The yardsticks for poverty

All data is invariably the result of its methodology which (however technically robust it might be) is always going to be arbitrary, whether it comes from here or China. The forms in which we measure poverty are a clear example of that. How do we define (and who defines?) the criteria whereby we decide whether we are above a “minimal threshold of welfare”?

Even if there are indeed certain criteria, the reality is that that minimal threshold changes even within the same country and can be very different (thus today in Argentina, the INDEC statistics bureau raises the bar higher for Patagonia than for the Cuyo Midwest mountain region and for Cuyo higher than for North-East Argentina).

Argentina nowadays has by far the most demanding poverty criteria in the region. Many people ask me: “Are those criteria reasonable? Are poverty estimates inflated? Which measurements would be more accurate?” I’m sorry to disappoint them — there are no “more accurate” measurements. Today’s criteria represent the consumer standards of the “lower middle class” (or “reference group” in the statistical jargon) in 2004–2005, thus replacing the traditional yardstick representing the consumer standards of what was the “lower middle class” in the mid-1980s.

That is why I think the key should not be seen in the 30 percent of poor in the abstract but in comparative terms in space and time (always using the same criteria).

Here’s a sample of just how “relative” poverty measurements can be. If Argentina were to apply the same standards as the United States, 66 percent would be poor (the US percentage is 14 percent in its own terms). If we use the much less demanding criteria of Chile (with a smaller shopping-basket of goods and services) our poverty figure would be 12.6 percent (theirs is roughly similar using their own methods — 11.7 percent in 2015). Brazilian benchmarks would have us with only 6.7 percent poor. Using the World Bank’s methods for measuring extreme poverty in sub-Saharan Africa or South Asia, the figure would go down to 1.7 percent.

The moral of this story — when people tell you: “We have many more poor than Chile” or “We have no more poor people than Germany” or “Wow, Chile has less poor than the US,” take your time and explain this. All three statements are full of holes — quite simply they are mixing apples and oranges.

Using the same yardstick, Argentina and Chile are pretty similar while both countries are way behind the developed world but far ahead of the rest of Latin America (except Uruguay).