Showing Page:
1/5
APPROACHES TO POVERTY IN PAKISTAN
Assignment
Muhammed Arif
A poverty line classically specifies the income (or level of spending) required to purchasing a
bundle of essential goods and services (typically food, clothing, shelter, water, electricity,
schooling, and reliable healthcare). Identifying the poor as those with income (or expenditures)
below a given line. The poverty line allows specialists to count the poor, target resources, and
monitor progress against a clear benchmark.
A poverty line indicates deprivation in an absolute sense, i.e., the value of a set level of resources
thought necessary to maintain a minimal standard of well-being. With such a definition, poverty
is eradicated once all households command resources equal to or above the poverty line. The
$1/day per capita poverty line is one example of an absolute poverty line, but most countries
determine their own absolute poverty lines as well.
The relative benchmarks used in Europe reflect the belief that important deprivations are to be
judged relative to the well-being of the bulk of society, approximated by the income level of the
household at the mid-point of the income distribution.
At a conceptual level, poverty is most often seen as a condition specific to individuals. All
members of a family may not be equally poor, however. For instance, a grandparent or a child
might face deprivation within a household that has adequate resources. To capture this idea,
researchers would ideally collect data on individuals, and poverty measurement would take place
at the individual level.
Monetary approach;
It is most commonly used approach which defines poverty with a shortfall in consumption or
income from some poverty line. It is preferred approach for economists, it is a widely accepted
Showing Page:
2/5
measure on which many policies and much research relies. It is mainly used for individual level
mostly.The Evaluation of the different components of income or consumption is done at market
prices and computed monetary value. (Naseem, 2012)
The main tools used in this approach are the Poverty Line, for establishing a poverty line, sets a
threshold below which people are classified as poor. There are two estimates of income-poverty
to assessing poverty especially in poor countries: the $1 a day level and $2 a day level. As used
by the World Bank $1 a day is meant to purchase the basic goods for survival and the $2 a day
poverty line is estimated in national line data especially from lower middle income countries.
The monetary approach to assessing poverty is based on ensuring that all needed goods and
services are included in the basket. It is assumed that the poor spend their income in the most
efficient way and not buy non-essential items. Monetary approach is compatible with utility
maximizing behavior i.e. the objective of consumer is to maximize utility and the expenditure
reflects the marginal value. Then welfare can be measured as the total consumption enjoyed.
It is known that consumption-based poverty lines provide a better measure of poverty than
income-based poverty lines but accurate data at the country level and across countries are more
readily available in income form. (Naseem, 2012)
Individual versus household: economists approach to welfare is the basically individualistic,
individuals always think about their welfare and poverty (as welfare shortfall) is a characteristic
of individual too. Income and consumption data are collected as household level it then
translated as individual poverty measures. It as tree aspects : one is to estimate the needs of
different individuals; second to estimate the extent of economies of scale enjoyed; the third is to
consider how household resources are allocated to the differ individuals within the household.
(Riddell, 2004)
Calorie intake approach, poverty line is determined on the basis of minimum calorie
requirement. Using the relationship between calories intake and food expenditure, the cost of
acquiring a certain amount of calories intake is estimated. In Pakistan poverty is estimated
usually on the basis of secondary data. In 1963-2008 period poverty is measured using the
calorific norm. This period is divided in to two broad groups; 1963-1992 the calorie intake was
Showing Page:
3/5
2550 calories per day per person. And for the 1992-2006 periods poverty line is estimated
officially 2350 calories per adult per day. (G.M.Arif & Farooq, 2012) In urban area the intake of
calorie by adult is 2150 calories and 2450 calories in the rural areas. (Naseem, 2012) The official
poverty line is then converted to monetary terms by applying the price of food items.
A critical point in this approach is variation in calories intake depends on activity level, choices
people and average weight of the population, leads to different calories standard. The first is the
energy required to maintain body weight (and growth of children, and fetal growth and lactation
in reproducing women. The second is energy for necessary activity. The individual weight is
very important to calorie intake and consumption of calorie depends on the activity of that
individual. So, adjusting weight is critical part of defining the minimum calories needs for
individual. However, neither activity level nor weight is calculated in house hold surveys.
Arif and Farooq (2012) measured the dynamics of rural poverty in Pakistan using the three ways
of panel survey data carried out by the Pakistan Institute of development economics (PIDE) in
2001, 2004 and 2010. Cross-sectional and longitudinal analysis was done in this study. They
mainly focus on the rural area because of the unavailability of data on urban section. In this study
they used the official poverty line: RS.723.4 per adult per month for 2001, Rs. 878.64 for 2004
and Rs. 1671.89 for 2010. All the data sets have detailed information about consumption
modules including food and non-food items. In this study they used “spell approach” to measure
the dynamic of poverty. (Arif & Farooq, 2012)
Arif, Iqbal and Farooq in 2011 studied The Persistence and Transition of Rural Poverty in
Pakistan used the panel data of The Pakistan Socio-Economic Survey (PSES) covers two
periods, 1998 and 2000, while the Pakistan Rural Household Survey (PRHS) covers the 2001
and 2004 period. The objective of the study was to estimate the trend and dynamics of rural
poverty across the provinces and the correlation of rural poverty. They used the calorie intake
approach to measure the poverty which is officially given by Planning Commission of Pakistan
based on 2350 calories per adult per day. This measure is based on consumption modules
considering the food items. The regional price differential is adjusted by using the Paasche’s
price index then poverty lines are derived. The panel households were grouped into four
Showing Page:
4/5
categories: chronically poor, moved out of poverty, fell into poverty and ‘always non-poor’.
(Arif, Iqbal, & farooq, 2011)
A single or all-things for the measurement of poverty have disadvantages that they are out of
reach. For the income variable data are collected at household level and then converted to
individual level. This concept in Pakistan faces problem due to joint family structure because in
the said family structure the earner may be the one having dozens of dependents.
The basic needs approach requires information on the prices of the goods that the poor consume,
especially when making comparisons across regions or over time.
The official poverty line is given as 2350 calories per adult per day but individual may need
more or less calories the needs of young children, growing teenagers, manual workers, pregnant
women, or sedentary office workers may differ quite markedly.
Unfortunately, the food energy intake method is seriously faulty, and should not be used for
comparisons across time, or across regions, or between urban and rural areas, unless the
alternatives are infeasible. Same food items in the basket have different prices across the regions.
In rural area food is cheaper than in urban and in urban the people purchases high quality food
stuff. There is also fault in calorie intake method that they converted calorie into money which
then served as poverty line.
Consequently, there are so many faults measuring the poverty by objective method. The solution
for this is to measure the poverty by asking the people to define a poverty line them self. Answer
will vary from person to person to get poverty line.
Bibliography
Arif, G., & Farooq, S. (2012). Rural Poverty Dynamics in Pakistan:Evidence from Three Waves
of the Panel Survey. Poverty and Social Dynamics Paper Series 2.
Arif, Iqbal, n., & farooq, S. (2011). The Persistence and Transition of Rural Poverty in Pakistan:
1998-2004. PIDE Working Papers.
Showing Page:
5/5
G.M.Arif, & Farooq, S. (2012). Poverty Reduction in Pakistan:Learning from the Experience of
China. PIDE Monograph Series.
Naseem, S. (2012). A Review Of Studies on poverty in apkistan . Islamabad: PIDE.
Riddell, R. (2004). APPROACHES TO POVERTY A NOTE FROM THE “DEVELOPMENT”
PERSPECTIVE. Geneva: ICHRP commissioned this document as a Working Paper.

Unformatted Attachment Preview

APPROACHES TO POVERTY IN PAKISTAN Assignment Muhammed Arif A poverty line classically specifies the income (or level of spending) required to purchasing a bundle of essential goods and services (typically food, clothing, shelter, water, electricity, schooling, and reliable healthcare). Identifying the poor as those with income (or expenditures) below a given line. The poverty line allows specialists to count the poor, target resources, and monitor progress against a clear benchmark. A poverty line indicates deprivation in an absolute sense, i.e., the value of a set level of resources thought necessary to maintain a minimal standard of well-being. With such a definition, poverty is eradicated once all households command resources equal to or above the poverty line. The $1/day per capita poverty line is one example of an absolute poverty line, but most countries determine their own absolute poverty lines as well. The relative benchmarks used in Europe reflect the belief that important deprivations are to be judged relative to the well-being of the bulk of society, approximated by the income level of the household at the mid-point of the income distribution. At a conceptual level, poverty is most often seen as a condition specific to individuals. All members of a family may not be equally poor, however. For instance, a grandparent or a child might face deprivation within a household that has adequate resources. To capture this idea, researchers would ideally collect data on individuals, and poverty measurement would take place at the individual level. Monetary approach; It is most commonly used approach which defines poverty with a shortfall in consumption or income from some poverty line. It is preferred approach for economists, it is a widely accepted measure on which many policies and much research relies. It is mainly used for individual level mostly.The Evaluation of the different components of income or consumption is done at market prices and computed monetary value. (Naseem, 2012) The main tools used in this approach are the Poverty Line, for establishing a poverty line, sets a threshold below which people are classified as poor. There are two estimates of income-poverty to assessing poverty especially in poor countries: the $1 a day level and $2 a day level. As used by the World Bank $1 a day is meant to purchase the basic goods for survival and the $2 a day poverty line is estimated in national line data especially from lower middle income countries. The monetary approach to assessing poverty is based on ensuring that all needed goods and services are included in the basket. It is assumed that the poor spend their income in the most efficient way and not buy non-essential items. Monetary approach is compatible with utility maximizing behavior i.e. the objective of consumer is to maximize utility and the expenditure reflects the marginal value. Then welfare can be measured as the total consumption enjoyed. It is known that consumption-based poverty lines provide a better measure of poverty than income-based poverty lines but accurate data at the country level and across countries are more readily available in income form. (Naseem, 2012) Individual versus household: economists approach to welfare is the basically individualistic, individuals always think about their welfare and poverty (as welfare shortfall) is a characteristic of individual too. Income and consumption data are collected as household level it then translated as individual poverty measures. It as tree aspects : one is to estimate the needs of different individuals; second to estimate the extent of economies of scale enjoyed; the third is to consider how household resources are allocated to the differ individuals within the household. (Riddell, 2004) Calorie intake approach, poverty line is determined on the basis of minimum calorie requirement. Using the relationship between calories intake and food expenditure, the cost of acquiring a certain amount of calories intake is estimated. In Pakistan poverty is estimated usually on the basis of secondary data. In 1963-2008 period poverty is measured using the calorific norm. This period is divided in to two broad groups; 1963-1992 the calorie intake was 2550 calories per day per person. And for the 1992-2006 periods poverty line is estimated officially 2350 calories per adult per day. (G.M.Arif & Farooq, 2012) In urban area the intake of calorie by adult is 2150 calories and 2450 calories in the rural areas. (Naseem, 2012) The official poverty line is then converted to monetary terms by applying the price of food items. A critical point in this approach is variation in calories intake depends on activity level, choices people and average weight of the population, leads to different calories standard. The first is the energy required to maintain body weight (and growth of children, and fetal growth and lactation in reproducing women. The second is energy for necessary activity. The individual weight is very important to calorie intake and consumption of calorie depends on the activity of that individual. So, adjusting weight is critical part of defining the minimum calories needs for individual. However, neither activity level nor weight is calculated in house hold surveys. Arif and Farooq (2012) measured the dynamics of rural poverty in Pakistan using the three ways of panel survey data carried out by the Pakistan Institute of development economics (PIDE) in 2001, 2004 and 2010. Cross-sectional and longitudinal analysis was done in this study. They mainly focus on the rural area because of the unavailability of data on urban section. In this study they used the official poverty line: RS.723.4 per adult per month for 2001, Rs. 878.64 for 2004 and Rs. 1671.89 for 2010. All the data sets have detailed information about consumption modules including food and non-food items. In this study they used “spell approach” to measure the dynamic of poverty. (Arif & Farooq, 2012) Arif, Iqbal and Farooq in 2011 studied The Persistence and Transition of Rural Poverty in Pakistan used the panel data of The Pakistan Socio-Economic Survey (PSES) covers two periods, 1998 and 2000, while the Pakistan Rural Household Survey (PRHS) covers the 2001 and 2004 period. The objective of the study was to estimate the trend and dynamics of rural poverty across the provinces and the correlation of rural poverty. They used the calorie intake approach to measure the poverty which is officially given by Planning Commission of Pakistan based on 2350 calories per adult per day. This measure is based on consumption modules considering the food items. The regional price differential is adjusted by using the Paasche’s price index then poverty lines are derived. The panel households were grouped into four categories: chronically poor, moved out of poverty, fell into poverty and ‘always non-poor’. (Arif, Iqbal, & farooq, 2011) A single or all-things for the measurement of poverty have disadvantages that they are out of reach. For the income variable data are collected at household level and then converted to individual level. This concept in Pakistan faces problem due to joint family structure because in the said family structure the earner may be the one having dozens of dependents. The basic needs approach requires information on the prices of the goods that the poor consume, especially when making comparisons across regions or over time. The official poverty line is given as 2350 calories per adult per day but individual may need more or less calories the needs of young children, growing teenagers, manual workers, pregnant women, or sedentary office workers may differ quite markedly. Unfortunately, the food energy intake method is seriously faulty, and should not be used for comparisons across time, or across regions, or between urban and rural areas, unless the alternatives are infeasible. Same food items in the basket have different prices across the regions. In rural area food is cheaper than in urban and in urban the people purchases high quality food stuff. There is also fault in calorie intake method that they converted calorie into money which then served as poverty line. Consequently, there are so many faults measuring the poverty by objective method. The solution for this is to measure the poverty by asking the people to define a poverty line them self. Answer will vary from person to person to get poverty line. Bibliography Arif, G., & Farooq, S. (2012). Rural Poverty Dynamics in Pakistan:Evidence from Three Waves of the Panel Survey. Poverty and Social Dynamics Paper Series 2. Arif, Iqbal, n., & farooq, S. (2011). The Persistence and Transition of Rural Poverty in Pakistan: 1998-2004. PIDE Working Papers. G.M.Arif, & Farooq, S. (2012). Poverty Reduction in Pakistan:Learning from the Experience of China. PIDE Monograph Series. Naseem, S. (2012). A Review Of Studies on poverty in apkistan . Islamabad: PIDE. Riddell, R. (2004). APPROACHES TO POVERTY A NOTE FROM THE “DEVELOPMENT” PERSPECTIVE. Geneva: ICHRP commissioned this document as a Working Paper. Name: Description: ...
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.
Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4