The truly pernicious aspect of poverty is how difficult it is to escape. We are well aware of how labourers use modest incomes to break out of the cycle of poverty by paying for their children's higher education or buying a home. The Mohammed bin Rashid Al Maktoum Global Initiatives foundation has a similar but even more ambitious goal of using Dh1 billion to help 130 million people escape poverty and illness.
It’s in this context that we welcome the Nobel Prize in economics being awarded to Angus Deaton. The Scottish-born Princeton professor combined the vastly expanded availability of information about consumption – particularly in developing countries – and the burgeoning power of computers in the 1980s to analyse how people consume and the policy implications that follow.
Prof Deaton is particularly critical of notions about where the poverty line should be set, arguing that basing it on the number of people living on less than $1 (Dh3.7) a day put an excessive focus on tradable goods. He also made trenchant criticisms of aid programmes that had the ultimate effect of distorting local markets and weakening both local governance and the institutions that would encourage sustainable development.
The Royal Swedish Academy of Sciences’ focus on the professor’s achievements in the fields of welfare and poverty are a reminder to us all to look at the world – and especially when devising ways to improve the lot of those on the bottom rungs of the economic ladder – from a perspective more broadly based than that of the educated and wealthy middle class.
In that sense, recognition of Prof Deaton’s work also highlights that of Peruvian economist Hernando de Soto, whose pioneering work on the informal economy suggested ways in which slum dwellings or even street trader sites are assets that ought to be used by the poor to break out of the cycle of poverty. Poverty might be pernicious and self-sustaining, but part of the answer to it will always be about making sure we are looking at the problem from the right perspective.
