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number of people living below the $1 per day threshold by 2015.2

This definition of poverty in terms of absolute deprivation seems to make good sense.

Yet there are problems with this absolute deprivation concept of poverty.  First of all, there is the issue of whether or not an income measure can really capture what we mean by people living in an “unreasonable” situation of deprivation; not all the things that make for a reasonable existence can be readily translated into purchasable commodities.  Then there is the issue of what we mean by “deprivation” – where does our sense of what people need come from?

My purpose here is, first, to review the different ways we can define poverty.  I will argue (Section II) that what people generally mean by poverty – or, more generally, by economic well-being – cannot be adequately captured by a single, absolute measure.  In particular, the meaning cannot be adequately captured by a person’s or a people’s absolute level of income.  This point has been widely recognized and is embodied in the UN’s Human Development Index (HDI), Sen’s capabilities concept, and to a degree in the Millennium Development Goals (MDGs) themselves.  The fact that there are several goals in the MDGs underscores the recognition that attaining an income goal alone does not eliminate poverty.  A closely related issue that I will note in this section is that poverty (or well-being) cannot be captured adequately by any single measure or single combination of measures, such as the HDI.

I have, however, a further concern (Section III) that challenges all of these concepts of poverty and economic well-being.  None takes into account issues of inequality in the distribution of income or the distribution of other measures of well-being.  This failure to incorporate a consideration of distribution in defining poverty (or, more generally, economic well-being) is, I will argue, conceptually problematic, if not simply wrong.  Although this conceptual issue has been widely recognized, its implications have not been adequately considered.

Perhaps more important, the failure to consider distribution creates serious practical problems for campaigns against poverty, at best limiting their impact and at worst dooming them to failure (Section IV).  If poverty is understood in absolute terms without consideration of distributional issues, the social structures that generate poverty tend to be ignored.  Policy is then viewed as a technical matter and often focuses on particular programs that are directed toward helping the poor improve their absolute situation: new

2 See Sutcliffe (2005, p. 14).  Also see, World Bank, “Measuring Poverty at the Global Level,” at http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/0,,contentMDK:20153855~menuPK:373757~pagePK:148956~piPK:216618~theSitePK:336992,00.html, and The UN Millennium Development Goals at http://www.un.org/millenniumgoals.   It is important to keep in mind that these amounts per day are defined in terms of real purchasing power, not in terms of actual exchange rates.  Thus $1.60 per day represents what a person could buy with that amount in the United States, not what could be bought in a low-income country if the $1.60 were exchanged for the local currency and then used to buy goods there.  Generally the latter would be substantially more than the former.

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