The Economic Perspective: Causes and Constraints to Reaching the Ultra Poor

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This blog post, written by Heather Risley of The QED Group, LLC, discusses topics and takeaways from the recent George Washington University Institute for International Economic Policy Symposium "The Economics of Ultra-Poverty: Causes and Remedies."

A young girl in Nicaragua looks at a small boy inside a makeshift health clinicAlthough significant strides have been made in reducing overall global poverty, many poverty reduction initiatives do not reach ultra-poor people who are left to subsist on less than $2 a day. Increasingly, policymakers are realizing the importance of programs that reach the ultra poor, but strengthening and financing these initiatives on a wider scale remain challenging. On March 22-23, a symposium was hosted by The Institute for International Economic Policy at George Washington University that brought together top academics and economists to discuss both the causes of ultra poverty and potential remedies. Key takeaways from the conference included the need to generate better data on the ultra poor and to design cost-effective programs that reach a larger number of ultra-poor people around the world.

Ultra-poor people comprise a significant proportion of the population. Despite progress in Latin America, more than 20 million people never moved out of poverty in the last 15 years, said Luis Felipe López Calva, Lead Economist for the Latin America and Caribbean Region at the World Bank.  These are the people still being excluded from social programs that have helped so many others. The social program created by the government in Brazil, “Brasil Sem Miséria,” greatly expanded public services but is still failing to reach the poorest. For example, conditional cash transfers are often dependent on the existence of a school or health center in the area, which is not a reality for those living in ultra poverty. Calva attributed the shortfalls in existing social programs to poor operational design, widely disbursed populations, and logistical barriers. To overcome these challenges, Calva stressed the need for more panel data on the poorest of the poor which could help policymakers design more effective programs. 

Peter Lanjouw, Research Manager of the Poverty Group at the World Bank, shared the methodology the Bank is using to better map where the ultra poor live, at multiple geographical levels, in many countries across the globe. These maps reveal critical information about the spatial distribution of living standards, which can serve as an important tool for policymaking and for investigating the relationship between growth and distribution inside a country. When national household survey data is not available, Lanjouw and his team have developed methods to combine sample survey data and census data to come up with predicted poverty rates for all households covered by the census.

Steve Radelet, Chief Economist for the U.S. Agency for International Development, gave an optimistic assessment on how poverty measures have improved around the world. Absolute poverty fell in every major region of the world in 2008, Radelet noted, even in the midst of the financial crisis. However, there are still a huge number of people living in ultra poverty, which presents an equally huge challenge.  Radelet spoke about the importance of looking at constraints to broad-based growth and who benefits. This includes the ability of the donor community to look beyond the measure of people who have moved over the poverty line, which can exclude a lot of progress happening under poverty line. Better articulating the successes and benefits of reaching the ultra poor will be important for building support for programs in the future.