An economist’s approach to poverty
First published by Woroni, the ANU Student Newspaper, on 5 August 2014. By MUHAMMAD TAUFIQ BIN SURAIDI
A new methodology to define poverty in first world countries is needed, and Nobel Prize-winning economist Amartya Sen's theory could be the answer.
Traditionally, poverty has been defined by an individual's level of income.
For instance, poverty is measured on a scale, with the most extreme form of poverty being measured as those who live on $1.25 per day or less.
In response to this, development programs have always been centred on job creation, gross domestic product (GDP) growth and other economic policies that could be measured through changes in income.
There are many disadvantages in viewing poverty purely as an issue of economic development.
One only needs to look at many authoritarian states around the world. Singapore boasts a GDP per capita of AU$52,052, but there are still many in the country who struggle to make a living, and those who live in poverty.
Not all in Singapore can enjoy the opportunities of a sterling education system - meritocracy only works to favour those whose parents are well connected and rich enough to send their children to elite schools like Raffles, Anglo-Chinese School or other Methodist schools.
Others are left behind and unable to climb up the socio-economic ladder as they are unable to fund for their children to go for extra tuition after schools or to afford textbooks to keep pace with those who can afford them.
In today's world of grave inequalities, even in the richest of nations, there is a strong need to see poverty as not merely an issue of access to income, education, health and other aspects of life which those in the developed world are fortunate enough to have.
A better approach is to see poverty as what Nobel Prize-winning economist Amartya Sen describes as the deprivation of a person's capabilities to live the life they have reason to value.
According to Sen's capabilities approach, development should focus on maximising what an individual can choose to achieve in life such as the ability to choose the many different cultural values and the practices to adopt them.
This will ultimately affect the individual's wellbeing, which is defined as the actual enjoyment of the individual's choices deriving from the range of options available to them.
Therefore, unlike utilitarianism and libertarianism, the capability and wellbeing approach looks at the range of options available for the individual to choose from and the freedom to exercise that choice.