DEFINITIONS AND MEASUREMENTS OF POVERTY

Of all the agencies, only one, IAF, has resisted adopting a quantitative measure of poverty. IAF assumes that the poor are readily visible to its field representatives and relies on direct contacts with the poor and groups that serve them to help them identify other needy poor (a process referred to as "the grapevine effect"). IAF has developed qualitative indicators -- known as "social gains" -- and the current attempts at their field validation are reviewed in this report. The three other institutions are exploring quantitative measures. These fall into two categories; absolute and relative poverty measures. Absolute poverty measures involve some measure of minimum levels of consumption or income that allow a separation of the poor from the rest of the population. Relative poverty measures are defined as some percentage of per capita income distributions of the country. Cut-off lines are variously set at 20 percent, 33.3 percent, 40 percent, or 50 percent. The number of persons falling below this line are classified as the poor. However, even attempts to measure the poor by the most rigorous of quantitative methods yield, at best, approximation. Apart from limitations of the available income distribution and lack of pertinent information for some countries, various assumptions, subjective considerations, and use of proxies affect the reliability of final results. It is recommended that a methodological workshop be organized to bring together concerned Latin American/Caribbean Bureau officials to dicuss discrepancies in poverty estimates pointed out in this report. In addition to a number of tables, the report includes two appendices: (1) Issues in Measuring Development Performance, and (2) Validation of the Inter-American Foundation"s Social Indicators.