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ECONOMY
households in many developing coun- households, lead to the conclusion that
tries, in order to empirically analyze in order to obtain a real image of global
the standard of living, i.e. the level and poverty, it is not crucial to use special
the structure of consumption of house- statistical constructs such as exchange
holds, as well as the manner of mea- rates based on the baskets of consumer
surement and expression of poverty. goods of poor people. It is much more
important to determine the height of
Deaton makes an important contri- the so called global line of poverty.
bution to the empirical analysis of the Namely, if India is excluded from the
standard of living and poverty in low determination of this global line of pov-
income countries thereby placing at erty, which is the dwelling of almost a
the forefront the measurement of con- third of the total number of extremely
sumption through the data from the poor people in the world and which has
surveys about the expenses of house- determined quite a low poverty level,
holds. One aspect of the empirical anal- then the global poverty limit would be
ysis is the relationship between poverty raised quite high, whereby many people
and malnutrition by measuring the re- in the developing countries would be be-
lation between changes in income and low this limit and would be considered
changes of the amount of calories con- poor.
sumed by households. In fact, some the-
ories relate the amount of calories with In the context of the analysis of pov-
labor productivity, and draw the conclu- erty, Deaton indicates another current
sion that poor people are poor because phenomenon. Namely, in the period be-
of their low productivity level, which is tween 1990 and 2007, the large develop-
a consequence of the low consumption ing countries, such as China and India,
of calories. In this regard, Deaton and realized spectacular economic growth
the associates (1996) arrive at an inter- rates (for this reason they were called
esting empirical result: the growth of fast-growing economies). However, at
income in poor households in India is the same time, major part of world pov-
more reflected on the growth of aggre- erty was concentrated in these coun-
gate food consumption, and twice less tries at the beginning of the 90’s. Did
on the growth of consumption of calo- the spectacular economic growth at the
ries. Such finding of the analysis has same time mean spectacular reduction
two implications: of poverty? Deaton warns that there is
no mechanical relation between rapid
• poor people are not poor be- economic growth and reduction of pov-
cause of their low productivity level (so erty – part of the registered growth of
for this reason they earn low income), GDP in the developing countries is a re-
but rather poor people are not produc- sult of an inclusion of part of the exist-
tive because they are poor (because of ing production of the informal sector
the low income they are undernour- in the calculation of the growth of the
ished and for this reason they have low official sector of the economy. The im-
productivity); proved statistical coverage does not nec-
essarily mean a real reduction of pover-
• the consumption of calories, and ty and a real increase of welfare. True to
thereby the productivity of poor people his primarily empirical-research based
would increase rather through the poli- approach to economic science, Deaton
cies of direct increase of the income of (2004, “Measuring Poverty”) concludes:
poor people than through the policies “It is important to measure poverty
which would indirectly, through stimu- directly, by collecting data about the
lation of the general economic growth standard of living of poor people, rather
(and the income of all people) increase than to assume that the income of poor
the income of poor people as well. people increases with the same rate as
the average”.
Poverty at a global level is also in
the focus of Deaton’s work. His empiri-
cal researches, based on the surveys of
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