ABSTRACT
From a historical perspective, poverty has wide economic connotations. The most common perception of the problem is perceived through the lens of low income, which disables people from having a ‘decent’ life. However, using monetary estimates to explain the magnitude of poverty has substantial limitations, and casts doubts on its conceptualisation. Focusing on the merely quantifiable sides of life leads to various omissions and does not capture the problem adequately. The poverty debate should turn more to aspects like social exclusion, material deprivation and the limited possibilities and horizons in education and work. Inability to fulfil basic human needs-i.e. enough food, shelter and clothing-prevents people from further achievements in welfare. For a better understanding, poverty should be defined broadly and not expressed only in economic terms. Many authors, starting from seminal works by Sen (1975, 1976, 2000) and Morris (1979), argue that poverty is a multidimensional phenomenon, which encompasses the social context
and has various manifestations (see the works of Ravaillon 1996; Brady 2003; Lister 2004; Sengupta 2005). Ravaillon (1996) argues that understanding poverty requires the inclusion of economic (money-metric) and non-economic factors. As a consequence, poverty can be seen as a composite structure, including a wide set of capabilities, functionings (Sen 1976) and other dimensions which constitute an individual’s well-being. Since capabilities and functioning are latent variables and cannot be observed directly, they are better measured by observable variables. Theoretically, a set of relevant indicators might include: consumption (Gordon 2000; Pradhan and Ravaillon 2000), nutrition status (Wagle 2006), education and health (Clark 2005; Sen 2002), or other elements of human well-being.
