It seems my talk at the National Development Forum in Dili last week has caused a bit of a stir. The talk itself related to challenges of development of the private sector, but the controversy appears to be focussed on one particular slide where I presented multidimensional poverty rates by district. Here is the slide:
The crux of the issue is that the national rate of 68% is
much higher than other poverty figures that are often quoted: in particular the
49.9% for 2007. How can this be? It all comes down to the methods used, and the
definition of “poverty”.
What is “poverty”?
Measures of poverty reflect different ideas about what
constitutes a basic standard of living: the extent to which basic, day-to-day
needs are being met and the extent to which people are able to create and take
opportunities to enrich their lives. It requires a judgement where to draw the
line between the poor and non-poor.
Consumption poverty
The 49.9% for 2007 is an estimate of consumption
poverty (the proportion of the population below the poverty line) calculated
using the 2007 Survey of Living Standards. This is the most recent
official poverty figure to date (and yes, 2007 was a long time ago!).
The poverty line reflects the dollar value of the minimum
amount of food, housing and other essential items a person needs each day. In
2007, the poverty line in Timor-Leste was 88 cents per person per day.
A household is therefore defined as “poor” if the dollar
value of their total consumption (actual or imputed value of food, housing,
etc) is below $0.88 per person per day. Using data from the 2007 Survey of
Living Standards, it is estimated that 49.9% of the population were below this
poverty line in 2007.
The poverty line is very low, and focuses on the minimum
number of calories needed to produce sufficient energy for daily functioning. It
also sets no minimum requirement for what is needed in the areas of diversity
of food intake, access to services, educational achievement, etc, in order for
a household to classify as non-poor.
Multidimensional poverty
The 68% for 2009/10 is an estimate of multidimensional
poverty calculated using the 2009/10 Demographic and Health Survey.
Multidimensional poverty is a broader measure of poverty in
that it allows for non-monetary aspects of poverty / wellbeing to be captured.
It is widely reported in UNDP Human Development Reports.
A household is defined as “poor” if they are deprived in more
than a minimum proportion of wellbeing indicators relating to health, education
and living standards (e.g. house has a dirt floor, children are not attending
school, no access to adequate sanitation).
So the consumption poverty and multidimensional poverty
rates are different because they define “poverty” in different ways: they are
measuring different things.
The 49.9% consumption poverty rate for 2007 and the 68%
multidimensional poverty rate for 2009/10 are in fact the most recent estimates
that can be produced with the data that is currently publicly available. Until
further data sets (e.g. HIES 2011, TLSLS 2014) are made available, it is not
possible to obtain more recent estimates.
What about the other poverty figures being quoted?
A figure of 41% for 2009/10 published by the World Bank is
often quoted: we strongly believe this figure is not a reliable estimate of
consumption poverty and should not be used or quoted. You can read why in our
report.
Do we have any idea of progress in poverty reduction?
In our
report we compare the multidimensional poverty rate in 2007 (Survey of
Living Standards) with 2009/10 (Demographic and Health Survey). This involved
some tweaking of indicators to ensure comparability across surveys. We find a
reduction in multidimensional poverty of 7 percentage points over these 2-3 years,
suggesting some very good progress.
Poverty measures like these offer insight into the aspects
of life where the people of Timor-Leste are most in need of support to improve
their wellbeing, and allow objective monitoring of progress over time. Of
course, behind numbers and measures are real people experiencing the challenges
and joys of everyday life. And remember: Timor-Leste is a young nation with a
difficult recent history. It takes time
to build a strong social and economic foundation, and the journey is full of
complexities.
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