Last months colombian government broadcast the results of the new methodology to measure the poverty in Colombia, as usual there were two measures: Extreme Poverty Line and Poverty Line, results from these measures are 12.3% of total population are in extreme poverty and 37.2% in poverty by 2010, nevertheless these measures are wrong due to the money value from these lines are growing less than official inflation rate in 2010 what means that poverty line value growth is not fitted with the growth of the cost from official basic basket through Consumer Price Index, a better measure of poverty in Colombia is through people who is eligible to government program called Sisbén, from people who is in this program one can make an approximation of 75% of total population in Colombia is in poverty. the main conclusion is what wrong poverty lines from experts!!!
Author: Humberto Bernal,
Economist,
e-mail: zhumber@gmail.com
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Colombia is one of the poorest countries around the world, according with World Bank poverty GINI index, Colombia is on 146th place out of 157 countries around the World with an index of 0.56, better places are Denmark and Japan with an index of 0.25 each, the UK showed an index of 0.36 and the States showed an index of 0.41 as figure 1 shows. Moreover Colombia is in the small group of countries that face population that earn less than US$2 per day, there is a share of 3.8% of total population that has to sort out this unfair issue, in absolute terms there are 3.6 million of people that have to live on with US$2 or less, other countries which face same problem are Congo, Liberia and Madagascar, countries which do not face this issue are Japan, USA and UK.
Figure 1. GINI index around the world
Source: World Bank, Stata 12.1, Mathematica WolframAlpha.
Socio economic policy in Colombia: really unfair.
According to official data, public servants are aware of poverty in Colombia but the solutions worked by them is not fair, the economic indicators hide the real situation of Colombia, if one had done the proper job, the poverty line and extreme poverty line would show a critical situation in Colombia, one can make a projection through Sisbén program, this socio economic program is for those who are really poor in Colombia, through this program they can get subsides (transfers of services and goods from government) in education, food, health and others, if one work with this data, people in poverty are not less that 75% of total population in Colombia, therefore there is lack of criteria to set up who is in poverty in Colombia but by sure people under this state is more that official data.
Wrong measure of extreme poverty line and poverty line in Colombia.
Recently Colombian government spent public resource in a research to set up a proper Extreme Poverty Line and Poverty Line in Colombia, this research was posted on the internet through bureau of statistics (DANE) webpage. Of course, these lines look like a proper work but is it?, apparently it is not a proper methodology to measure poverty in Colombia due to the growth of money values of these poverty lines do not fit with inflation rate as economic welfare theory says: “income must growth at least the inflation rate”, figure 2 and 3 shows Extreme Poverty Line annual growth, Poverty Line annual growth and inflation rate. By 2010 Extreme Poverty Line annual growth was lower than inflation rate, same situation is showed for Poverty Line on figure 3, in the first case while inflation showed a value of 3.2% in 2010, the annual growth of Extreme Poverty line was 0.7% in 2010, results were similar for Poverty Line, its annual growth was 2.5% and inflation rate was 3.2%, what wrong thing from researchers!!!!.
the main conclusion is methodology of poverty lines must be reevaluated under welfare theory and fair adjustment which shows the reality of Colombia, moreover poverty lines is not an instrument to make politics as public servants broadcast their results as a big target when colombia faces no less that 75% of population in poverty.
Figure 2. Extreme poverty line annual growth and inflation rate 2003-2010
Source: National Planing Department (DNP) and Bureau of statistics.
Figure 3. Poverty line annual growth and inflation rate 2003-2010
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