If a person suddenly becomes poor, for example, due to an unexpected death or illness in the family, they will have a rather different experience and understanding of poverty than someone who has been impoverished almost their entire life. Importantly, both individuals most likely face quite different prospects for the future. Standard measures of poverty, however, are only 'snapshots'. They are based on people's current income status and do not account for their history of poverty. Should they?
This is the question examined in the June 2012 special issue of the Journal of Economic Inequality, the culmination of a 4-year research project initiated by the guest editors, Luc Christiaensen and Tony Shorrocks, while at UNU-WIDER. It was launched at a joint UNU-WIDER-World Bank event in Washington DC on 14th June 2012 chaired by Tony Addison, Deputy Director and Chief Economist at UNU-WIDER, and Branko Milanovic, member of the Journal of Economic Inequality's editorial board. Judging by the over 200 participants in total, both in person and online, from countries across the world--for example, China, Ethiopia, Mexico, Pakistan, Rwanda--and the lively debate which ensued, the topic clearly struck a note.
Beyond a 'snapshot' view of poverty
The progress made towards reducing worldwide poverty is undoubtedly encouraging. World Bank estimates, for example, suggest that the percentage of the population in the developing world living below US$1.25-a-day declined from 52 per cent in 1981 to 22 per cent in 2008. The number of people living below this line was estimated at 1.29 billion, down from 1.94 billion in 1981. But this snapshot approach to measuring poverty, common to most standard measures of poverty, has shortcomings.
Without taking into account a person's history of 'poverty spells'--the timing, length and severity of previous poverty episodes--it remains hard to know how poor that person really is. People with long poverty spells in the past are, for example, less likely to escape from poverty, and if they do, they are far more vulnerable to becoming poor again. The timing of the spell also matters, with childhood poverty being especially detrimental. It can hurt children's cognitive development, their prospects of marriage and lifetime earnings.
To overcome these shortcomings in poverty measurement, people's lifetime experience of poverty should be reflected in them. The measurements should aim to present a 'movie'...