Poverty, Undernutrition, and Famines In the first part of this course we have been dealing with poverty, growth, institutions, and microfinance But we have not yet seen many other dimensions of poverty, which are crucial for policy In particular, in today’s class: 1)How can we accurately measure the extent of poverty 2)What causes acute levels of undernutrition and famines? 3)How can one best deliver aid to a famine-stricken region?

1) Measuring Poverty Measuring poverty based on the notion of a “poverty line” Five concerns: 1)Expenditure or item-by-item consumption? 2)Absolute or relative? 3)Temporary or chronic? 4)Households or individuals 5)A fixed notion?

(a)Head count (b)Head count ratio: (c)Poverty gap ratio:

(c)Income gap ratio Note: All ignore “relative depravation”

2) Causes of poverty Lack of assets and undernutrition, obviously interconnected Energy input Nutrition and work capacity Discrimination against females, both adults and children Credit and Insurance

3) Famines and aid A. Sen argues that a distinction should be made between starvation and famines, and That starvation and famines are not due to FAD, but distribution Food “entitlements” depend on individuals’ assets and the amount of food individuals can obtain via exchange Below a certain threshold, individuals unable to acquire food against those assets, and can therefore experience starvation and famines

3) Best way of delivering aid to a famine-stricken region (Coate 1989) Note: we are dealing with aggregate shocks here First: Who are the vulnerable? Three possible scenarios, easy to distinguish the vulnerable: 1.A rural region populated by large and small – scale subsistence farmers, and suppose that there is a crop failure 2.A rural region populated by farmers and landless laborers, and there is a bad harvest 3.A rural region populated by high and low wage earners, and food prices increase

Suppose an scenario where famine- stricken region is originally exporting food, importing food, or neither And suppose that an aid agency wishes to minimize mortality rates

Now suppose that the famine-stricken region is experiencing a surplus of food and is originally exporting food. Are cash handouts a good strategy?

Now suppose that a famine-stricken region is originally importing food. Are cash handouts a good strategy?

Now suppose that a famine – stricken region is neither importing nor exporting food. Are cash handouts a good strategy?

In Sen’s view: Famines can be prevented via Employment creation Public holdings of food stock Health Education Clean water and sanitation DR adds: Land reforms Human capital → Next Class: Population and Rural Urban Migration (Consult syllabus)