IN the conventional method, poverty is measured in terms of the inability of households to be able to afford the “imaginary basket of goods”. That basket of goods is supposed the necessities that a household needs, among which are food items, basic utilities and housing costs.
Theoretically, if a household could not afford the basket, then it is considered as poor, because it falls under the so-called poverty line.
In a relatively newer method, the Multidimensional Poverty Index (MPI) measures a household’s lack of access to certain goods and services. If a household does not have access to these, then it is interpreted to mean that they are “deprived”, and as a result, they are considered as “poor”.
Since the MPI method was developed by the United Nations, it is up to member states to adopt it or not. The problem with the conventional method is that it is up to the individual countries what to add or subtract from the imaginary basket, and more often than not, the method is prone to manipulation by some dishonest governments that would want to present a rosy picture of having a poverty rate that is lower than the reality.
For example, these governments would not care to include the costs of mobile communications, even if these have already become basic necessities, sometimes second only to food.
As a matter of fact, I have heard of the tendency of some Filipino households to forego the purchase of some food items, so that they could save some money to buy their cell phone loads for texting and internet surfing.
That might sound ridiculous to some people, but in all probability, they might actually be using their devices to earn money via some means of livelihood. It might actually be a damn if you do, damn if you don’t situation, because if they could not communicate, they also might not be able to buy food at all.
Depending on which method is used to measure poverty, the final poverty rate that will be reported will be either high or low, sometimes depending on how honest the reporting authority is.
One thing to watch out for is the reported unemployment rate, because if the unemployment rate is high, then the poverty rate should also be high.
We should also watch out for the mandatory minimum wage, because if it is high, then the poverty rate should be low. In other words, the reported rates should reconcile.|
