The logic of the fight against poverty in Mexico

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Suppose someone wants to help the poor, how does he find them? Part of the problem is unavoidable, poor being a relative category such as tall or thin, although we generally know what we are talking about when we refer to the poor, in getting a working definition of poverty. Contains a range of arbitrary choices.

For example, even if we are willing to take a risk and indicate that people who are below a certain level (the so-called poverty line) are poor and others are not, we must first specify which The dividing line of what defines level is and what factors… The most obvious would be income, consumption, and wealth, but we can certainly think of others. Of them all, income seems the most logical, until one begins to think about the difficulties involved in measuring it: after all, income varies greatly, especially for the poor who do not have a paying job, and Income can be income other than day or month to month, sometimes accidentally or intentionally (think of the seller who takes one day off per week) and that they can buy or consume (because they don’t want to sell their money). save or borrow). In other words, we run the risk of concluding that the seller is poor because we measured his income from the day off.

Calculating average earnings over the long term helps us here, but it raises a different set of problems. People are not good at remembering what happened a few weeks or months ago, especially if there are many possible changes. It is also very difficult for them to calculate their income (unless they earn a salary, and even then they may not know the value of the benefits involved in the job). This is partly because they have both money inflows and outflows (ie income and expenses), and they don’t happen at the same time (so you have to find a way to compare them).

For these reasons, many economists prefer to use consumption as a measure, which undoubtedly differs little from income (which shows that individuals avoid substantially changing their consumption habits) and therefore income. is closely related to. Average over a given period. This measure also has limitations: we systematically underestimate the well-being of those who save a lot than those who do not, even if the latter have better prospects for the future.

The question of spending on health care also raises an additional problem: should we exclude these expenses when we calculate consumption on the basis that they are essential and not a substitute, or include them because they tell us Whether one family is able to cope and the other poor will have to resign themselves to poor health instead?

So it is probably easier to measure consumption than to measure income (mainly because individuals tend to adopt relatively stable consumption patterns, and thus we can come to a reasonable conclusion by asking them how they have spent money recently), although This is also not an easy task. To begin with, this can be time-consuming: Individuals have a hard time remembering what they ate in the past week, unless they are presented with a complete and specific list of products that have been They are able to buy and ask for each. separately from them. Similarly, decisions regarding consumption vary by gender: in general, men know more about the money they spend on home improvements, while women have more accurate ideas about the price of onions. it happens. For this reason, it may be necessary to ask more than one person in the same household to get an accurate estimate of their consumption expenditure.

Given how time-consuming and laborious it is to obtain an accurate measure of poverty based on income or consumption, it is perhaps not surprising that most governments in developing countries opt for more predictable estimates and a simpler approach. .

Instead of looking for direct indicators related to consumption or income, we can use approximation tests of resources.

by Luis David Fernandez Araya
economist
@DRLUISDAVIDFER

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