Poverty, Damned Lies And Statistics

Sri Lanka’s poverty line uses somewhat of an outdated system to calculate poverty. But of course, to be fair, the whole world uses an outdated system to calculate poverty. I was at a forum organized by the Center for Poverty Analysis (CEPA) yesterday and a few interesting things were voiced.

Poverty

The Department of Census and Statistics (DCS) takes a value of how many calories a person needs to consume; 2030 calories per day in 2002. Then it looks at how much money you need to buy this many calories and arrives at the food poverty line.

Add to this the estimated costs of other requirements and you have the official poverty line. In 2002 this was Rs. 1423 per person per month. This is inflated every year to reflect the change in price levels. By that measure, it should currently be something like Rs. 3646 per person per month. Successive Household Income Expenditure Surveys (HIES) done by the DCS has revealed the number of poor people as a percentage of the population to have dropped as follows.

By the standards of nutritional measure at least, living seems to have gotten better here. Although the statistics do appear a little fantastic. Harsha De Silva for example asked how poverty levels of Estate workers could have sunk from some 30% in 2002 to something  like 12% in 2009. Admittedly Sri Lanka has gone through some serious socio-economic changes since the ceasefire. And while i doubt the DCS would put a number in public view without reasoning to back it, paranoia and doubt is warranted because it certainly does behave very suspiciously at times.

Lies and Statistics

The CDS remains incredibly cagey and protective about its statistics. When i say ‘incredibly’ however, i mean marginally. But even marginal cageyness when it comes to statistics can render any objective party almost impotent when it comes to interpreting economic numbers for itself.

Take inflation for example; inflation is calculated by tracking the prices of a ‘basket’ of consumer goods that a household is typically assumed to consume. The items in this basket is divided into broad categories (food and beverages, clothing and footwear, education, transport etc)  and further divided into subcategories (like the food category would contain, beets, beans, samba rise, anchor milk etc). These items are then assigned weights based on their relative importance (e.g. food would have 40% of the basket while clothing has 10%). A survey is done on weekly prices and the prices are multiplied by the weights to arrive at the overall inflation figure.

Now i might sound pedantic, but bear with me here. While the CDS gives the weights for the broader categories it fails to give the weights for the sub categories in the basket. And sub-categories are the most important thing here because knowing the relative importance of Anchor milk in the index is the only thing that allows us to accurately calculate the real impact of a milk price hike to inflation.

When i asked why the CDS isn’t transparent about inflation, especially when the government has repeatedly come under fire of accusations of manipulation, Suranjana Vidyaratne, Director General of the CDS, dodged my question. I suppose there is no smoke without fire.

Government data in Sri Lanka is generally like this though. A lot of the Central Bank data that comes out suffers from mysterious lags and occasional omissions and corrections that raise the eyebrow.

What is Happiness?

But is money and food a sufficient measure of poverty? And should we be measuring poverty in the first place? Traditional measures of poverty fall a little short of conveying the real deal of what it means to be poor and human by their valuation of poverty via a measure quantified purely in terms of money.

Since the seventies however, a movement towards including more dimensions into how we measure poverty has been gathering force. The Multidimensional Poverty Index attempts to incorporate factors like education, health and standards of living into a numerical measure of poverty that tries to be sort of more holistic.

Countries like Bhutan are already way ahead in measuring what they like to call ‘happiness’ using their GNH (Gross National Happiness). It takes data that can be quantitatively measured such as health and education but also gives importance to culture, spiritual progress, good governance and other qualitative, and critics accuse; subjective, measures.

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