Note to the Reader

This essay is premised on the notion that policy-makers and involved lay readers are entitled to have an insight into how global money-metric poverty statistics are presently (unreasonably) conceptualized – and how they might be (more reasonably) formulated. This is a matter of such direct, if foundational, global justice that it deserves a widespread and inclusive understanding of the issues involved. Accordingly, the essay is aimed at presenting an expository account of the World Bank's methodology of assessing country-specific and global income-poverty. The methodology, in the author's view, is logically flawed, apart from being politically conservative. It is also the author's belief that a more direct measure of income-poverty is yielded by what is known as the ‘quintile income statistic’, or average income of the poorest 20 per cent of a population. This statistic (a version of which is beginning to be gradually and cautiously accepted by the World Bank), it can be argued, should provide a better idea of income-poverty (as such), than the misleading and questionable estimates, presently put out by the Bank, of the so-called ‘dollar-a-day headcount ratio’. The present essay has been written, with a view to stimulating the widest possible popular interest, in the style of one of Leo Rosten's well-known H*y*m*a*n K*a*p*l*a*n stories, and is addressed to readers who do not feel called upon to systematically diagnose seriousness only in the presence of solemnity. A less unorthodox version of the contents of this piece are available in a recent UNU-WIDER (Helsinki) publication by the present author (bibliographic details are furnished in the recommended reading list at the end of the piece).

It had all begun innocuously enough, reflected Mr Parkhill ruefully, as he looked back on the events of the evening. It occurred to him that it was a cardinal feature of Beginners' Grade that things always began innocuously enough there, before they metamorphosed fantastically into those monstrous and outrageous affairs which his temple of learning was increasingly becoming a site of. Sentence construction, Mr Parkhill admonished himself severely. He also took himself to task for ending a sentence with a preposition, a vileness which one ought, he believed, to perpetrate no more in thought than in speech. Switching the focus of his disapprobation from himself to his fate, why, he asked his immortal soul tiredly, did he always end up presiding over these anarchic situations? Need he have asked? The self-evident answer flashed across his mind's eye in glorious Technicolor, the red letters shadowed in blue and separated, lovingly, one from the other, in stars of emerald green: H*Y*M*A*N K*A*P*L*A*N.

The Class had been untypically lacking in energy that evening, and in an innocent bid to hello-jolly them into a state of something approximating wakefulness, he had exhorted his flock in these terms: ‘Come, Class, a little show of engagement, if you please! Learning the lingua franca is an indispensable key to leading the good life, so may I ask for a little more effort all round?’

This had been the unwitting trigger to Apocalypse.

‘The good lives, the best lives’, moaned Olga Tarnova of the husky throat, ‘are Rossian, all Rossian.’

‘Is Chris Columbuss no good then?’ enquired Mr Pinsky with elaborate sarcasm, the while slapping his cheek.

‘Likevise Alexander the Great? Or perhaps it is Alexander the Stoopid?’ Thus Mr Reubens Olansky.

‘Oy!’ grunted Mrs Moskowitz, which could be interpreted as a comment signaling even-handededly bipartisan criticism.

‘And Greta Garbo?’ queried timid Miss Mitnick anxiously.

Miss Tarnova waved the barbarians' questions away with a languid and bejewelled hand.

‘The good lives, the best lives’, she repeated throatily, ‘are all Rossian. Tchaikovsky, Rimsky-Korsakov, Tolstoy, Dostoevsky, Nureyev, Pavlova –’

‘And you hevvink no room for even vun non-Rossian in your list of the good lives, Tarnova?’

The question, uttered softly and suavely, and pregnant with silken menace and the promise of a fatal hidden trap, emanated from the lips of Hyman Kaplan.

‘Esk her’, encouraged loyal Pinsky, slapping his cheek again.

‘Answer yourself’, commanded Olga Tarnova, with regal contempt. ‘Vun name, that is all I ask, just vun name from outside Rossia that is more great than Tchaikovsky or Rimsky-Korsakov or Tolstoy.’

‘Perheps you hev never come across this name?’ wafted in tones even silkier from her adversary. ‘Perheps the Star of Beginnis’ Grate is unknown to you? Perheps, Tarnova, you hev not had the pleasure, plizz, of ever knowing the name of–Hymie Keplen?’

Mr Kaplan, an agent provocateur to beat all agents provocateurs, had outdone himself on this occasion. The reactions followed quick and fast.

‘Pffft!’ said Mr Pinsky admiringly.

‘Holy Smoky!’ said Mr Stanislaus Wilkomirski.

‘God forgive such prodness!’ said Mr Peter Studniczka, a sexton in real life.

‘Pride, Mr Studniczka, pride’, corrected Mr Parkhill, skillfully diagnosing the sexton's intended rendering of the abstract noun form of ‘proud’.

Gentle Miss Mitnick was devastated. Barely managing to keep the tears out of her voice, she wished to know how ‘Mr Kaplan is standing himself besite Dostoevsky, Columbus and Greta Garbo?’

‘Perheps Keplen is more beautiful than Garbo. Perheps he hev more shapeful legs’, hooted Mr Nathan P. Nathan.

Bereft of rational explanation, Olga Tarnova was inclined to lay Mr Kaplan's hubris at the door of insanity rather than villainy. ‘Mod!’ she moaned. ‘Mod! Mod!’

This was beginning to get out of hand. Mr Parkhill moved in swiftly and firmly.

‘Class’, he said, ‘My reference to ‘the good life’ was not intended to move you to a – er – parochial appropriation, to your own respective nationalities, of all the great lives lived upon earth. By ‘the good life’, I had in mind’, continued Mr Parkhill, rather allowing himself to be carried away a little, ‘the Aristotelian notion of human flourishing, of a fulfilling material, intellectual, and – ah – spiritual life.’

‘Not possible’, asserted Mr Kaplan vehemently, ‘vithout owning planty caboodle.’

‘If your reference is to the possession of money’, said Mr Parkhill, ‘the relevant colloquialism is, I believe, ‘boodle’, not ‘caboodle’, though both terms may also be employed interchangeably to refer to an entire group, or collection, of people.’

‘Yes, money’, said Mr Kaplan lovingly. ‘Vun must have money for the good life. Vithout, is life of poverty.’

‘True indeed’, said Mr Parkhill. And then he made the fatal mistake. ‘How much money, do you think, does one need to avoid poverty?’

Earnest Miss Mitnick, who made a strenuous effort to keep herself au courant with the affairs of the world, volunteered this intelligence:

‘According to Vold Bank, vun dollar per day. Ektually, in 1990 it was 1.02 Purchasing Power Parity dollars in 1985 prices; in 2000, it was 1.08 PPP dollars in 1993 prices; and now, after 2008, it is 1.25 PPP dollars in 2005 prices. Commonly referred to as ‘dollar-a-day’ international poverty line.’

‘Vun dollar per day! Ha! Ha! What this vun dollar per day is?’ said Mr Blattberg derisively.

‘It is Vold Bank's Poverty Line’, explained Miss Mitnick, patiently if self-referentially.

‘Voild Bank is valcome to living on vun dollar per day’, said Mr Kaplan generously. ‘I do not object to Praz'dent of Voild Bank earning 30 dollars a month. But I do object to pipple saying that Hymie Keplen is a malted millionaire if he earn more than 360 dollars a year. Oh, yes, I object. I object planty’.

‘Multi-millionaire, Mr Kaplan’, corrected Mr Parkhill gently.

‘But, but –’, stammered poor Miss Mitnick. ‘Vold Bank is using scientific methods of all kinds economics and statistics to arrive at dollar-a-day poverty line.’

‘Perheps Keplen is great economist’, said Mr Olansky subversively. ‘Perheps Keplen is working in spare hours on secret formula for Poverty Line which get him the Nobel Prize!’

‘Mitnick, Olansky, you also most valcome to become malted millionaires on vun dollar per day. Let me not stop you’.

‘Pffft!’ said Mr Pinsky, slapping his cheek.

‘Give an inch, Kaplan’, pleaded Miss Shimmelfarb. ‘In India, poverty line is even less than vun dollar per day. It is a way of speaking. Any poverty line is artiberry –’

‘Arbitrary, Miss Shimmelfarb’, said Mr Parkhill.

‘Thank you, Mr Pockheel. Any poverty line is ar-bit-ra-ry this way or that’, continued Miss Shimmelfarb carefully. ‘It is a way of speaking. But one has to have some poverty line to see if the number of people below the poverty line is increasing or decreasing over time. And in the voild – also in many countries like India – the number of people below the poverty line is decreasing with time. That is good think, if poverty is becoming less and less. Why you want to spoil the Voild Bank's party, Kaplan?’

‘Because, Shimmelfarb, Voild Bank's party is not mine party. Is poverty becoming less and less if poverty line is $2.50 instead of $1.25?’

‘Do you have – er – an argument to offer, Mr Kaplan?’ enquired Mr Parkhill, who never despaired of the possibility of steering his Class toward more rational forms of discourse than their heightened emotional involvement in their various subjects of discussion often permitted.

‘Is axcellent point, as alvays, from Mr Pockheel’, purred Mr Kaplan approvingly. ‘Our tichcher is asking for rizzon and logick, not slep-beng remocks ottered vit'out t'inking and sanse. Kindly pay attention, Shimmelfarb, Studniczka, Olansky, Mitnick, leddies and gantlemen, fallow-members of Beginnis' Grate’, continued the paragon of reason and logic. ‘Kindly tell me: what minns ‘poverty line’?’

‘Perhaps you will tell us, Mr Kaplan?’, said Mr Parkhill, gently nudging Mr Kaplan, even as Socrates had nudged his own acolytes, from the undisciplined delights of rhetoric to the civilized pleasures of reasoning. ‘What does the expression ‘poverty line’ mean?’

‘It minns’, said Mr Kaplan, smoothing his tie, ‘that money, or income, is a minns, not an and.’

‘A means, and not an end’, repeated Mr Parkhill. ‘A means to what, Mr Kaplan?’

‘A minns to avoiding vant in anodder space, the space of ‘fonctionings’’.

‘That is a most interesting thought, Mr Kaplan’, said Mr Parkhill, impressed despite himself. ‘Mr Kaplan makes the reasonable point, as I see it, that a poverty line specified in income terms is – presumably by virtue of its being called a ‘poverty line’ – a means to the end of avoiding poverty in the space of ‘functionings’. A ‘functioning’ is what the economist Professor Amartya Sen calls ‘a state of being or doing’ – a state of being well-nourished, for example, or mobile, or in possession of knowledge, or in reasonably good health, or able to ‘appear in public without shame’. Am I correct, Mr Kaplan?’

‘You are alvays correct, Mr Pockheel’, said Mr Kaplan, making it plain that no one who had the honour of being his, Mr Kaplan's, mentor could ever be found guilty of error.

‘So what, Keplen’, queried Mr Olansky, ‘if ‘poverty line’ is a minns to an and?’

‘So this, Olansky’, replied Mr Kaplan. ‘If ‘poverty line’ is a minns to the and of avoiding vant in the space of fonctionings, how come the poverty line is vun dollar for you and me and the whole kit and caboodle? If ‘poverty line’ is a minns to avoiding vant in the space of fonctionings, how should we fix the poverty line? Like so. For me, for you, for itch of us, we first ask: ‘What is the rizzonable cost of avoiding hunger? Avoiding ignorance? Achieving mobility? Being in good health? Being a part of our community?’ We then edd up all the costs, and the sum is the poverty line. But because our nidds are different, our poverty lines should be different. You and I, Olansky, have to spand money on Beginnis Grate to learn English, but not so a native Yankee. I nidd to spand money on a dantist for my kevvities, but not you, Olansky, who have strong tith from eating babies alive. I hev to spand money for my son's Bar Mitzvah, but not you, pagan Olansky. If Mitnick marries and bears child’, (Miss Mitnick was observed blushing furiously), ‘then she nidd to spand more money on food then you, Olansky, who are alraddy obis. Mitnick nidd more money than a person in South India to keep warm in winter. A person in South India nidd more food than Mitnick, because food in South India is poorly absorbed due to amoebas in the water. So how come vun dollar per day is the same poverty line for itch of us? Explain me, Olansky.’

Mr Olansky drew a deep breath, and Mr Parkhill exploited the opportunity to move in swiftly before Beginners’ Grade was exposed to a blast of Olansky eloquence. ‘Mr Kaplan’, explained Mr Parkhill in the best tradition of the helpful interlocutor, ‘offers us much food for thought. It is his contention that the language of a ‘poverty line’ is compatible only with a view of income as a means to an end, specifically, the means to the end of avoiding deprivation in functioning space. If this is accepted, then in view of the fact that there are both individual and context- or environment-dependent heterogeneities, making for inter-personal differences in the ability to transform incomes into functionings, the case for a unique money-metric poverty line loses much of its force. Putting it differently, it is unquestionably true that the standard in terms of which poverty is measured must be invariant across regimes if poverty comparisons are to be meaningful. But the language of the ‘poverty line’ strongly suggests that it is invariance of the poverty standard in the space of functionings, rather than of incomes, that must be maintained. This, indeed, is the essence of Amartya Sen's oft-repeated sentiment that poverty is best regarded as an absolute notion in the space of functionings, but – and precisely for that reason – as a relative notion in the space of real incomes (the World Bank's identification methodology ought to take note of this), or commodity bundles (the Government of India's official methodology ought to take note of this), or resources in general. We can agree, Class, can we not, that Mr Kaplan has furnished us with a cogent argument against the World Bank's dollar-a-day advocacy, and related poverty identification approaches?’

In reactions ranging from immediately delighted acquiescence to belatedly reluctant acceptance, Mr Kaplan's point of view, it became clear, gradually found favour with the denizens of Beginners’ Grade. Mr Kaplan bowed modestly. He was not, however, quite done.

‘If the lengwidge of ‘poverty line’ is used’, resumed Mr Kaplan, ‘then we must hev at least group-specific poverty lines: vun poverty line for averybody in a country – not to mention the voild – is absurd, crazy, bobo, unbelievabubble, weird! No point in using bad lengwidge and then making axcuse of unavoidable artiberriness in fixing the poverty line. This is ebbuse of lengwidge, rizzon and logick. But what if the minning of income is taken differently? What if income is seen not as a minns to an and but as an and in itself?’

‘Well, then, Mr Kaplan’, invited Mr Parkhill. ‘What if we were to – ah – abjure the language of the ‘poverty line’, and interpret income in the light of an end in itself rather than as a means to the end of avoiding deprivation? Would this open up some other way of assessing money-metric poverty, one that avoids the standard identification-followed-by-aggregation procedure?’

‘Yes, Mr Pockheel, it vould’, averred Mr Kaplan. ‘I vould soggest that we should use the quintile income statistic of Professor Kaushik Basu as a poverty indicator. Very smart dude, Kaushik Basu, despite being former Chief Economic Advisor to Government of India and prasent Wise Praz'dent of Voild Bank. Looks like Voody Allen and is one or two times as smart. We hear that Voild Bank is planning to give systematic information on the average income of the poorest 40 per cent of each country's population. If income is seen as an and in itself, then the ‘income-poor’ of a country are, for exemple, the income-poorest 10 or 15 or 20 or 25 or 30 or 40 per cent of the population. Ornerry logick. Say 20 per cent (which make more sanse than Voild Bank's 40 per cent), and the average income of the poorest 20 per cent is the quintile income statistic – ‘Q’. In a plain and simple way, Q is an income poverty indicator, when income is taken to minn an and in itself. Q should replace Voild Bank's ‘dollar-a-day’ headcount estimates of poverty, which are minningless. At a point of time, countries can be compared for their income poverty in terms of their levels of Q. Over time, and for itch country, or for the voild as a whole, we can see how Q is moving. We can set targets for the growth of Q. For exemple, if the growth rate of per capita GNP is fixed at x per cent per year (which is something many countries do), then we can esk: what should be the level of Q such that, say, 50 per cent of the growth in income is distributed across quintiles in the prazent proportion and 50 per cent of the growth is divided equally among the quintiles? Call this Q*. We can now compare the ektual Q with Q* in itch year, to see if the income-poverty indicator is keeping up with, or moving away from, its target levels. This will give a more real picture of income poverty trends than dollar-a-day headcount estimates. We can do more than this. Suppose M and M* are defined for richest quintile just as Q and Q* are defined for poorest quintile. We can compare the ratio of Q to Q* – call it q – for the poorest quintile with the ratio of M to M* for the richest quintile – call it m. If these ratios are vun in itch year over time, we have a case of ‘inclusive growth’. If the q-ratios are less than vun and the m-ratios are greater than vun, and if the ratios are also moving away from each other over time, we have a case of growing dynomic inequality. Q is a wery wersatile index. It is a poverty indicator, an inequality indicator, and can be used to measure the ‘inclusiveness’ of growth. But for that, Voild Bank should use the statistic visely and vell, and not for kismetic purposes or by being too clever in halves.’

‘Cosmetic purposes, Mr Kaplan, and ‘too clever by half’’, corrected Mr Parkhill. ‘Well, I must say that I find Mr Kaplan's advocacy of the ‘quintile income statistic’ as a measure of money-metric poverty simpliciter (as the philosopher would put it), and as a means of diagnosing inequality and the inclusiveness or otherwise of growth, to be very persuasive. We may well discover that Q suggests we live in a world of greater income-poverty and inequality than we have so far been led to believe is the case.’

‘Hurrah for Keplen!’ hailed Mr Pinsky. ‘Keplen will now lead us to Zuccotti Park!’

There was no denying Hyman Kaplan now. He was, without doubt, the darling of Beginners’ Grade, even amongst his most seasoned and hard-bitten adversaries. As the bell tolled to signal the end of a momentous session, the Class gathered around its elected leader, slapping him on the back and congratulating him on its noisy, shuffling way out of the classroom. It was then that Mr Parkhill reviewed, rapidly, in his mind's eye, the events of the last hour, and which have formed the substance of this account.

As he came swiftly to the end of his review, his eye caught that of Mr Kaplan, who had turned at the head of the stairs and waved a deferentially fraternal hand at him.

‘Von't you join us, Mr Pockheel?’ he asked. ‘It vould be an honour’.

‘Yes!’ chorused the rest of Beginners’ Grade. ‘Please, Mr Pockheel!’

Mr Parkhill hesitated for no more than a moment.

‘What the heck!’ he said to himself, as he joined his jostling, chattering flock.

*

Three hours later, as they were being evicted from Zuccotti Park by the police, Mr Parkhill's class, under the leadership of Mr Kaplan, gave lusty expression, one more time, to the sentiment that They Were The 99 Per Cent.

Mr Parkhill, his hair tousled, his clothes dishevelled, his spectacles perched all anyhow on his nose, his tie askew, and his face flushed, said modestly and sotto voce: ‘Yay!’

He had to admit it to himself. For almost the first time in his life, Mr Parkhill felt, well, l*i*b*e*r*a*t*e*d.