Some reading/listening I came across over the weekend.

NPR’s Planet Money is one of my favourite podcasts and their latest podcast is titled “The Trouble with the Poverty Line”

In the podcast, they describe how the poverty line was developed in 1963 in the US. When  it was developed, it was based on a measure the US Department of Agriculture had developed, called the  Thrifty Food Plan which was the minimum amount of food that the US government said a family would need to survive. The economist that developed the poverty line took the cost of that food plan for a year and multiplied by 3, since, back then, food took about a third of most households’ incomes. Anyone that made at leat 3 times what they spent on food was considered above the poverty line. 

While the line has been adjusted for inflation, nothing has been changed in the underlying formula. I am assuming that the same formula is what is in use in Kenya as well.

Of course, this is evidently mistaken. Food, and especially in urban areas, does not take one third of our income. I’ll posit that housing is the largest item, and communication is  also a big ticket item. As such, basing development metrics and decision making on something that is evidently wrong means that policies may simply not work.

In the same lines, of poverty, I cam across this visualization. It’s interesting to see that while there are more poor people in South Asia than in Africa, there are more poor Africans/Africa (as a percentage of the population) than there are Asians in Asia.

Blog_Dashboard

What I am left wondering though, given the earlier bit on the problem of the poverty line, and the fact that this information is based on spend, how correct is it as an indicator of poverty levels?