Day 2: Poverty and Health Measurements Takashi Yamano

1. Development Problems in AfricaSpring 2006 Day 2: Poverty and Health Measurements Takashi Yamano

2. Poverty in Africa • Today’s contents • Overview of poverty in Africa • Concept of poverty • Poverty Measurements • Example from the REPEAT in Uganda • Poverty Dynamics: Chronic or Transit?

3. Income Poverty by Regions • Source: World Development Report 2000/2001, • World Bank, Chapter 1

4. Concept of Poverty: Measuring poverty in its multiple dimensions • Income Poverty • Pros: (Mostly) Comparable across regions and countries • Cons: Measured at the household level, ignore inequality within the household • Health and Education • Pros: Measured at the Individual level, Comparable measures are available • Cons: Limited data • Vulnerability; Voicelessness and Powerlessness • Pros: These are important components of poverty • Cons: Difficult to define and measure it Source: World Development Report 2000/2001, World Bank, Chapter 1

5. Measuring Vulnerability • Because of poor infrastructure and public service deliveries, without functioning insurance markets, people in poverty are vulnerable against shocks (natural disasters, diseases, violence, crime, etc.). Thus, vulnerability is an important component in poverty. But it is difficult to measure it. • An example: Standard Deviation of Income over time • This measure reflects fluctuations in income. • Problem 1: Equal weights to upward and downward fluctuations • Problem 2: No time dimension: consecutive downward fluctuations are more damaging than separate ones. • Problem 3: Many small downward fluctuations and a large one may have same impacts. • Source: World Development Report 2000/2001, • World Bank, Chapter 1

6. Measuring Ability to cope with shocks • Resourceful people are able to cope with shocks and recover from them over time, while resource poor people may suffer from long-term consequences by falling in to poverty. • Measuring households’ ability to cope • Physical assets • Human capital • Income diversification • Links to networks (social capital) • Participation in informal (or formal) safety nets • Access to credit markets • Source: World Development Report 2000/2001, • World Bank, Chapter 1

7. Measuring Income Poverty • Four major methods: • Food Energy Intake (FEI) approach • Cost of Basic Needs (CBN) approach • One-dollar-a-day approach • Social subjective poverty line

8. Food Energy Intake Approach • The FEI approach associates the poverty line with the level of expenditure or income at which a typical household meets its nutritional requirements. For instance, • ln (y) = a + b C • y is the daily per capita consumption, including food and non-food items • C is the calories consumed • The poverty line is calculated at C* is the calorie requirement: C* varies depending on age, gender, activity levels. A typical measure is 2200kcal for male adults

9. Expenditure/Income Z* Poverty Line C* Calorie Intake

10. Costs of Basic Needs Approach • The CBN approach is also based on nutritional requirements. • Define a basic food basket of poor • Calculate costs of obtaining the basket that provides requirements: • >> Food Poverty Line. • A non-food poverty line is calculated at the mean nonfood expenditure of households who are on or around the food poverty line.

11. Costs of Basic Needs Approach • Thus, the poverty line is the sum of food and nonfood poverty lines. Poverty Line = Z Food + Z Non-Food Different prices should be applied to different regions, such as urban vs. rural.

12. FEI vs. CBN • The FEI approach is simple • The CBN approach is consistent • The consumption baskets of poor are implicit in the FEI approach but explicit for the CBN approach. • The CBN approach provides consistent comparisons across groups. • Thus, many studies use the CBN approach.

13. Indicators of Poverty • The Headcount ratio: • Poverty Gap: • Squared Poverty Gap: See Deaton (1997): Chapter 3

14. P2: Squared Poverty Gap Individual income or expenditure z 0 xi -1 P0: Headcount P1: Poverty Gap

15. The headcount ratio does not give any information about the distribution of poor below the poverty line: an uniform weight to every poor household. Individual income or expenditure z 0 xi 1 Weight P0: Headcount

16. Poverty Gap indicates the degree of poverty. It assigns a weight which is (Z – Xi)/ Z. Individual income or expenditure z 0 xi 1 Weight P1: Poverty Gap

17. Squared Poverty Gap indicates the degree of poverty also but assigns a weight which is ((Z – Xi)/ Z)2. Poorer households receive larger weights. Individual income or expenditure z 0 xi 1 Weight P2: Squared Poverty Gap

18. Comparisons of poverty measures • The Headcount Ratio is an easy to use measure, but it does not capture the depth of poverty. For instance, P0=.20 could be 20 % of people are just below the poverty line or quite below the poverty line. • The Poverty Gap captures the depth of poverty. This is the total amounts of income to bring every poor person at the poverty line divided by the number of people. • The Squared Poverty Gap gives more weights to poorer population.

19. Example from the REPEAT in Uganda • 940 households • We have asked cash expenditure on 39 items • Evaluated home consumption as • Production – Sales • Used a food basket (see handouts) • Calculated the cost to obtain 2,250cal per adult • Determined the annual food poverty line at $72 per adult • Calculated the average non-food expenditure of households around the food poverty line and found it $22.7 (31.5 % of total expenditure) • Thus, the poverty line is $118

21. Cash Expenditure Share by Quartile

22. Food Poverty Line Poverty Line Distribution of total expenditure

25. Poverty Dynamics • Chronic Poverty: the average welfare indicator (e.g., income or expenditure) over time is below the poverty line. • How to escape poverty: Need to improve physical and human capital to improve income generating ability in general. Temporary assistances may not help them to escape poverty in the long run. • Transitory poverty: when the income or expenditure goes below the poverty line at times, although the average income or expenditure is above the poverty line. • How to escape poverty: Temporary helps, such as safety net programs or credit programs, may help them when they fell below the poverty line.

26. Chronic Poverty Transitory Poverty Poverty Line Always Poor (Chronic poverty) Time

27. Measuring Health • Child Health in Africa Overview • Concepts and Measurements • Research Example: “Child Growth, Shocks, and Food Aid in Rural Ethiopia” by Yamano, Alderman, and Christiaensen (2003)

28. Child Mortality Rate Overview Under 5 mortality rate per 1,000 Source: World Bank Development Indicator 2004

29. Source: World Bank Development Indicator 2004

30. Illiterate rate among female in 2000 Source: World Bank Development Indicator 2004

31. Source: World Bank Development Indicator 2004

32. Why should we care about child health and malnutrition? • Humanitarian reasons • A link between child nutrition and cognitive development and education; and a link between child nutrition and life-time productivity • Previous studies have shown that school going children have higher academic records if they were healthy in their early childhood (0-5 years old). • Previous studies shown that adults who were healthy in their early childhood have higher education levels and income. • Saving resources: healthy children require less medical expenditure and higher returns from education systems. See Behrman, Alderman, and Hoddinott (2004) in Global Crises, Global Solutions

33. Concepts and Measurements • Hunger: a condition, in which people lack the basic food intake to provide them with the energy and nutrients for fully productive lives. (Hunger Task Force, UNDP, 2003) • FAO: the prevalence of undernourishment • Per capita dietary energy supply: production + stocks – post-harvest losses + imports + food aid – export • Criticisms (i) poor data, (ii) poor information about distribution, (iii) evidence show underestimations of hunger. • But this is the only measure available for many years for many countries. See Behrman, Alderman, and Hoddinott (2004) in Global Crises, Global Solutions

34. Anthropometric Measures • Height for Age Z-score • Long-term health measure • Below -2: stunted • Below -3: severely stunted • Weight for Height • Short-term measure • Below -2: wasted • Below -3: severely wasted • Weight for height • Long & short measure • Below -2: underweight • Below -3: severely underweight

35. Other Measurements • Anthropometric Measures of Malnutrition >> Next slide • Measures of Micronutrient Deficiency • Prevalence of iodine deficiency • Among pregnant women >> Low birth weight • Among children >> high mortality rates • Prevalence of low iron intake in children and women • Among women >> anemia, low birth weight • Among children >> low cognitive ability • Prevalence of vitamin A deficiency • Blindness • Child mortality

36. How about self reporting? Strauss and Thomas found that reported height is systematically shorter than the measured height for younger children. They speculate that this is because parents remember the last measurement, but younger children grow faster than older children. They also found that the difference between the two is related with income. High-income parents may monitor more closely. From Strauss and Thomas (1996) AER

37. Factors that affect child health • Income • Education of mother Usually its impacts are stronger than father’s education • Education of father • Education of parents could be supplemented by other members’ education • Infrastructure • Micro-nutrients of food intake • Gender preference of parents (especially in South Asia)

38. Fertility by the education of mothers Created from Demographic and Household Surveys in the 1990s

39. HAZ by the education of mothers Created from Demographic and Household Surveys in the 1990s

40. Mother’s education and Child Health • Mother’s education has been found a key factor • Why does mother’s education improve child health? • Glewwe (1999) argues that • Formal education may directly transfer health knowledge • The literacy and numeracy skills acquired in school may enhance the capability to diagnose and treat child health problems • Increased familiarity with modern society through schooling may make women more receptive to modern medicine

41. Missing in Action:Teacher and Health Worker Absence in Developing Countries by Nazmul Choudhury, Jeffrey Hammer, Michael Kremer, K. Muralidharan, and F.H. Rogers

42. Efficiency of Absence The worker absence would be efficient if workers are under-paid and a certain level of absence is in accounted in the service provision.