The Under-estimation of Urban Poverty in Low and Middle-Income Nations

This paper discusses the limitations in the income-based poverty lines that are widely used to define poverty and to measure urban poverty in Africa, Asia and Latin America. This includes a discussion of whether the poverty lines defined by international agencies and national governments are set at levels that are realistic in relation to the costs of living in the larger/more prosperous/more expensive cities and the prices that the urban poor have to pay for essential non-food items. It also includes a discussion of what poverty definitions based only on income fail to take account of in regard to identifying deprivation and to helping inform poverty reduction policies and practices. This paper assembles data from many empirical studies which suggest that the scale and depth of urban poverty is systematically under-estimated in most of the official statistics produced or used by governments and international agencies. Among the reasons for this are:
- The over-concentration on income-based poverty lines with little or no attention to other aspects of deprivation, especially inadequate, overcrowded and insecure housing, inadequate provision for water, sanitation, drainage and basic services such as health care, emergency services and schools, and lack of the rule of law and respect for civil and political rights.
- The lack of knowledge of local contexts by those who define and measure poverty (in part reinforced by the lack of local data on living conditions and basic services) which often leads to questionable assumptions about better living standards in urban areas
- The inappropriate concepts used in setting income-based poverty lines (for instance in determining the income-levels needed for non-food essentials and in making allowances for variations in the costs of non-food essentials within nations and between nations). Most poverty-lines make unrealistically low allowance for non-food needs because this is based on what a set of the poorest households spend on non-food needs, not on the minimum income they would require to meet their needs or on any assessment of whether their non-food needs are met. The data on what poor households spend on non-food needs is often drawn from national data or rural data and so considerably understates expenditures in high-cost locations (mostly urban areas)
There is also a discussion of the gap between the proportion of urban dwellers said to be ‘poor’ by official statistics and the proportion who ‘live in poverty’ in very overcrowded conditions in tenements, cheap boarding houses and illegal settlements where provision for water, sanitation and basic services is very inadequate. This is largely the result of inappropriate judgments made by specialists based in high-income nations and drawn from concepts developed in high-income nations for use in high-income nations. The paper ends with a discussion of how the definition of poverty can be widened to include aspects other than income or consumption and how this helps identify many more possibilities for poverty reduction and much expanded roles in poverty reduction for local governments, community organizations and local NGOs. It also discusses the changes needed in defining and measuring urban poverty that are required to support this.