Cross posted from The Indian Express
The Op-Ed Page (March 28, 2012)
Reading beyond the lines
Consumption-based measures don’t accurately estimate poverty
Since the publication of poverty estimates purportedly based on the Tendulkar methodology and the 2009-10 consumption survey of the National Sample Survey Organisation (NSSO), many in Parliament and outside, from different political parties, have questioned its conclusions. Concomitantly, media reactions have speculated on poverty’s relationship with fertility, growth, specific schemes, et al. But, India’s poverty, like itself, refuses to classify itself in simple boxes.
Beyond the happenstance of poverty decline in an odd state being less than another, there is no strong and obvious relationship to growth in incomes, whether agricultural or non-agricultural; population, urban or rural, or to the performance of schemes like NREGS. Might it be found in district-level relationships to economic and demographic structure?
It might, but there are good reasons why it might not. The headcount ratio, that is, the share of people below a certain level of consumption, called the poverty line, is a blunt measure. States with a high proportion near the poverty line will show a large fall in headcount ratio for relatively small increases in overall consumption, while states with a large proportion well below the poverty line will show smaller reductions, even if they have higher increases in consumption. This indifference to inequality below the poverty line weakens the relationship between growth and the headcount ratio and is the essence of Amartya Sen’s critique of the measure.