This paper takes an extensive look at poverty in the modern, industrialized world. Specifically, the essay looks at the ways in which societies measure and gauge poverty.
Keywords Absolute Measure; Hardship Measure; Poverty Measure; Relative Measure; Social Capital
According to Confucius, who is considered by many to be one of history’s greatest philosophers, attention to the poor is essential to a system's overall success. "In a country well-governed, poverty is something to be ashamed of," he said. "In a country badly governed, wealth is something to be ashamed of" ("Confucius" 2007).
Indeed, in every society, there are three general strata of economic class. In the upper class are the wealthy citizens, whose financial incomes make life comparatively easy. For middle-class citizens, however, money and access to the best programs and services are not as easily obtained — they do, on the other hand, experience a modicum of stability.
In the third class, income is minimal, access is limited, and social mobility is rare. For those who live below the poverty line, life is wrought with anxiety and uncertainty. This paper takes an extensive look at poverty in the modern, industrialized world. Specifically, the essay looks at the ways in which societies measure and gauge poverty.
In order to gauge poverty in the postindustrial era, one must be able to define it. According the United Nations High Commissioner for Human Rights (UNHCR), poverty is "a human condition characterized by the sustained or chronic deprivation of the resources, capabilities, choices, security, and power necessary for the enjoyment of an adequate standard of living and other civil, cultural, economic, political, and social rights" (UNHCR, 2002).
The causes of poverty stem from two main arenas.
- First, the individual himself or herself, by his or her own action or inaction, does not seek access to or take advantage of the resources and services he or she needs to bolster personal income and move a state of poverty.
- Second, the government or relevant political institutions (or in the cases of war-torn nations, a lack thereof) fails to provide to impoverished individuals the access or means by which they may gain access to the aforementioned programs, resources, and services that would enable them to pull themselves out of poverty.
Absent for the impoverished citizen is social capital. Social capital refers to the institutions, networks, and resources that are integral to the development and maintenance of a society's interactions. Social capital, according to the World Bank, is manifest in five key dimensions. The first of these areas is that of groups and networks, in which individuals collectively form and maintain interpersonal relations. Second is solidarity, which fosters cohesion and stronger collective action. The third arena is collective action and cooperation, in which groups of people work together to resolve issues within their community. Fourth is social cohesion and inclusion, which helps mitigate conflict, promotes equitable distribution of benefits and encourages participation of marginalized groups. Finally, information and communication enables social groups to gain access to the data and resources they need to collectively advance (The World Bank Group, 2008).
The structural framework of social capital described above indicates that poverty is not simply a matter of a lack of financial resources. It is a lack of community cohesion, information, networking opportunities, and other resources that will enable upward mobility. Social capital is not a concept that is localized to one particular social stratum, however. Ideally, it exists in some form on every social level. However, certain types of social capital may be more conducive to strengthening a given class. One study, for example, identifies two manifestations.
- The first of these examples is horizontal social capital, which are incarnations of the framework above that operate solely within a socioeconomic or cultural stratum.
- The second is vertical social capital — for this version, the above-mentioned framework is applicable and uniform from the highest to the lowest socioeconomic strata (Lewandowski, 2008). Poverty is evident within this latter context, as it entails the absence of the very same forms of social capital that exists in higher strata.
Relying on Statistics
Orshansky's Poverty Measure
In the early 1960s, the United States Social Security Administration (SSA) began publishing poverty statistics based on a model derived by economist Mollie Orshansky. Orshansky assessed the average diet for a family and multiplied it by three in order to create an effective buffer (thereby allowing for additional expenses). Comparing it to the before-tax income necessary to afford such expenses, the SSA turned the resulting figure to the US Census Bureau, which would compile the information of households that fit this profile. The poverty measure, as the model is known, has been used consistently over time by government agencies and leaders to craft policy responses to rises in poverty rates in a given population. Such responses include the availability of federal, state, and local assistance programs, tax reductions, and other public services.
The poverty measure has proven to be the gauge of choice for policymakers to monitor instances of poverty within their constituency. Researchers and even the media have also looked at this measuring stick as a vital resource in combating poverty. Then again, as populations grow more diverse to include different racial and ethnic groups, geographic variations (such as rural areas versus urban neighborhoods) and even age group differentials, it becomes more vital that the tools employed to monitor poverty are fully reliable (Citro & Murphy, 1995).
Dangers of Incomplete Data
There is an issue at hand in measuring poverty based on statistical analysis and census data; by relying on voluntary individual responses to surveys, the agency is at risk of receiving significantly incomplete data. Failure to adequately count the number of impoverished individuals in a given population could lead to woefully inadequate government antipoverty funding and programming. A pivotal 1995 report by the National Academy of Sciences offered twelve alternatives to the official poverty measure, taking into account varying definitions of family income and poverty thresholds as opposed to the more rigid Orshansky formula.
Additional Factors to Consider
The alternatives did not seek to replace the present poverty measure but to offer some additional factors worthy of consideration in expanding the definition of poverty in the United States. Among the suggestions was using actual costs for food, clothing, and shelter rather than basing expenditures on an estimated budget for such costs. Also, the study recommended adjusting the poverty level to account for family size and for geographic differences in housing costs. Furthermore, the panel suggested including government food and housing benefits that do not come in the form of a cash payment, as well as tax credits such as the Earned Income Tax Credit (EITC) in calculations of individual and household income. On the expense side, the National Academy of Science report recommended that mandatory costs such as taxes, work expenses, child care costs, child support, and out-of-pocket medical costs be included in the calculation process (Porter, 1999).
In the aggregate, the proposed adjustments to the poverty measure provide greater clarity to the true state of poverty. In fact, it appears that such proposals would add greater accuracy. According to one study, if employed within the poverty measure, all twelve measures would have produced a higher poverty level (in some cases, 2 percent more) than the current formula ("The troubling…," 2007).
The Determination of More Accurate Poverty Levels...
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