[Book excerpt] Defining Poverty

from The Globalist

By Muhammad Yunus

Every country and every region has its own definition of poverty, caused by variations in cultural habits and living conditions. As Nobel Prize winner and Grameen Bank founder Muhammad Yunus explains, what is most important is a definition of poverty that is of practical use for aid workers on the ground.

At Grameen Bank, we had to develop our own definition of poverty so that we would be able to measure our success in helping people rise out of poverty through microcredit. We could have used a benchmark based on money income — for example, the equivalent of one U.S. dollar or two a day. These are both commonly used markers of poverty in the international development community.

However, we felt that this system would not be practical for day-to-day decision making. Instead, we developed a ten-point system that describes specific living conditions. Once a family has succeeded in clearing all ten of these hurdles, then we at Grameen Bank consider them to have escaped from poverty.

A comprehensive set of criterion

The ten points are:

1. The bank member and her family live in a tin-roofed house or in a house worth at
least 25,000 taka (roughly equivalent to $370). The family members sleep on cots or a bedstead rather than the floor.

2. The member and her family drink pure water from tube-wells, boiled water, or arsenic-free water purified by the use of alum, purifying tablets, or pitcher filters.

3. All of the member’s children who are physically and mentally fit and above the age of six either attend or have finished primary school.

4. The member’s minimum weekly loan repayment installment is 200 taka (around $3).

5. All family members use a hygienic and sanitary latrine.

Beyond survival

6. All family members have sufficient clothing to meet daily needs, including winter
clothes, blankets, and mosquito netting.

7. The family has additional sources of income, such as a vegetable garden or fruit-bearing trees, to fall back on in times of need.

8. The member maintains an average annual balance of 5,000 taka (around $75) in her savings account.

9. The member has the ability to feed her family three square meals a day throughout the year.

10. All family members are conscious about their health, can take immediate action for proper treatment, and can pay medical expenses in the event of illness.

International application

Our ten indicators, obviously, were designed to define an individual and a family who are not in poverty any longer. But absence of the very same indicators can be used to define those who are in poverty.

With appropriate modifications, the same system of indicators might work well in some other developing countries.

Editor's Note: This feature is adapted from CREATING A WORLD WITHOUT POVERTY by Muhammad Yunus. Copyright 2007 Public Affairs. Reprinted with permission of the publisher.