment. However, transient poverty was also significantly predicted by variables representing asset limitations, though most of these covariates had a stronger association with chronic poverty than transient poverty. The association of asset limitations with transient poverty appeared to be partly explained by the fact that government benefits shifted some asset-limited households, who would be expected to be chronically poor, out of chronic poverty and into transient poverty. Results of this study suggest implications for both research and policy. The finding that rates of chronic and transient poverty differ depending on whether the Supplemental Poverty Measure or official federal poverty measure is used suggests that researchers and policy analysts should consider using the SPM when analyzing longitudinal poverty, as the SPM has a stronger conceptual and empirical grounding than the OPM and did not simply function as a proxy for the OPM when examining poverty longitudinally in this study. Results related to the impact of government benefits on chronic and transient poverty rates suggest that policymakers should consider not just short-term policy impacts, but also the longitudinal impact of specific policies and of the overall package of government benefits on poverty. In addition, the differential impact of policies on chronic versus transient poverty, and on chronic and transient poverty among different demographic subgroups, should be considered. Findings related to the predictors of chronic versus transient poverty suggest that policies to address chronic poverty should target individuals with limited bases of human assets needed to generate income; such policies could function either through asset building or through long-term income supplementation or subsidies. Transient poverty could be addressed by enhancing short-term unemployment support, while policies targeted to asset-limited individuals would be likely to impact transient as well as chronic poverty. Further research to more clearly distinguish predictors of chronic poverty over and above transient poverty would be helpful for policy targeting purposes. Finally, prior research on the impact of chronic and transient poverty on life outcomes suggests that two types of poverty could be considered as priorities for policy interventions, due to greater impact on health and other outcomes, namely chronic poverty (as exposure to longer duration of poverty is associated with worse outcomes) and transient poverty occurring during the sensitive developmental period of childhood (as exposure to even short-term poverty during this sensitive period is associated with serious long-term health and developmental impacts). Results from this study show that addressing either of these two types of poverty could be feasible, if somewhat ambitious policy goals in terms of the number of individuals affected and the cumulative gap between their resources and needs.

One out of every five Latin Americans or around 130 million people have never known anything but poverty, subsisting on less than US$4-a-day throughout their lives. These are the region ́s chronically poor, who have remained so despite unprecedented inroads against poverty in Latin America and the Caribbean since the turn of the century. Left Behind: Chronic Poverty in Latin America and the Caribbean takes a closer look at the region’s entrenched poor, who and where they are, and how existing policies need to change in order to effectively assist them. The book shows significant variations of rates of chronic poverty both across and within countries. Within a single country, some regions show incidence rates up to eight times higher than the lowest. Despite the higher rates of chronic poverty in rural areas, chronic poverty is as much an urban as a rural issue. In fact, considering absolute numbers, urban areas in many countries, including Chile, Brazil, Mexico, Colombia and the Dominican Republic, have more chronic poor than rural areas. Undoubtedly the region has come a long way during the decade in terms of poverty reduction, guided by a mix of sustained growth and increased levels in amounts and quality of public spending and programs targeted directly or indirectly to the chronic poor. While improving endowments and the context where the chronic poor live is a necessary condition going forward, the decade’s experience suggests that it may not be enough to reach the chronic poor. The book posits that refinements to the existing policy toolkit †“ as opposed to more programs †“ may come a long way in helping the remaining poor. These refinements include intensifying efforts to improve coordination between different social and economic programs, which can boost the income generation process and deal with the intergenerational transmission of chronic poverty by investing in early childhood development. Equally important though, there is an urgent need to adapt programs to directly address the psychological toll of chronic poverty on people’s mindset and aspirations, which currently undermines the effectiveness of the existing policy efforts.

For policymakers, the need now is to get inside the 'black box' of poverty reduction - the assumption that growth, combined with demographic or political change, will lead somehow to reduced poverty. Rather than poverty policy focusing on getting the headcount ratio down as rapidly as possible, it should zero in on the context specifics of removing the barriers to upward mobility for chronically poor people, reducing the risks of destitution for the already poor and preventing downward mobility into persistent poverty for the near-poor. This involves a different approach to designing policy and new poverty analytics. The evidence suggests that policy in developing countries has begun to generate disaggregated responses, though not in terms of poverty dynamics - perhaps because the poverty analytics need to develop alongside this.

Focusing on the nature and politics of chronic poverty in India, this book provides an analysis of poverty reduction policies from a chronic poverty perspective. Using quantitative and qualitative data, the volume offers an account of the major causes and consequences of chronic poverty. Among other concerns the book explores: the phenomenon of chronic poverty among rural casual labourers; the effect of involuntary displacement and relocation on marginal groups that are chronically poor; the opportunities afforded by technology for empowerment of the poor and the underprivileged; and possible ways and means to strengthen existing safety nets for the vulnerable section of India′s population.