For example, in 2019, UN disputed the poverty figures released by Malaysia, an upper middle-income country. Across the globe, governments in many countries downplay the existence of chronic poverty and this is not only adversely affecting the focus of their development programmes, but most importantly their children and future social cohesion. At a recent conference at Harvard University, several attendees from the Government of Bangladesh openly declared that Bangladesh has banished poverty or is about to do so within a couple of years.
I will provide some details on a few of the issues surrounding calculation of the incidence of poverty. I will do so to illustrate how poverty can be measured in different ways, and to show how numbers can be wrong even when calculated with the right tools. In the final analysis, it’s a matter of what the numbers are used for and how they are interpreted. As the old saying goes, statistics can lie, and in fact, they often do!
A related point. Increasingly, countries that have embraced the SDG programme are conceding that household income is not necessarily the best indicator of poverty and are now measuring other ways in which one may experience poverty.
In addition to income, development practitioners have used the Multidimensional Poverty Index (MPI) to measure poverty. MPI, developed by the Oxford Poverty and Human Development Initiative (OPHI) with the support of the United Nations Development Programme (UNDP), measures acute poverty via deprivations suffered in the areas of health, education and living standards. MPI complements traditional monetary-based poverty measures by capturing the acute deprivations that each person faces at the same time with respect to education, health and living standards.
The latest dispute on poverty measurement between the officials and the economists happened in Malaysia. When it comes to measuring poverty levels in Malaysia, the government currently uses two methods: Poverty Line Income (PLI) and MPI. In the past, the government has claimed that its poverty level was low, but this happened because Malaysia defined poverty level as household income per month less than RM 980. Many media sources have reported that the previous regime took special pride in boasting about its achievement in eliminating poverty from Malaysia. Critics, including Project Borgen, the anti-hunger NGO, point to a lack of transparency and accused the government of hiding the results and the data from the public.
The poverty numbers that the Malaysian government has been pushing for a number of years have always been questioned by independent observers, and this has recently brought the Malaysian government and the World Bank to loggerheads, after the various international agencies questioned the data on poverty and encouraged the government to revise its definition of the poverty line, and raise the PLI which the international agencies consider to be too low.
The differences between Malaysia and the rest of the world, so to speak, came to a head last month when the UN publicly disputed the poverty figures released by Malaysia. Malaysia stated that its poverty figures were down to 0.4 percent in 2016 as compared to 49 percent in 1970. This is because Malaysia defined poverty as household income per month less than RM 980. However, the United Nations Special Rapporteur (UNSR) on extreme poverty and human rights, Professor Philip Ashton, argued that Malaysia has set the poverty line too low. He made the case that household income more than RM 980 but less than RM 2,000 is in fact under the poverty category also. The UN is of the view that a realistic estimate of the poverty rate in Malaysia is from 16 percent to 20 percent. However, Malaysia has so far stood firm and countered that the UN assertions are incorrect.
Recent research by economist Martin Ravallion shows that countries with average incomes similar to Malaysia’s have absolute poverty lines equivalent to RM 2,550 per month for a family of four, almost three times the current PLI. That poverty line would yield a poverty rate of about 15 percent, which is close to the rough estimate given in the UNSR’s report, and also the 17 percent that arises from applying an OECD-style relative poverty line.
Malaysia’s MPI comprises the current monetary PLI plus non-monetary measures of deprivation such as education, health, and living standards. Even when non-monetary aspects of well-being are considered, Malaysia’s MPI counts less than one percent of Malaysians as multidimensionally poor. However, this estimate has also been challenged.
At the recent World Statistics Congress in Kuala Lumpur, World Bank staff presented new research on a potential alternative MPI for Malaysia, using the same multiple dimensions as the current MPI but setting standards relevant to an upper-middle income country. This alternative estimate pegs Malaysia’s rate of multidimensional poverty at 19 percent.
The Malaysian case offers some lessons for Bangladesh which is seeking to reduce its poverty level and improve the lot of the bottom eighty percent of the population. According to estimates provided by Habitat for Humanity, there are 64 million people who live below the poverty line. But poverty appears to be a dirty word here too.
The government has a divergent understanding of the prevalence of poverty in the country. At the recent Bangladesh Rising Conference at Harvard University, many officials denied the existence of poverty in Bangladesh. They repeated a slogan which we have heard before, “Nobody dies of hunger any more in Bangladesh”, which manifests a misunderstanding of the concepts of poverty, hunger, and starvation.
The website for Habitat for Humanity presents the case of Panjoboti Debborma which typifies the average poor family in Bangladesh. She said, “We have no garden, no land, and little income. We live hand to mouth. That is why I am worried about our future.”
Fortunately, the prime minister, at a speech delivered at Bangladesh Civil Service Administration Academy on June 23, 2019, was more realistic, albeit optimistic.
“At present, we’ve brought down the poverty rate to 21.8 percent. I’ve a target to reduce it further. The poverty rate in the USA may be 17/18 percent. I’ll have to cut down it to at least one percent less than that in the USA, at any cost,” she said according to media reports.
Dr Abdullah Shibli is an economist and works in information technology. He is Senior Research Fellow, International Sustainable Development Institute (ISDI), a think-tank in Boston, USA.