Global Policy Forum

Colombia's New Index to Measure Poverty Merits a Cautious Welcome


Columbia has adopted a new holistic poverty reduction plan to reconcile economic development and growth with poverty eradication. The plan is based on the Multidimensional Poverty Index, a new method of measuring poverty that identifies different areas of deprivation and captures interactions between them. The new plan also recognizes the need to tackle income inequality at the same time as absolute poverty. Although Columbia’s progressive new poverty reduction plan should be applauded, it is important to note that the index only looks at outcomes and fails to address processes such as displacement, an overriding problem in Columbia.  

Jonathan Glennie

August 30, 2011

Colombia has become the first country in the world to announce a poverty reduction plan, with binding targets, based on a new "multidimensional" method of measuring poverty. The multidimensional poverty index (MPI) looks beyond income alone, and also assesses education, health and living standards (such as assets and housing).

Broadly speaking, the index is good news. Income is a very limited indicator of whether or not someone is poor. Families with very low incomes who live in safe environments and have access to basic goods and services can be less poor than families with higher incomes who live in terrible conditions where it is expensive to meet basic needs.

This is especially true if you remember that, according to today's rather bizarre convention, people earning more than $2 per day are considered "non-poor". This is manifestly not the case.

So any further challenges to income poverty measurements, building on the groundbreaking work of the UNDP for the past few decades, are welcome.

Colombia is under great pressure from the international community to address poverty. While other emerging economies are demonstrating impressive reductions in poverty levels, Colombia is saddled with rather depressing statistics. According to World Bank figures, 28% of Colombians – more than 12 million people – are poor (living on less than $2 a day) while 16% of Colombians – 7 million people – are extremely poor (living on less than $1.25 a day).

That puts Colombia 25th on the list of countries with the most income-poor people in the world, on a par with Zambia and Burkina Faso, and second on the list for Latin American countries, behind Brazil.

Colombia's national poverty line would suggest things are even worse; fully 64% of Colombians fall below it.

The new Santos administration has made it clear that, after eight years of securitising the country under President Álvaro Uribe Vélez, it wants to bring prosperity and poverty reduction, a sincere and laudable aim.

One initial concern with the MPI is that it appears to do Santos a huge political favour. According to the new measure, poverty levels are not at 64%, 28%, or even 16%. They are at 9%. What government could resist taking 3.1 million people out of poverty with a simple change in measurement methodology?

Since the MPI was launched in 2010, its proponents have emphasised that it seeks to complement rather than replace income measures. Nevertheless, if the new multidimensional measure is to be the centrepiece of the Colombian government's poverty strategy, as is claimed, 9% will surely become the main figure bandied around by politicians and the press. Something to keep an eye on.

On a more positive note, the new poverty reduction plan suggests the Colombian government is recognising, for the first time, the need to attack inequality at the same time as absolute poverty. In previous plans, the term equality appeared to be blacklisted. Now it is front and centre.

Colombia's Gini rating, which measures income inequality, has worsened despite rapid growth, while other Latin American countries have improved. Its inequality of land distribution is 0.87 (with one being the most unequal possible). Colombia is now probably the most unequal country in Latin America.

Inequality is at the heart of violent conflict and remains the greatest barrier to social cohesion. Progressive policies on wealth redistribution are a far swifter way to reduce poverty than simply relying on economic growth. The prioritisation of equality by the Santos administration is, therefore, to be welcomed.

It appears constant pressure from the international community has strengthened the hand of progressive elements in the Colombian government. The collaboration with the Oxford Poverty and Human Development Initiative (OPHI) team that created the MPI is likely to further this trend. A number of developments are being planned by the OPHI researchers that would be very welcome in a country like Colombia, including attempts to integrate employment and safety from violence in a more coherent and internationally comparable way.

However, the new index, like all current poverty measures, fails to address a major problem. It looks only at outcomes, not process. As I have suggested before, this is insufficient to tell us what is really happening to poor people. In Colombia, for example, displacement is an overriding problem, with internal refugees reaching levels expected in countries such as the Democratic Republic of the Congo.

As well as counting poor people, researchers should apply the following ethics test to development strategies: if you displace 100 families from their land, is it possible that poverty indicators will actually improve? If the answer is yes, which it often is, there is something wrong or limited with the indicators. Perhaps some brilliant academic can devise a measure of poverty reduction that acknowledges this issue.


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