Poverty definition is important in order to develop poverty measures. Hence, the definition of poverty necessarily implies indicators that show what poverty is and who suffers from it. Definitions should highlight how poverty should be measured and which indicators are the most adequate for measuring particular types of poverty. For instance, some studies and statistics mention a ―poverty line‖ as a measurement of ‗income poverty‘, whereas some organizations such as the World Bank and the
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UN indicate different methods. The UNDP considers an ‗index of human development‘ as a measurement of ‗human poverty‘, while the World Bank adopts some elements in addition to the poverty line to measure poverty. The EU reports multi-dimensional indicators for poverty measurement. Some bodies such as the Poverty and Social Exclusion Survey of Britain (PSE) have used particular measurements that combine subjective and objective indicators of absolute and overall poverty. A brief discussion of the methods of poverty measurement is presented below.
World Bank and poverty measures
The World Bank uses consumption or an income-based measure of poverty, in addition to the non-income dimension of poverty. According to the World Bank report on poverty reduction in 1990 (cited in Gordon and Townsend, 2000: 84) there are two elements which are consumption-based: ‗the expenditure needed to buy a minimum standard of nutrition and other basic necessities and a further amount that varies from country to country reflecting the cost of participating in the everyday life of society‘. ‗Poverty line‘ is the most commonly applied technique used to measure income poverty and this may embody either a relative concept or absolute concept (Gordon and Townsend, 2000: 30). The World Bank has used a ‗poverty line‘ to measure poverty income where a person is considered poor if his or her income level falls below the poverty line, which is supposed to be the minimum level necessary to meet basic needs. Therefore, the poverty line varies in time and place and each country uses lines that are appropriate to its level of development and social norms and values. As mentioned earlier, the World Bank uses reference lines set at $1 and $2 per day (more precisely $1.08 and $2.15 in 1993 Purchasing Power Parity terms).
The Poverty and Social Exclusion Survey of Britain (PSE)
According to Gordon and Townsend (2000), the PSE survey relied on a scientific approach to measuring poverty that combines two things: firstly, it incorporates the views of members of society, not just judgements of social scientists, about what the necessities of life are that all adults and children should have. Secondly, it calculates the level of deprivation that constitutes poverty by using a scientific method rather than arbitrary decisions. Gordon and Townsend (ibid.) refer to an operational measurement designed by British scientists that the PSE used to estimate the extent
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and nature of absolute and overall poverty. This method combined an objective and subjective measure. The method was applied in three stages:
1- Show the respondent the definition of absolute and overall poverty adopted by the United Nations World Summit of Social Development (see the definitions above). 2- Ask the respondent his/her views on the level of income that is needed to keep people above the poverty line.
3- Ask the respondent how far above or below that level his/her household is.
In their study, Gordon and Townsend (2000) present many tables and indicators that show how to use the objective and subjective measurements of absolute and overall poverty, and how this method is applicable, after suitable modification, for other European countries.
Measuring Poverty in Europe
Many studies have measured poverty in Europe. A notable one is that carried out by the European Panel Analysis Group (EPAG) and supported by the European Commission (Berthoud, 2004) on ‗patterns of poverty across Europe‘. The study aimed to investigate the geographical distribution of income poverty among European countries and was based on data from the European Community Household Panel survey (ECHP) which was launched in 1994 with a final wave of interviews in 2001. The study chose two basic variables: ‗current income‘ and ‗annual income‘. The ‗inequality index‘ is a useful tool to help summarize the distribution of income poverty in Europe. The study has significant implications related to the methodology of poverty study.
In the ‗Joint Report on Social Protection and Social Inclusion 2006‘ (European Commission, 2006b) another method of measuring poverty and social exclusion was utilized. This method is concerned with multi-dimensional indicators covering three main aspects of poverty and social exclusion: the income dimension, the labour market dimension, and the skills and health dimensions. This approach advocates (or supports) the idea of overlapping notions of poverty and social exclusion. In addition, it introduced some operational indicators for measuring the multi- dimensional aspects of poverty and social exclusion.
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Another argument on measuring poverty in Europe is presented by Gordon, Panazis and Townsend (see Gordon and Townsend, 2000, Chapter 5) who discuss the idea that if Europe wishes to abolish the problem of poverty and social exclusion effectively, there needs to be a valid and reliable success measurement, yet at the current time, there are insufficient statistics available on low incomes. They propose that two sets of statistics are required to measure effectively the success of anti- poverty and social exclusion policies: firstly, Europe needs low income statistics that are relevant to a known, measurable and socially approved standard of living. Secondly, the standard of living that people have needs to be directly measured. To deal with the first requirement, they suggested obtaining a modified low-income series from the European Household Panel Survey or national Households Budget Surveys by abandoning arbitrary equivalence methods and income thresholds and instead, using a standard budget approach. They suggest some methods for dealing with the second requirement such as ‗the consensual method‘, which would reveal how many people currently have too few resources to allow them to avoid material and social deprivation. This method would also distinguish between those who are excluded by their own choice and action from those who are excluded due to a lack of income, services and other resources (for more details about this method, see Gordon and Townsend, 2000: 101; Mack and Lansley, 1985, cited in Gordon and Townsend, 2000: 98).
The conclusion is that a scientific operational measurement of poverty is essential for developing an efficient anti-poverty strategy. To obtain that, it is necessary, as previous studies demonstrate, to obtain adequate income statistics. Accordingly, industrial countries, the World Bank and the UN organizations are paying more attention to this idea and have endeavoured to build scientific operational measurements of poverty which are adjustable according to the social conditions of every country (for example see Coudouel et al., 2002).