POVERTY: As many as one-third of all poor people were not born poor

Duke public policy professor Anirudh Krishna and a team of researchers spent the last decade talking to over 35,000 families in India, Kenya, Peru, Uganda and the U.S. to answer this question: Why are people poor? Mr. Krishna’s book on his findings, “One Illness Away: Why People Become Poor and How They Escape Poverty,” will be out in October from Oxford University Press. India Real Time spoke to Professor Krishna about his research.
Edited excerpts:
As many as one-third of all poor people were not born poor, Mr. Krishna found. They became poor within their lifetimes on account of factors that could have been prevented.
IRT: One of the findings you stress is that many poor people are “first-generation” poor. How many?
Krishna: Our results show as many as one-third of all poor people were not born poor. They became poor within their lifetimes on account of factors that could have been prevented. It’s ironic that even as governments and donors and others are doing a lot to pull people out of poverty, very little is done to prevent people from falling into poverty so the pool of people in poverty keeps growing even as many people come out.
IRT: Were the reasons people became poor pretty similar across countries?
Krishna: Some of these reasons are similar across different domains, including right here in North Carolina. People have fallen into poverty on account of a chain of negative everyday events like illnesses and [spending on] marriages and deaths. Some of these factors vary considerably across and both within countries, suggesting the approach to poverty reduction needs to be contextual. What’s common everywhere is the contribution illness and high health care costs make to the reproduction of poverty.
IRT: Was wedding spending as high a burden in other countries as in India?
Krishna: Not really. but expensive funeral ceremonies were common in parts of Kenya and parts of Uganda and expensive wedding ceremonies were important in one part of Peru, around Cajamarca [in the highlands], but still not as prominent as in parts of India.
IRT: And how do you compare the impact of spending on ceremonial events and illnesses on families?
Krishna: A wedding is something you plan for. An illness is something that happens mostly unexpectedly, especially an injury, and that wipes out the savings you’ve accumulated. That said there’s an obscene amount of spending on weddings and dowries and these amounts are growing from year to year.
IRT: What sorts of policies does your study point towards?
Krishna: Health insurance is important but as important is the provision of high-quality health care. There are still several parts of India where there is no doctor available and we all know about the incidents of misconduct and overcharging so there’s also a case for the regulation of the healthcare sector particularly as it’s being privatized.
Paralleling that is a second set of policies that I call supporting policies. The policies really have to be about the individual. Institutions such as employment exchanges, career guides simply don’t exist so many young people are simply unaware about the different opportunities they could tap.
In the 80 villages that I surveyed, out of more than 1,000 who have graduated from high school in the past 10 years, only 10 or 12 have risen to any higher paying position. The rest are bus conductors or school teacher or electricity linemen.
I contrast this to the situation in the U.S. My kids when they were in high school were bombarded with career-related information. They had so many choices they could explore. Why can’t we have the same thing in our country?
IRT: India is currently trying to figure out how many of its people live below the poverty line. Any advice?
Krishna: I say good luck to them. When the linkage between incentives and poverty measurements is so obvious there are all sorts of reasons for people to lie. [For my research] I said to everybody “I’m a schoolmaster and we have nothing to do with the government or any NGO. So nothing you say to us can give you any benefit or cause you any harm.” That’s when we started to get real information. With so many things tied to the benefit of a BPL card there’s all sorts of incentives for people to fabricate.
Personally I go more by assets than by income or by consumption. Particularly for poor people, income and consumption are hugely variable and fluctuating. What is so much more stable or durable is the possession of assets. They don’t fluctuate so much. I would prefer to go by a very simple asset-based index measure of wealth. That’s what I do in the book and that’s what I’d suggest.
IRT: What do you view as positive steps in poverty reduction in India?
In some respects I think NREGA is doing a great job. I’ve been working in the same rural areas for almost 20 years know. I can no longer find anyone who’s wiling to work at 40 rupees a day and that in itself is a huge accomplishment—the raising of the expected rural wage rate from abysmally low to acceptably low amounts. Will it be a pathway out of poverty? Probably not, but it keeps the wolf from the door.
IRT: What trends make you worry?
Krishna: What needs to be done is the enhanced provision of marketable skills. One of the pieces of research I’m currently working on looks at a data set of 15,000 rural Indians. These people were looked at in the early 1990s and in 2005.
In villages located more than 5 kilometers from the nearest town per capita income has fallen in real terms. This is during the period of high-speed growth. The reasons they have fallen are twofold. Beyond five kilometers from a town the bulk of the income comes from agriculture, where production is stagnant. Unless you’ve been able to build some connection with a city you are in a bad way.
It’s really only rural families who’ve been able to build a second and sometimes a third source of income in the city—it’s only such families who have been able to stay out of poverty.
http://blogs.wsj.com/indiarealtime/2010/08/12/qa-duke-professor%E2%80%99s-new-poverty-study/