Poverty measurement has made incredible advances in recent times. These are both in
terms of (1) consolidation and developing best practice, mainly in relation to monetary
and quantitative methods, that took place in the fifteen years from the mid 1980s to the
end of the last millennium, and (2) the recent conceptual and methodological advances
that have taken place in the first few years of the new millennium. This study examines
poverty measurement in Sri Lanka against the backdrop of these advances. The study
also evaluates existing sources of data for poverty measurement, and makes
recommendations that identify priority actions for improvement in poverty
measurement, key players in the improvement process and steps to be taken.
POVERTY MEASUREMENT METHODOLOGY: INTERNATIONAL BEST PRACTICE AND NEW ADVANCES
(1) It is now clearly recognised that any single indicator of poverty will not adequately
describe or measure the complex phenomenon that is poverty. Multidimensionality of
poverty is now firmly accepted, and we are much closer to measuring it than we were a
decade ago. (2) It is also evident—although arguably—that any single approach to
measuring poverty will not suffice. The contribution of the monetary approach to
poverty measurement is well-known, just as its limitations are evident. The capability
approach to poverty measurement by focusing on basic deprivation, has contributed
much to the conceptual resurgence in this field, and thus provides a good theoretical
and conceptual basis for improvements in poverty measurement. In terms of practical
application of this approach, many of the educational, health, environmental and
empowerment indicators that are currently used can be regarded as indicators of
functionings in the multiple dimensions of deprivation. However, the social exclusion
approach has a contribution to make by adding the element of participation or
inclusion. In addition the focus on groups, rather than individuals has useful
implications for measurement as well as analysis. The participatory approach provides
the “subjective” or local non-expert based knowledge that is insufficiently emphasized
in the other approaches.
(3) We are also much better at measuring the dynamics of poverty than we were several
years ago. The availability of panel data has led to methodological improvement in
distinguishing between the transiently and permanently poor and tracking movements
in and out of poverty. (4) This has also had important implications for the measurement
of vulnerability. (5) The measurement of empowerment, or its absence—voicelessness
and powerlessness—is still at a somewhat rudimentary stage, but with a growing
research agenda.
(6) Recent empirical work has focused on comparing results using different approaches
(quantitative and qualitative, objective and subjective, monetary and non-monetary,
etc.). (7) This has been facilitated by the availability of non-traditional instruments of
data collection. Mainly, the household survey design that is most useful is a multi-topic,
panel survey, where questionnaires include both standard objective data collection
questions, as well as the type of questions on subjective well being that sociologists have
been collecting for years.
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The fundamental elements of the process of poverty measurement have not changed,
however. The problems of identification (who are the poor?) and aggregation (how to
add them up into a measure(s) of poverty?) with the attendant choices of indicator, unit
of analysis, poverty line and poverty measure are still the basic nuts and bolts of poverty
measurement. A country that is looking to improve its poverty measurement
methodology needs to pay attention these choices, and devise ways of making them. To
a large extent, the process of improving a poverty measurement methodology would
consist of (1) determining which dimensions and indicators of poverty are appropriate
to that country, using a combination of local knowledge and expert knowledge, (2)
assuming that income or monetary poverty measurement is retained as an important
though not exhaustive dimension of poverty, improving the measurement of income
poverty using the well-established guidelines on which there is a great deal of consensus
(3) determining methodologies for the aggregation of indicators into poverty measures.
This may include easily constructed composite indices, even though their disadvantages
are well-known, as well as more sophisticated methods of statistical analysis such as
principal component or factor analysis, latent variable analysis, as well as developments
in the use of fuzzy set theory, etc. (4) Finally, this will include establishing priorities in
the process of data collection that is required for the purpose of poverty measurement