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Post-2015 Consensus: Poverty Perspective, Kozel

Summary

The Copenhagen Consensus Center’s initiative to sponsor “hard-nosed” assessments of the economic costs and benefits of proposed goals and targets, along with the strengths and weaknesses of data and methodologies to monitor progress, is providing welcome contributions to ongoing discussions.  The Assessment Paper from John Gibson raises three questions: Do the proposed poverty targets strike the right balance between breadth, idealism and realism?; Is it appropriate to focus solely on extreme poverty ($1.25 a day)?; and Are data and monitoring methodologies sufficiently robust and well-specified to carry the debate forward?

The proposed post-2015 Sustainable Development Goals are a broader and more ambitious set of development goals than the previous MDGs.  The call to eradicate poverty “in all its forms everywhere” is very ambitious.  None but the most idealistic believe that this goal—or the other SDG zero-goals—are possible to achieve. Gibson points out some of the underlying features of rapid poverty reduction in the past that are not likely to carry forward into the future. There is one important additional factor which may slow the pace of future poverty reduction: as policies and programs become more narrowly targeted and concentrate on groups which have been socially excluded or are discriminated against, they may not have widespread political support.

Although the proposed targets have been criticized as being too ambitious, others argue that the $1.25 a day poverty line is not ambitious enough and has no relevance for middle and upper income countries. By this reckoning, a set of (higher order) goals is needed that better capture the rising aspirations that all countries have for the well-being of their citizens. We take the view that “stretch” goals have an essential role in post-2015 SDG discussions. 

Reducing global poverty, as defined using a truly global standard that reflects standards that apply in all countries, would be an additional such goal to put alongside the proposed zero target for extreme poverty. Taking out the billion people in extreme poverty, and the billion who are prosperous by global standards, leaves five billion who are poor by standards of rich countries but not poor by the standards of the very poorest countries. The short answer to the question of whether the $1.25 a day target is the only one which matters is “of course not”.

Although we have learned a lot about what it takes to reduce poverty, we still struggle—and endlessly debate—how best to measure poverty and monitor progress.  The assessment paper does a nice job of describing current problems with poverty data and measurement methodologies, and notes—correctly--that measurement problems are likely to worsen over time. Changes in consumption patterns affect the poor as well as the more affluent, and must be reflected in surveys.

Although there is clearly merit in harmonization to enable global comparability, different methodologies also reflect the cultures and needs of individual countries. National governments are much more interested in making consistent comparisons over time than modifying their systems to comply with global standards. Nevertheless, it is also important to update poverty monitoring systems on a regular basis, particularly as countries become more affluent and economies are more globally integrated.  Doing it right—constructing comprehensive measures of household welfare, adjusting for regional cost of living differences, updating poverty lines—is essential for robust poverty monitoring, both at the national level as well as for global poverty monitoring.