Measurement of Poverty, Undernutrition and Child Mortality G Ö T T I N G E R S T U D I E N Z U R E N T W I C K L U N G S Ö KO N O M I K / G Ö T T I N G E N S T U D I E S I N D E V E L O P M E N T E C O N O M I C S Mark Misselhorn Mark Misselhorn - 978-3-631-75363-7 Downloaded from PubFactory at 01/11/2019 05:54:44AM via free access Although the world has seen a strong increase in global incomes in the last two decades and consequently a decline in global poverty rates, the number of persons living in absolute poverty remains on unacceptably high levels. Besides rising incomes can not distract from the fact that resources to fight global problems remain scarce. These resources have to be devoted to the fight against different global problems like the fight against communicable and non-communicable diseases (especially HIV/AIDS and Malaria) or the fight against global warming. The main precondition to achieve the best results with these limited resources is a good knowledge about the determinants and the best policies to fight each problem. But before being able to analyze the determinants of the different global problems and especially of poverty, it is of fundamental importance to find the right indicators for each phenomenon. This book contributes to the discussion of appropriate poverty indicators for the different dimensions of poverty like income poverty, undernutrition and child mortality and proposes a multidimensional poverty indicator that takes the income distribution into consideration. Mark Misselhorn, born in Munich in 1977, studied economics and political science at the Ludwig-Maximilians-University, Munich, the Hochschule für Politik in Munich and the York University in Toronto (Canada). As a Ph.D. student at the Chair for Development Economics he also worked as a consultant for several international development agencies in various countries in Africa, Latin America and Asia. G Ö T T I N G E R S T U D I E N Z U R E N T W I C K L U N G S Ö KO N O M I K / G Ö T T I N G E N S T U D I E S I N D E V E L O P M E N T E C O N O M I C S Mark Misselhorn Measurement of Poverty, Undernutrition and Child Mortality Mark Misselhorn - 978-3-631-75363-7 Downloaded from PubFactory at 01/11/2019 05:54:44AM via free access Measurement of Poverty, Undernutrition and Child Mortality Mark Misselhorn - 978-3-631-75363-7 Downloaded from PubFactory at 01/11/2019 05:54:44AM via free access Gottinger Studien zur Entwicklungsokonomik Gottingen Studies in Development Economics Herausgegeben von/Editecl by Hermann Sautter und/and Stephan Klasen Bd./Vol. 24 • PETER LANG Frankfurt am Main · Berlin · Bern · Bruxelles · New York · Oxford · Wien Mark Misselhorn - 978-3-631-75363-7 Downloaded from PubFactory at 01/11/2019 05:54:44AM via free access Mark Misselhorn Measurement of Poverty, Undernutrition and Child Mortality PETER LANG lnternationaler Verlag der Wissenschaften Mark Misselhorn - 978-3-631-75363-7 Downloaded from PubFactory at 01/11/2019 05:54:44AM via free access Open Access: The online version of this publication is published on www.peterlang.com and www.econstor.eu under the interna- tional Creative Commons License CC-BY 4.0. Learn more on how you can use and share this work: http://creativecommons. org/licenses/by/4.0. This book is available Open Access thanks to the kind support of ZBW – Leibniz-Informationszentrum Wirtschaft. ISBN 978-3-631-75385-9 (eBook) Bibliographic Information published by the Deutsche Natlonalblbllothek The Deutsche Nationalbibliothek lists this publication in the Deutsche Nationalbibliografie; detailed bibliographic data is available in the internet at <http://www.d-nb.de>. :£ Zugl.: Gottingen, Univ., Diss., 2007 Cover illustration by courtesy of the lbero-Amerika-lnstitut fur Wirtschaftsforschung, Gottingen. D7 ISSN 1439-3395 ISBN 978-3-631-57659-5 © Peter Lang GmbH lnternationaler Verlag der Wissenschaften Frankfurt am Main 2008 All rights reserved. All parts of this publication are protected by copyright. Any utilisation outside the strict limits of the copyright law, without the permission of the publisher, is forbidden and liable to prosecution. This applies in particular to reproductions, translations, microfilming, and storage and processing in electronic retrieval systems. Printed in Germany 1 2 3 4 5 7 www.peterlang.de Mark Misselhorn - 978-3-631-75363-7 Downloaded from PubFactory at 01/11/2019 05:54:44AM via free access To Sabine For all your support without which I couldn't have accomplished this. Mark Misselhorn - 978-3-631-75363-7 Downloaded from PubFactory at 01/11/2019 05:54:44AM via free access Mark Misselhorn - 978-3-631-75363-7 Downloaded from PubFactory at 01/11/2019 05:54:44AM via free access Editor's Preface Although the world has seen a steady decline in poverty rates in the last two decades, the fight against poverty and inequality is far from over. The absolute number of persons living on less than $1 a day is still close to a billion persons. Especially when considering rising incomes elsewhere this high number of poor persons is increasingly unacceptable. Reducing poverty further, however, will re- quire tough choices. This is especially the case when we take into account that poverty is not the only problem that has to be tackled in the coming decades. Considerable resources have to be devoted for example to the fight against com- municable and non-communicable diseases like HIV/ AIDS and Malaria or the fight against global warming. It is therefore of fundamental importance to understand the determinants, and the most promising policies to fight poverty. But this requires agreement on the right indicators to monitor poverty in its many dimensions. Due to this multidi- mensionality of poverty there is a very large number of potential indicators and measurement issues are far from solved. This thesis contributes to the discussion of appropriate indicators for poverty measurement. All four essays are concerned with measurement issues of the different dimensions of poverty or are contributing to the literature on the determinants of poverty. In his first essay Mark Misselhorn focuses on studying the determinants of changes in income poverty at the macro level. The essay argues that the use of elasticities to measure changes in poverty rates over time is prone to misinterpretations and should therefore be avoided. These misinterpretations can be avoided by looking at absolute changes (i.e. per- centage point changes) in headcount poverty, the poverty gap and the squared poverty gap. The paper also shows that this way one can better understand the re- spective roles of growth and distributional change on absolute poverty and predict the impact of both on future poverty reduction. The second essay focuses on an especially important dimension of poverty, namely undernutrition. So far most multinational institutions measure changes in this dimension by looking at underweight, an anthropometric indicator that measures the weight of a child for a certain age and compares it to a reference standard. Due to the publication of a new reference standard that was published by Mark Misselhorn - 978-3-631-75363-7 Downloaded from PubFactory at 01/11/2019 05:54:44AM via free access viii EDITOR'S PREFACE the World Health Organization (WHO) in 2006 it is very likely that future progress will be measured using this new reference standard. In the essay it is argued that this opportunity should be used to not only switch to a new reference standard but also to a different indicator, namely stunting. The reason is that all weight-based anthropometric measures, such as underweight and wasting, suffer from the bias related to changes in the nutritional composition of diets in developing countries, which erroneously suggests falling rates of undemutrition that does not coincide with real improvements in the health of the affected children. This bias could lead to wrong conclusions concerning progress in the fight against undemutrition. In the third essay, Mark Misselhom examines the interdependencies and de- terminants of child mortality and child undemutrition in several countries in Sub- Saharan Africa and South Asia using representative microdata sets. In particular, he analyzes the question why child mortality is considerable higher in Africa than in South Asia although the incidence of child undernutrition is higher in South Asia than in Africa. He shows that differences in the determinants of both phe- nomena partly explain this puzzle. The overall poor health care system in African countries strongly contributes to the high rates of child mortality in this region whereas the relatively low nutritional status of mothers contributes to the high rates of child undernutrition in South Asia. The last essay is concerned with the multidimensional measurement of poverty. Although there are a large number of different indicators, the probably best known measure is the Human Development Index (HDI). One of the most often heard cri- tiques of the HDI is that is does not take into account inequality within countries in its three dimensions. In this essay a relatively easy and intuitive approach is sug- gested, which allows to compute the three components and the overall HDI for quintiles of the income distribution. This allows researchers and policy-makers to compare the level in human development of the poor with the level of the non-poor within countries, but also across countries. These essays by Mark Misselhom provide an extremely valuable contribution to the literature on the empirical analysis of poverty in its many dimensions. Prof. Stephan Klasen, Ph.d. Gottingen, December 2007 Mark Misselhorn - 978-3-631-75363-7 Downloaded from PubFactory at 01/11/2019 05:54:44AM via free access Author's Preface It is well known that the road to the completion of a dissertation is stony and difficult to complete without the help of other persons. In my case special thanks of course go to Prof. Stephan Klasen. He can truly be called the 'Harry Potter of Science' because he has an answer to absolutely every question. He is by far the most educated person I have ever met. Besides without him I probably wouldn't have aspired a doctors degree. Several times I had the firm intent to leave Gottingen and return back home, but thanks to his persuasion and humaneness I always stayed. The enormous freedom he allowed me during the whole time was of tremendous importance for me. The offered trust hardly would have come from someone else. I surely would have turned my back on Gottingen if I hadn't met my friends Dr. Ken "Ruban" Harttgen and Prof. Dr. Michael Grimm. Besides the nightly beers, the shared suffering as commuter to Munich, the uncompromising bodybuilding training, Michael was always willing and able to answer all scientific questions. Without the chaos control and permanent assistance by Ken I would have probably never finished my dissertation. It was of tremendous importance for me to have someone with whom I share so many views on so many things (okay, except on soccer!). In fact I would have never thought that I would make such a good friend in hostile territory, with whom I would start a very a promising Marathon and Triathlon career. Special thanks also go to Melanie and s'Giintherle, with whom I had numerous coffee breaks that kept the spirits high for all the research effort. Thanks also to all the other members of the Chair in Development Economics like Michaela, Johannes, Sebastian, Katharina, Denise and so on and so on, I really enjoyed working with you. Very special thanks also go to Karl H. Wagner and Dr. Ulrich F. Geyer. With- out the opportunity to earn some additional money during the whole time at uni- versity in Munich and Goettingen and without the continuous generosity I expe- rienced by those two persons I would have met a lot more obstacles in the last years. Mark Misselhorn - 978-3-631-75363-7 Downloaded from PubFactory at 01/11/2019 05:54:44AM via free access X AUTHOR'S PREFACE By far the largest burden had to be carried by my beloved girlfriend Sabine. To be forced to live together with someone who is never really there and never really away is no fun at all. Without her understanding and support I surely wouldn't have been able to write this dissertation. And even more important is that the road would have been stonier and a lot less beautiful than it actually was. During all my steps up the ladder of our education system, my family was a continuous source of backing. Besides my brothers and sisters Hella, Dirk and Bettina, my parents were of decisive importance. Probably no one has ever had an easier and happier life than I have had so far. Therefore I want to use this seldom opportunity to say thank you to all of you. Mark Misselhom Gottingen, Oktober 2007 Mark Misselhorn - 978-3-631-75363-7 Downloaded from PubFactory at 01/11/2019 05:54:44AM via free access Contents List of Tables List of Figures Introduction and Overview 1 The Semi-Elasticity of Poverty Reduction I . I Introduction . . . . . . . . . . . . . . 1.2 Influence of Income and Distribution Changes . 1.3 Growth Elasticity versus Semi-Elasticity . 1.4 Empirical Results I .5 Conclusion ............... 2 Undernutrition and the Nutrition Transition 2. I Introduction . . . . . . . . . . . . . . . 2.2 Data .................. 2.3 The new WHO Child Growth Standard . xiv xv 1 9 IO 12 15 16 20 25 26 28 29 2.4 The Nutrition Transition . . . . . . . . 31 2.5 Results . . . . . . . . . . . . . . . . . . 33 2.5. I The theoretical composition of the underweight indicator . 34 2.5.2 The empirical composition of the underweight indicator 38 2.5.3 The Composition of Undemutrition across countries 40 2.5.4 Composition of Undemutrition across subgroups 42 2.5.5 Changes in Undemutrition over Time 45 2.6 Conclusion . . . . . . . . . . . . . . . . . . . . . . . 48 3 A Regional Puzzle of Child Mortality and Undernutrition 3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . 3. I. I Child Mortality and Undemutrition . . . . . . 3.1.2 The South Asia - Sub-Saharan Africa Enigma . 3.2 Methodology . . . . . . . . . . . . . . . . . . . . . . 51 52 52 52 56 Mark Misselhorn - 978-3-631-75363-7 Downloaded from PubFactory at 01/11/2019 05:54:44AM via free access xii 3.2.1 Multilevel Analysis . . . . . 3.2.2 The Basic Multilevel Model 3.2.3 Model Specification 3.3 Empirical Analysis ..... 3.3.1 Data Description .. 3.3.2 Descriptive Statistics 3.3.3 Regression Results 3.3.4 Simulations 3.4 Conclusion ....... CONTENTS 56 58 59 61 61 64 68 76 77 4 A Human Development Index by Income Groups 83 4.1 Introduction . . . . . . . . . . . . 84 4.2 Methodology . . . . . . . . . . . . . . . . . 86 4.2.1 General idea and overview . . . . . . 86 4.2.2 Imputing income for DHS households 87 4.2.3 Calculating the life expectancy index by income quintiles . 90 4.2.4 Calculating the education index by income quintiles . . . 92 4.2.5 Calculating the GDP index by income quintiles . . . . . . 94 4.2.6 Calculating the overall HDI and the HDI by income quintiles 95 4.2.7 Calculating the HDI by income quintiles for OECD countries . . . 96 4.3 Illustrating sample of countries 98 4.4 Results . . . . . . . . . 98 4.5 Limits of the approach 4.6 Conclusion . . . . . . AppendixB Appendix C AppendixD Bibliography 103 105 111 117 125 129 Mark Misselhorn - 978-3-631-75363-7 Downloaded from PubFactory at 01/11/2019 05:54:44AM via free access List of Tables 1.1 Absolute change in headcount poverty rate during growth spell 17 1.2 Relative change in headcount poverty rate during growth spell 18 1.3 Absolute change in poverty gap ratio during growth spell . . . 20 1.4 Relative change in poverty gap ratio during growth spell . . . 21 1.5 Absolute change in squared poverty gap ratio during growth spell . 22 1.6 Relative change in squared poverty gap ratio during growth spell 23 I. 7 Poverty/Growth semi-elasticity as a function of mean income and income inequality . . . . . . . . . . . . . . . . . . . . . . 24 1.8 Country Comparisons of Elasticities and Semi-Elasticities 24 2.1 Data Sources: Demographic and Health Surveys (DHS) . . 28 2.2 Prevalence rates of undemutrition . . . . . . . . . . . . . 30 2.3 Mobility matrix of NCHS/WHO to WHO reference standard 31 2.4 Composition of group of underweight children . 39 2.5 Composition of group of underweight children . 39 2.6 Anthropometric indicators over time . . . . . . 46 3.1 Infant Mortality and Anthropometric Indicators 65 3.2 Summary Statistics . . . . . . . . . . . . . . . 66 3.3 Mortality and Stunting by Asset and Access to Health Facility Index 69 3.4 Regression Results of Infant Mortality . . . . . . . . . . . 79 3.5 Regression Results of Stunting (Old Reference Standard) 80 3.6 Regression Results of Stunting (New Reference Standard) 3.7 Global Regression of Infant Mortality and Stunting 4.1 Quintile specific HDI by country) . . . . . . . . . A. I Poverty/Growth elasticity as a function of mean income and in- 81 82 100 come inequality(assumption: no change in distribution) . . . . . . 107 A.2 Poverty/Distribution change elasticity as a function of mean in- come and income inequality(assumption: no change in distribution) I 08 Mark Misselhorn - 978-3-631-75363-7 Downloaded from PubFactory at 01/11/2019 05:54:44AM via free access xiv A.3 A.4 A.5 A.I A.2 A.3 A.4 A.5 A.6 A.7 A.8 A.I A.2 A.3 A.4 LIST OF TABLES Theoretical values of headcount poverty as a function of mean in- come and income inequality(assumption: no change in distribution) 108 Poverty/Distribution change semi-elasticity as a function of mean income and inequality(assumption: zero growth of mean income) . I 09 Descriptives of Regions . . . . . . . . . . . . . . . . . . . . 110 Scoring Coefficients . . . . . . . . . . . . . . . . . . . . . . 117 Regression Results of Infant Mortality (Logistic Regression) 118 Regression Results of Stunting (Logistic Regression) 119 Regression Results of Stunting (Logistic Regression) . . . 120 Regression Results of Stunting (OLS Regression) . . . . . 121 Regression Results of Stunting Z-Scores (OLS Regression) 122 Regression Results of Stunting Z-Scores (Multilevel Regression) 123 Regression Results of Stunting Z-Scores (Multilevel Regression) 124 Data sources for developing countries . . . . .- . . 125 Quintile specific life expectancy indices by country 126 Quintile specific education indices by country 127 Quintile specific GDP indices by country 128 Mark Misselhorn - 978-3-631-75363-7 Downloaded from PubFactory at 01/11/2019 05:54:44AM via free access List of Figures l. l Decomposition . . . . . . . . . . . . . . . . . . . . . . 12 2. l Wasting/Stunting Combinations for Underweight of -2.0 34 2.2 Wasting/Stunting Combinations for Underweight of -2.0 35 2.3 Stunting/Wasting Combinations for Underweight of -2.0 36 2.4 Stunting/Wasting Combinations for Underweight of -2.0 37 2.5 Composition of undemutrition by countries (Group l) 40 2.6 Composition of undemutrition by countries (Group 2) . . 41 2.7 Composition of undemutrition by countries (Group 3) . . 42 2.8 Composition of undemutrition in India by asset index quintiles 43 2.9 Composition of undemutrition in Uganda by nutrition status of mother. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 2. l 0 Composition of undemutrition in India and Tanzania by survey year 47 3. l Mean Stunting Z-Scores By Age . . . . . . . . 75 4. l A human development index by income groups IO l 4.2 Correlation between the overall HDI and the ratio between the QHDI for the richest and the poorest quintile . . . . . l 03 A.l Stunting/Wasting Combinations for Underweight of -2.0 ..... l l l A.2 Stunting/Wasting Combinations for Underweight of -2.0 . . . . . 112 A.3 Composition of undemutrition in Burkina Faso by asset index quintiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 A.4 Composition of undemutrition in Bolivia by asset index quintiles . l l 4 A.5 Composition of undemutrition in Chad by the nutrition status of mother ................................ 115 A.6 Composition of undemutrition in India by the nutrition status of mother ................................ 116 Mark Misselhorn - 978-3-631-75363-7 Downloaded from PubFactory at 01/11/2019 05:54:44AM via free access Mark Misselhorn - 978-3-631-75363-7 Downloaded from PubFactory at 01/11/2019 05:54:44AM via free access Introduction and Overview The State of Global Poverty Over the past decades a mix of technology and economic integration trans- forming the world has lead to unprecedented increases in material wealth and prosperity. Between 1980 and 2005 the world economy grew at a steady pace despite several major disruptions including the Latin American debt crisis, the demise of the Soviet Union, the East Asia crisis, two global downturns, and the tragedy of September 11, 2001. Fortunately strong income growth was not only limited to developed countries. Income growth was especially strong in South and East Asia, but other developing regions were also able to realize strong increases in output. As a consequence the percentage of people living on less than $1 a day fell according to World Bank estimates from almost 27.9% of the population of developing countries to 18.4% (World Bank 2007). Although these percentage reductions in poverty rates are important improve- ments, it is the absolute number of poor persons that is recognized in the public. The still high total number of poor persons often leads to the impression that global inequality has increased in the past decades. It is therefore very important to note that despite strong population growth, the absolute number of poor persons has decreased from more than 1.2 billion people in 1990 to 984 million in 2004. For the first time the number of people that live on less than $1 a day is below a billion. But this can not distract from the fact that still some 2.6 billion people, or almost half the developing world's population, remain below the $2 a day poverty line (World Bank 2007). It is also extremely important to keep in mind that poverty is not limited to the income dimension but encompasses aspects such as a low life expectancy, high child mortality and undernutrition rates. Differences in these dimensions between developing and developed regions are enormous as well. While in rich countries fewer than I child in l 00 does not reach its fifth birthday, in the poorest countries as many as a fifth of children do not. And while in rich countries fewer than 5 percent of all children under five are malnourished, in poor countries as many as 50 percent are. Mark Misselhorn - 978-3-631-75363-7 Downloaded from PubFactory at 01/11/2019 05:54:44AM via free access 2 INTRODUCTION The Fight against Poverty In times of increasing opulence in the developed countries as well as in certain population subgroups in developing countries, the persistence of significant per- centages of world population in poverty becomes more and more unacceptable. Consequentially this has lead to a lot of political activism. Numerous national and international organizations have formulated goals on how much poverty has to be reduced within the next decades, politicians have demanded time and again that development aid has to be increased dramatically, "Live-8"-Concerts have re- ceived a lot of public attention and celebrities as Bono are considered as "poverty experts". Although globalization promises to improve the lot of humanity as a whole incalculably, there are signs of a backlash abound. The strong opposition against globalization is on the one hand due to the fact that in the rich world labor's share of GDP has fallen to historic lows, while profits are soaring, and on the other hand due to the persistence of absolute poverty in developing countries. Reductions in poverty rates are consequently not only a very worthy goal on their own, but an equitable distribution of globalization's profits is also the precondition for the general acceptance of liberal market economies. Unfortunately not only the views of many adversaries of globalization but also most demands publicly announced by well-meaning politicians and celebrities are neither very realistic nor very likely to have the assumed positive effects on the poor. Although poverty in its many dimensions is clearly a very emotional topic, the fight against poverty should not be dominated by those expressing the most ambitious goals but by realism and scientific insights into the determinants of poverty. Besides it is important to keep in mind that despite large income increases in the past and likely further increases in the future, that have the potential to lift a lot of of people out of poverty, it cannot be neglected that resources are scarce and will remain so in the future. This is especially the case when we take into account that poverty is not the only problem that has to be tackled in the coming decades. Considerable resources have to be devoted for example to the fight against communicable and non-communicable diseases like HIV/AIDS and Malaria or the fight against global warming. Prioritization and Efficiency Due to the scarcity of resources a certain degree of prioritization is necessary. Although prioritization is certainly necessary, the resentment against this idea is widespread. Mainly this is due to the general notion that we shouldn't have to prioritize. Whereas all demands for improvement in certain or all areas are un- Mark Misselhorn - 978-3-631-75363-7 Downloaded from PubFactory at 01/11/2019 05:54:44AM via free access