As you have just seen, there are several ways of classifying countries according to their
wealth. In order to make these classifications as
reliable as possible, the organisations involved need indicators.
An indicator is an observable measuring tool that makes
it possible to understand specific aspects of complex phenomena by simplifying and
quantifying them. Indicators should make it possible to grasp
specific problems and to provide information for
decision-making. However it should not be forgotten that indicators are not a
true reflection of reality but only provide information about certain aspects of it. To get
more information, decision-makers therefore often rely on a set of indicators or aggregate
several indicators into a single more complex indicator.
Poverty is a multifaceted phenomenon and there are a variety of indicators that make it
possible to highlight the different aspects of it. For instance, indicators focussing on
income may provide information on the financial aspects of poverty,
literacy rate gives some insight into the educational dimension of poverty.
As you saw in the previous unit of this lesson, poverty has a great deal to do with people's
well-being and this well-being depends on all of the factors mentioned.
Why is the per capita income insufficient to measure poverty?
Measuring Poverty: Economic Wealth vs. People's Quality of Life
Although economic growth was for many years the most important reference point for
evaluating wealth, it is well-known that economic growth is not actually enough to assess
the wealth of a country or region. It is true that by increasing a nation's total wealth,
economic growth enhances its potential to reduce poverty.
However, wealth indicators, which reflect the quantity of resources available to a society,
provide no information about how these resources are allocated
(e.g. income distribution between social groups; resources used to provide free health and equal
education services; the impact of production and consumption on people's environment). History
offers a number of examples of situations where economic growth was achieved at the cost of
greater inequality, higher unemployment, weakened democracy, a loss of cultural identity or
the over-exploitation of the natural resources needed by future generations.
It is therefore not surprising that countries with similar average incomes can differ
significantly when it comes to human development,
which is determined by people's quality of life (access to education and health care,
employment opportunities, availability of clean drinking water, etc.).
indicators
