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A new paradigm in measuring, defining poverty By Muthanna Saari

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Malaysia's gross domestic product (GDP) for the second quarter of 2021 was recorded at 16.1 per cent as against -16.1 per cent in the same quarter in 2020.

Despite GDP being constantly referred to as a national economic indicator, Simon Kuznets, who introduced GDP calculation, cautioned against using GDP in measuring economic development.

He said, "GDP is not a welfare measure; it is not a measure of how well we are all doing. It counts the things that we're buying and selling, but it's quite possible for GDP to go in the opposite direction of welfare".

Nobel-Prize winning economist Joseph Stiglitz also believes that GDP is not a good measure of economic performance and not a good measure of well-being. Debates on measurement methodology and appropriate approaches are essential as what we measure informs what we do. The wrong measurement leads to the wrong thing. 

Debates on income inequality in a country focuses on the income and wealth of one per cent of the wealthiest people in a country's population.

Oxfam International Report shows that "Eight men own the same wealth as the 3.6 billion people who make up the poorest half of humanity," and "Eighty two per cent of the wealth generated in 2017 went to the richest one per cent of the global population". However, more attention should be given to the declining and the stagnation of livelihoods among middle-income households.

Achievement of human development should be mentioned in quantitative aspects such as life expectancy or years of schooling and also qualitative aspects. Are people enjoying a better quality of life or frequently suffering from illnesses or having bad air quality?

Are children merely attending schools but unable to acquire skills and knowledge to complement them for a better future? Has work been able to guarantee one's success, or do most people only remain in vulnerable and precarious jobs?

From a human development perspective, real progress can be achieved by ensuring the quality of education, health and standard of living.

The well-being of people should be measured by considering various dimensions and not limited to monetary dimension. In this context, the human development approach should be the basis for the current developmental programme.

Human Development Index developed by the United Nations Development Programme (UNDP) is a measurement approach which combines elements of human capability to live a healthy and dignity life, measured through life expectancy at birth; capability to acquire knowledge, measured through years of schooling; and capability to have a good standard of living, measured through gross national income.

In addition, the Multidimensional Poverty Index (MPI) identifies acute deprivation occurred at the household level through three dimensions; health, education and standard of living. Measured deprivation has its weight in measuring multidimensional poverty levels such as nutrition, child mortality rate, years of schooling, assets ownership and access to necessities.

The Twelfth Malaysia Plan, in its second theme of strengthening security, well-being and inclusivity acknowledged the importance of addressing poverty eradication agenda in a right and transformative way.

Its Game Changer Six radically tries to promote a need basis approach in eradicating hardcore poverty, albeit with a typical mindset of introducing government machinery at federal and district levels with a call for an integrated and centralised database on poverty.

Nevertheless, the six priority areas with 28 strategies to address poverty and build an inclusive society will determine whether the transformative approach will come to fruition come 2025 when the five-year plan concludes.

Amartya Sen, another Nobel-Prize winner in the economy, well-known for his poverty as capability deprivation theory, stated, "poor does not mean living below an imaginary poverty line. It means having an income level that does not allow an individual to cover certain necessities, taking into account the circumstances and social requirements of the environment".

Disputes on the approach and poverty definition should not obscure the real focus on poverty eradication which is more important. Nevertheless, the basis for policies and programmes must be decided on accurate measurement for the right delivery to the targeted groups.

The writer is Research Officer, Parliament of Malaysia

The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times




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