The 2015 development agenda is leaning toward a goal of eradicating absolute poverty by 2030. The World Bank’s recently approved corporate strategy has the same goal. However, this target is absolutely meaningless for the Asia and Pacific region.
How do we define the eradication of absolute poverty? According to the prevailing characterization, reducing the proportion of people living under $1.25 per capita to less than 3 percent qualifies as reaching the goal. I am not sure if we need to wait for 16 years to achieve this.
In the Asia and Pacific region, 18.3 percent of people lived under $1.25 per capita in 2010. By 2020, this proportion is likely to decline to less than 5 percent. The number will further reduce to below 3 percent by 2023. Most countries in the region, individually, are likely to achieve this goal well before 2030, even if they do not undertake any special action. Does it make sense to shoot for a goal that we know will be achieved without stretching ourselves?
My main problem, however, is with the definition of absolute poverty. Does $1.25 per capita allow the minimum quality of life and basic necessities and human dignity that people in our region aspire to?
Indeed, countries in our region have poverty lines which are much higher than $1.25. Central Asian countries have poverty lines around $5 per capita, Pacific countries have poverty lines around $3 to $4 per capita. Even in South Asia, where poverty is endemic, all countries have poverty lines above $1.25. Even in these countries, most people believe that these poverty lines (well above $1.25) are too low.
I want to share an interesting experiment undertaken by two 26 year-old men―Tushar and Matt―in India recently. One graduated from University of Pennsylvania and the other from Massachusetts Institute of Technology. Both came back to India and decided to understand their country by trying to live as a “poor” person does. They undertook an experiment which would change their thinking about poverty forever.
They decided to live on 26 rupees per day (almost equivalent to $1.25 in purchasing power parity terms) in rural areas. They moved to Matt’s ancestral village, Karucachal, in Kerala. Their experiment allowed only 60 percent of their “income” to be spent on food.
Trying to live on $1.25 a day
They discovered it was impossible to get a balanced meal on 18 rupees per day. They could not afford any meat or dairy products and had to survive on parboiled rice, tuber, and banana. Eating out, even at roadside places, was out of the question. So was taking any paid transport. They walked long distances, saved money even on soap to wash their clothes. They could not afford communication by mobile phone or internet. They were lucky that they did not fall sick, or else they would have been forced to prematurely halt their experiment.
They learned that $1.25 a day is not enough to survive on for the long term, let alone to provide disposable resources for any contingency. Since this income did not provide any cushion for investing in themselves, they were condemned to be poor forever. This poverty line did not allow them even a modest dream.
In the Philippines, the $1.25 per capita poverty line translates into about 35 pesos per day. Just imagine trying to live on that income, paying for housing, transport, food, clothes, utilities, health, and education.
We need to recalibrate the poverty line to a level that is adequate for leading a life with dignity, and which provides disposable resources for self-development, allowing individuals to make a better future for themselves and their children. Also, it should leave enough savings for a rainy day.
When I asked my senior colleague and friend Juan Miranda, managing director general at the Asian Development Bank, what he thinks about the $1.25 per capita figure, he responded without batting an eyelid. “It is a joke! A cruel joke to believe that such a low number can support a dignified life.”
Indu Bhushan is Deputy Director General of the Strategy and Policy Department at the Asian Development Bank (ADB). This article was first published by the ADB Development Blog