By Geof Wood
It must be helpful that this year’s economics Nobel prize (Banerjee, Duflo and Kremer) has been awarded for tackling poverty. But there also must remain a questionmark over whether experimental methods and RCT can really capture the problems which need to be addressed, and thus whether their ‘scientific evidence’ is sufficiently comprehensive and the right kind of guide to solutions. Language, concepts and methods are all of a piece, and can be misleading.
The sticky problem of ongoing poverty across the world, including its richer countries like the UK, is not addressed through the present favoured vocabulary of ‘graduation’ as the key evidence to be measured or factored. The metaphor does not stand up to the mildest scrutiny and is indeed, for me at least, quite offensive. In what way does the reference to students passing exams and gaining a degree represent or inform us about poverty eradication? First of all, students are a privileged minority in all countries, and especially poorer ones. Access is heavily skewed as are outcomes. Secondly the material condition of a student does not change upon graduation. No significant threshold has been passed beyond the acquisition of a qualification which only ‘may’ have a positive effect upon the degree-holder’s career and future livelihood. Third, while graduates are supposed to have advantages over non-graduates in the population, these are not guaranteed and the livelihood has yet to be earned. And of course there is a graduation day, but we guess not like poverty eradication day, with its elite ceremonial and dressing up. As an analogy it is distasteful and misrepresents the problem and challenge. And it does not engage with the required agency among the poor to survive or progress.
Likewise, there is a problem with ‘leave no-one behind’. In what policy direction is this phrase supposed to guide us? To me, it suggests the tired idea that economic growth will generate trickle down effects to benefit the poorest to an adequate extent. It also conjures up a cycling race whereby a few extend their lead while the peleton steadily falls back. The more accurate description is surely trickle up, with capitalist growth worldwide seeming to increase rather decrease inequalities. ‘Leave no-one behind’ alludes to a Pareto optimum outcome in which everyone gets better off, but not at equal rates. It is a grand allusion, akin to fake news, whereby poverty can be solved painlessly without ‘costing’ the upper deciles in terms of structural reform and re-distribution of returns from labour as well as investment. And in policy terms it frames compensatory benefits as state philanthropy rather than citizens’ rights. Rather, I like the growth-poverty elasticity idea, which, for policy purposes, can be disaggregated by depth of poverty thresholds, as well by economic sector and geography, and indeed other identities like ethnicities and religion. In this way, guided by stats, we can be led to a better understanding of how and why poverty is reproduced in its varied ways. That understanding is a required platform for eradication strategies.
Coming to poverty in poor countries, where most poverty is located such as India and even still China alongside the more familiar candidates elsewhere in the Indian sub-continent and Africa, the political economies are loaded with more hazards and shocks to trip up newly minted ‘graduates’. The point about rich country inequalities is that there are more certainties in terms of process. There is a precariat, but the unwelcome knowns are at least better known, even if welfare access is rationed by ideological austerity. In poorer countries, the unknowns are more prevalent, and uncertainty correlates with depths of poverty. Thus people’s futures are not linear, trajectories are not continuously positive—further undermining the value of a graduation metaphor. Livelihoods can go in reverse with only minor changes in circumstances. Under uncertain conditions, the poorer one is, the higher one’s discount rate of the future will be. Thus psychology and the skewed structure of economic opportunities interact and are mutually reinforcing so poor people have less room for manoeuvre subjectively and objectively to help themselves in the absence of meaningful state support.
We know from our research in Bangladesh and some recently analysed data by the World Bank that despite an overall claim for significant poverty reduction, it is actually increasing in some districts while displaying enough reduction in cities and their hinterlands to underpin the overall trend. But even in areas of reduction, the linear fortunes of some are offset by the cyclical declines of others. And we need to remember that ‘graduation’ is even applied to people moving only from extreme poverty to moderate—that is like a graduated student moving from unemployment to stacking supermarket shelves.
The empirical point is that there is considerable churning of fortunes around these thresholds, with those managing to get above them for some time easily knocked back by floods, droughts, other environmental pressures, conflict, adult morbidity in the family, adverse dependency ratios, gender imbalances in the context of dowry obligations, unfair competition from an influx of micro-credit into already saturated local small business markets, predatory landlords and land gangsters stealing back pro-poor land grants, finding oneself suddenly on the wrong side of local political alliances and being politicaly and socially excluded from contract work or welfare lists.
There is a current controversy in Bangladesh because in our poverty-related writing from Bath over the last 2 years (Wood et al 2018, Devine et al 2017, Wood, Devine & Maitrot 2019) echoed by the recent World Bank Poverty Assessment in Dhaka, the scale of vulnerability above the upper poverty threshold is being estimated as significantly above 50% of the population due to churning. Obviously for a government keen to extoll the virtues of arriving at lower middle income status, with intentions to take itself out of the less developed country status in the next few years, this is an unwelcome estimate. But it focuses our attention upon applying the notion of resilience to paths out of poverty, drawing conceptually from literature on ecology, environment and mental health. The contrast with those literatures is to move beyond reversion to the status quo ante after a shock or hazard towards a sustained improvement over the status quo, indicated by a lowering of discount rates as people view the future more positively and are able to remove more uncertainty through their own agency. There are many ways to measure and indicate such a lowering, and these should be incorporated into any thinking about poverty eradication and achievement with SDGs.
Geof Wood is Professor Emeritus of International Development at Department of Social and Policy Sciences of University of Bath.