Global Poverty & Aid

The Discrepancy Between Two Approaches to Poverty:

What Does it Reveal? 

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The Discrepancy between Two Approaches to Poverty: What Does it Reveal?

A wide variety of poverty measures has become available in the past several decades, with each helping to identify patterns across regions and groups, thus allowing for better evaluations of programs addressing populations with the greatest need. Nevertheless, each poverty measure is also subject to debate, leading to an effort to craft supplementary measures that capture items presumed missing.

Currently, two major methods of poverty measurement are income and multidimensional measures. They stem from two prominent approaches: the monetary approach (MA) and the capability approach (CA). In the MA, poverty indicates a lack of income to meet basic needs while in the CA, poverty indicates a failure to achieve basic capabilities. Among globally comparable approaches, this study focuses on these two approaches. Both the monetary and capability approaches are more relevant to absolute poverty in the context of developing nations.

This study examines the measurement differences arising from the monetary and capability perspectives. The extent of their incongruency not only fuels debate over whether one poverty measure can map the other, but accounting for such incongruency also serves as a tool for characterizing and responding to poverty.

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COMPARISON OF THE MONETARY APPROACH (MA) AND THE

CAPABILITY APPROACH (CA) MEASURES

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COMPARISON OF THE TWO APPROACHES TO POVERTY

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