Human Poverty Index(HPI)

Human Poverty Index(HPI)was first introduced into

the Human Development Report by the United
Nations Development Program (UNDP) in 1997 in an
attempt to bring together in a composite index the
different features of deprivation in the quality of life
to arrive at an aggregate judgment on the extent of
poverty in a community.

The Human Poverty Index (HPI) was created by the United Nations to combine various aspects of
a person's difficult life, like health and education, into one overall measure of poverty in a
community. It's like putting all these aspects together to get a big picture of how much poverty
exists in that place.
 Human Poverty Index(HPI)
• It is a combined measure using the dimensions of
human life already considered in the HDI: life
length, knowledge, a decent living standard.

• The index is calculated annually by the UNDP for

all countries according to the availability of
statistical data.

• It is prepared in two forms, depending on whether

it is a developing (HPI-1) or an industrialized
economy (HPI-2).
 The Human Poverty
Index(HPI) for Developing
Countries(HPI-1)
The following three dimensions are taken into
account:
• Deprivation of longevity, measured as a percentage
of the individuals with a life expectancy lower than
40 years (P1).
• Deprivation of knowledge, expressed as a
percentage of illiterate adults (P2).
• Deprivation of decent living standards (P3). This last
indicator is made up by the simple average of three
basic variables which are as:
 The Human Poverty
Index(HPI) for Developing
Countries(HPI-1)
 The percentage of the population without access to
drinking water (P31),
 The percentage of population without access to
health services (P32) and lastly,
 The percentage of underweight children aged less
than five (P33).
 The indicator P3, referred to the living standard, is
then obtained as an average of the three indicators,
in this way:
• [(P31 + P32 + P33) / 3
 The Human Poverty
Index(HPI) for Developing
Countries(HPI-1)
 The global index HPI-1 is obtained by combining
these three dimensions into one single measure
giving a greater weight to the most disadvantaged
situation.

• The formula is:

HPI-1 = [(P13 + P23 + P33 ) / 3]1/3
 The Human Poverty
Index(HPI) for Industrialized
Countries(HPI-2)
• The human poverty index for industrialized
countries uses the same dimensions of the
previous index, but the variables and reference
values are different:

 deprivation of longevity is measured by the

percentage of individuals whose life expectancy is
below 60 years of age (P1).
 The Human Poverty
Index(HPI) for Industrialized
Countries(HPI-2)
 Deprivation of knowledge is based on the
percentage of adults functionally illiterate
according to the OECD definition (P2).

 Deprivation of decent life standards (P3) is the

percentage of the population living below the
poverty level, as defined according to the criteria of
the International Standard of Poverty Line, thus
being equal to 50% of the per capita average
national income.
 The Human Poverty
Index(HPI) for Industrialized
Countries(HPI-2)
• HPI-2 also considers a fourth dimension, social
exclusion, measured with the long-term
unemployment rate (P4), that is to say, the
percentage of those unemployed for 12 months or
over compared to the total workforce (the sum of
those working and those seeking a job).
• The HPI-2 is calculated in a way analogous to that
of the HPI-1:
• HPI-2 = [(P13 + P13 + P33 + P43) / 4]1/3
 Poverty

Poverty is the lack of basic necessities that all

human beings must have: food and water,
shelter, education, medical care, security, etc.
A multi-dimensional issue, poverty exceeds
all social, economic, and political boundaries.
As such, efforts to alleviate poverty must be
informed of a variety of different factors.
 

4.4 billion people live in developing countries.

Of these …

Three-fifths lack basic

sanitation
Almost one third have no access to
clean water
A quarter do not have
adequate housing
A fifth have no access to
modern health services
WHY
 ... In 1997 the richest fifth of the world’s
population had 74 times the income of the
poorest fifth.

..The top three billionaires have assets greater

than the combined GNP of all least developed
countries and their 600 million people.
Everyone has the right to a standard of living
adequate for the health and well-being of him/(her)self
and his/(her) family, including food, clothing, housing
and medical care and necessary social services...
Everyone has the right to education.
Percentage of people living below the
poverty line
Europe and Central Asia
3.5%
Latin America and Caribbean
23.5%
Sub-Saharan Africa
38.5%
Middle East and North Africa
4.1%
South Asia
43.1%
 Causes of third world poverty

Trade
Third world countries lose out through unfair trade
agreements, lack of technology and investment, and
rapidly changing prices for their goods.
Work and globalisation

Better communications and transport have

led to a “globalised” economy. Companies
look for low-cost countries to invest in. This
can mean that, though there are jobs, they
are low-paid.
War or conflict
When a country is at war (including civil war)
basic services like education are disrupted.
People leave their homes as refugees. Crops are
destroyed.
Debt
Third world countries have to pay interest on their
debts. This means they cannot afford to spend
enough on basic services like health and
education; nor on things like transport or
communications that might attract investment.
Land
If you have land you can grow your own food.
But many people in the Third World have had
their land taken over by large businesses, often
to grow crops for export.
 Health
Affordable or free health care is
necessary for development. In poor
countries the percentage of children who
die under the age of five is much higher
than in rich countries. HIV/AIDS is having
a devastating effect on the Third World.
HIV is now the single greatest threat to future economic
development in Africa. AIDS kills adults in the prime of their
working and parenting lives, decimates the work force, fractures
and impoverishes families, orphans millions...
Callisto Madavo, vice-president of the World Bank, Africa
region 1999
 Food and education
Affordable, secure food supplies are vital. Malnutrition
causes severe health problems, and can also affect
education. Without education it is difficult to escape from
poverty. This becomes a vicious circle – people who live
in poverty cannot afford to send their children to school.

Gender
When we measure poverty we find differences between
the level experienced by men or boys, and women or
girls. Women may be disadvantaged through lack of
access to education; in some countries they are not
allowed to own or inherit land; they are less well paid
than men.
 Environment
A child born in an industrialised country will add more to
pollution over his or her lifetime than 30-50 children born
in the Third World. However, the third world child is likely
to experience the consequences of pollution in a much
more devastating way. For example, annual carbon
dioxide emissions have quadrupled in the last 50 years.
This contributes to global warming, leading to
devastating changes in weather patterns. Bangladesh
could lose up to 17% of its land area as water levels
rise.
Poverty Targets

2015 poverty targets

Members of the Organisation for Co-operation and
Development (OECD) agreed these after the 1995
Copenhagen summit. They aim to reduce poverty in
third world countries by at least one half by 2015.

20/20 initiative
At the same summit some governments agreed that
20% of aid and 20% of the budget of the developing
country receiving that aid would be spent on basic
services.
·
 Aid
Access to basic services for everyone would cost
approximately $US40 billion more per year than is
spent now. This is 0.1% of world income. World
military spending is $US780 billion per year. US$50
billion is spent on cigarettes in Europe every year.

Fair-trade
Fair trade guarantees higher, more stable prices for
third world producers. Look out for products with a
Fair trade Mark.
 Problems in Measuring
Inequality
• The Poverty Line and Income Inequality
– As economic growth pushes the entire income
distribution upward, more families are pushed above
the poverty line because the poverty line is an absolute
rather than a relative standard.
– Despite continued economic growth in average income,
the poverty rate has not declined.
– Although economic growth has raised the income of
the typical family, the increase in inequality has
prevented the poorest families from sharing in this
greater economic prosperity.
 Problems in Measuring
Inequality
• Three Facts About Poverty
– Poverty is correlated with race.
– Poverty is correlated with age.
– Poverty is correlated with family composition.
 Problems in Measuring
Inequality
• Data on income distribution and the poverty
rate give an incomplete picture of inequality
in living standards because of the
following:
– In-kind transfers
– Life cycle
– Transitory versus permanent income
 Problems in Measuring
Inequality
• In-Kind Transfers
– Transfers to the poor given in the form of goods
and services rather than cash are called in-kind
transfers.
– Measurements of the distribution of income and
the poverty rate are based on families’ money
income.
– The failure to include in-kind transfers as part of
income greatly affects the measured poverty rate.
 Problems in Measuring
Inequality
• The Economic Life Cycle
– The regular pattern of income variation over a
person’s life is called the life cycle.
• A young worker has a low income at the beginning
of his or her career.
• Income rises as the worker gains maturity and
experience.
• Income peaks at about age 50.
• Income falls sharply at retirement, around age 65.
 Problems in Measuring
Inequality
• Transitory versus Permanent Income
– Incomes vary because of random and transitory
forces.
• Acts of nature
• Temporary layoffs due to illness or economic conditions,
etc.
• A family’s ability to buy goods and services depends
largely on its permanent income, which is its normal, or
average, income.
• Permanent income excludes transitory changes in income.
Day in the life of a Kenyan child
Hello! My name is Irene Kagunda. I am ten years
old.
I live in a town called Soweto, in Kenya. Kenya is in
Africa.

My town
Come and visit my town. Our houses in
Soweto are small and very close together.
Most have no water or electricity. Many
people use paraffin (a kind of oil) to make
lamps so that they can see in the evenings.
My family
There are three children. I am the youngest. My
mum is called Joyce. She runs a kiosk (a small
shop) that sells paraffin and other household
goods.
CAFOD’s partners in Soweto gave mum a loan to
help her to sell more things in her shop. Now she
can afford to buy better food and clothes for me.
She can afford to buy me school books too.
My school
I go to Riverine Primary School. There are 170 children at
the school. My classroom is bright and happy. It has an
iron roof with a skylight to let the sunshine in.
The classroom walls are decorated with the letters of the
alphabet and with colourful paintings of animals and
transport. We sit on wooden benches.
I go to school in the afternoons. There are not enough
schools in Soweto for all the children to attend school for
the whole day.
School Fees
My school fees are 4500 Kenya shillings (about £30) a
term. The teaching is free, but the building, caretaker,
books, uniform, and paper all have to be paid for.
This is how I spend my day
It’s 2km to school and I walk there every day with my auntie. We
get lunch at school – usually sukumawiki and ugali (greens and
maize-meal porridge).
Maths is my best subject. I like my teacher Miss Wanjiku. She
helps us with things we don’t understand. Going to school will help
me learn things. After that I want to be a nurse.
I get home at about 5pm and do my homework for an hour. Then I
help my mum with washing the pots and pans. Sometimes I go out
to play. I like skipping.
When we skip we sing a song called ‘superstyle’ which means that
while you’re skipping someone calls out a style and you have to
do it – for example, you have to put your hands behind your head.
If I don’t go out to play I help my mum in the shop. I sell paraffin
when she has to do other things.
 Poverty! what is that?

Poverty doesn't know your age, or the colour of your skin, he

doesn't even care about the poor state that you're in.

He doesn't want to know, if you're hungry, or you're cold, he just

keeps calm and quiet, while head bent you hold.

Many who have met him? are still with him today, not through
their own choices, but by him not giving way.

Desperately needing clothes or shoes, so into purse you peer,

you'll
have to wait another week, or visit charities you fear.

He knows you've little money, and this he never defends, he knows

you'll have to borrow, from loan sharks, or from friends

He doesn't even blink an eye, when you're worse off than before,
he
swears, that it's your own fault, you must have known the score.
“The amount of money the
UK spends
On chocolate each year
could make Africa
NOT live in poverty”