Colombia recently, with the help of some experts from the Economic Commission for Latin America and the Caribbean (ECLAC) and the World Bank, changed the method it uses to calculate poverty. Consequently the numbers of the poor were reduced significantly. There are significant statistical differences between the old and new methodology. Under the old methodology, which was in effect until earlier this year, the number of people living below the poverty line was 45.5% in 2009 and fell to 44.1% in 2010. Under the new methodology, the percentage was calculated at 40.2% in 2009, and falling to 37.2% in 2010. The old methodology placed the percentage of those living in extreme poverty at 14.8%, which was decreased to 12.3% with the new calculations.
The statistical differences are significant, and there are several obvious questions: How accurate are these statistics? Do they really reflect the reality of the poor? And how are the chosen variables measured? The key change to the new methodology is that it includes a variable for government subsidies and support from programs such as Family in Action, which target a segment of the poor. The inclusion of these subsidies changed the calculations by statistically adding more income to the poor.
The new method of calculation will certainly be subject to scrutiny but two things may be more difficult to challenge:
- The absolute number of poor may have decreased over the last decade.
- The income distribution gap remains unchanged, with a GINI coefficient of 0.56%, one of the highest in Latin America and in the world.
Under the new calculations, the poverty line was set at 187,079 Colombian pesos per person a month, or just over $100. After writing this blog, the Colombian Vice President Angelino Garzón questioned how someone making 190,000 a month ($104) would not be considered poor.
You can read more of Nazih Richani's blog, Cuadernos Colombianos, at nacla.org/blog/cuadernos-colombianos.
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