Abstract
The current literature on poverty focuses intensively on objective poverty, which is based on household income, household consumption, basic needs, calorie intake or a multidimensional poverty approach. In contrast, this paper researches subjective poverty, which is compared with objective poverty measured by income in Pakistan. Using Pakistan Panel Household Survey 2010 data, where household heads classify themselves on a ten-point-scale from the poorest to the richest, we find that the determinants of subjective poverty (feeling poor) are not limited to household consumption, but include household size, household demographic structure, agriculture land ownership, sanitation facility, physical and food insecurity. In comparison with the overall non-poor, the objective poor and the subjective poor households are determined by different factors. Particularly, for households lying below the subjective poverty line, factors such as education, household size, own residence and physical security have a significant positive impact on the eradication of poverty relative to overall non-poor. In addition, the Spearman Rank test upholds that subjective poverty measure complements the conventional method. Thus, priority should be given to specific targeted determinants, which are more important in the alleviation of poverty, while making and implementing public policy given the limited available resources.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Notes
Objective poverty is defined as when the household income or consumption, after adjusting for household composition, is below a designated threshold line. While subjective poverty is defined as ‘an individual or households perception of their economics position in life (both broader and narrow concept of subjective poverty)’.
Subjective well-being is defined as “a person’s cognitive and affective evaluations of his or her life” (Diener et al. 2002). We have broader concept of subjective poverty (life satisfaction, happiness) and narrow definition of subjective poverty (perception about economic situation). In this study, we use the narrow definition of subjective poverty.
Individual freedom means the right to express their opinions and communicate freely with others their economic position without any constraints.
Districts include in the sample from four provinces are; Dir, Mardan and Lakki Marwat from KP; Attock, Hafizabad, Faisalabad, Vehari, Bahawalpur and Muzaffargarh from Punjab; Larkana, Nawabshah, Mirpur Khas, and Badin from Sindh; and Loralai, Khuzdar, and Gwadar from Baluchistan.
The national poverty line is Rs. 1745 per capita per month (2010/11). The official poverty line was estimated using the Food Energy Intake (FEI) method, which regresses household consumption expenditure on calories consumed. The poverty line is evaluated at the minimum threshold caloric intake requirement (Economic Survey 2013–2014).
we utilize ordered probit model and probit model in our analysis given the nature of the data set. Using the ordered probit model sometime, the parallel regression assumption is violated. In this case, the generalized ordered probit is used as an alternative model. However, this model is very sensitive to low frequency counts. As a result, we have chosen to present the results of ordered probit model. In addition, we use the multinomial model, which is usually used when the parallel regression assumption is violated.
We also check the linear relationship between the district average value of the ladder (subjective well-being) and the log of per capita consumption to check the Easterlin Hypothesis (1974), and found a linear relationship among the districts average value of the ladder (average subjective well-being) and log per capita consumption. Appendix Fig. 1.
WHO defines Quality of Life as an individual’s perception of their position in life in the context of the culture and value systems in which they live and in relation to their goals, expectations, standards, and concerns. It is broader concept affected in a complex way by person’s physical health, beliefs, psychology, social status, and relation to their environment.
References
Alkire, S. (2007). The missing dimensions of poverty data: Introduction to the special issue. Oxford Development Studies, 35(4), 347–359.
Camfield, L., Choudhury, K., & Devine, J. (2009). Well-being, happiness and why relationships matter: Evidence from Bangladesh. Journal of Happiness Studies, 10(1), 71–91.
Cantril, H. (1965). Pattern of human concerns. New Brunswick: Rutgers.
Deaton, A. (2001). Computing prices and poverty rates in India, 1999–2000. Princeton: Research Programme in Development Studies.
Deaton, A. (2010). Price indexes, inequality, and the measurement of world poverty. The American Economic Review, 100(1), 3–34.
Deaton, A., & Drèze, J. (2009). Food and nutrition in India: Facts and interpretations. Economic and Political Weekly, 44(7), 42–65.
Deaton, A., & Heston, A. (2010). Understanding PPPs and PPP-based national accounts. American Economic Journal: Macroeconomics, 2(4), 1–35.
Deeming, C. (2013). Addressing the social determinants of subjective wellbeing: The Latest challenge for social policy. Journal of Social Policy, 42(3), 541–565.
Diener, E., & Biswas-Diener, R. (2002). Will money increase subjective well-being? Social Indicators Research, 57(2), 119–169.
Diener, E., Oishi, S., & Lucas, R. E. (2002). Subjective well-being: The science of happiness and life satisfaction. In C. R. Snyder (Eds.), Handbook of positive psychology. Oxford and New York: Oxford University Press.
Diener, E., Sandvik, E., Seidlitz, L., & Diener, M. (1993). The relationship between income and subjective well-being: Relative or absolute? Social Indicators Research, 28(3), 195–223.
Dolan, P., Peasgood, T., & White, M. (2008). Do we really know what makes us happy? A review of the economic literature on the factors associated with subjective well-being. Journal of Economic Psychology, 29(1), 94–122.
Garner, T. I., & Vos, K. D. (1995). Income sufficiency v. poverty results from the United States and The Netherlands. Journal of Population Economics, 8(2), 117–134.
Goedhart, T., Halberstadt, V., Kapteyn, A., & Van Praag, B. (1977). The poverty line: Concept and measurement. The Journal of Human Resources, 12(4), 503–520. https://doi.org/10.2307/145372.
Government of Pakistan. (2014). Economic survey 2013–2014. Islamabad: Ministry of Finance.
Greene, W. H. (2011). Econometric analysis (7th ed.). ISBN-13, 978-0131395381.
International Labour Oragnisation (ILO). (2005). Socioeconomic security for a better world. Geneva: ILO.
Jodha, N. S. (1988). Poverty debate in India: A minority view. Economic and Political Weekly, 23(45/47), 2421–2428.
Kingdon, G. G., & Knight, J. (2006). Subjective well-being poverty vs. Income poverty and capabilities poverty? The Journal of Development Studies, 42(7), 1199–1224.
Layard, R. (2005). Happiness: Lessons from a new science. London: Penguin. ISBN 9780141016900.
Lever, J. P. (2004). Poverty and subjective well-being in Mexico. Social Indicators Research, 68(1), 1–33.
Mangahas, M. (1995). Self-rated poverty in the Phillippines, 1981–1992. International Journal of Public Opinion Research, 7(1), 40–52.
Michalos, A. C. (2008). Education, happiness and wellbeing. Social Indicators Research, 87(3), 347–366.
Oishi, S., & Kesebir, S. (2015). Income inequality explains why economic growth does not always translate to an increase in happiness. Psychological Science, 26(10), 1630–1638.
Pradhan, M., & Ravallion, M. (2000). Measuring poverty using qualitative perceptions of consumption adequacy. The Review of Economics and Statistics, 82(3), 462–471.
Ravallion, M., & Lokshin, M. (2002). Self-rated economic welfare in Russia. European Economic Review, 46(8), 1453–1473.
Riffault, H. (1991). How poverty is perceived. In K. Reif & R. Inglehart (Eds.), Eurobarometer (pp. 349–354). London: Palgrave Macmillan.
Ross, C. E., & Van Willigen, M. (1997). Education and the subjective quality of life. Journal of health and social behavior, 38(3), 275–297.
Sen, A. (1988). The standard of living. Cambridge: Cambridge University Press.
Sen, A. (1993). Capability and well-being 73. In The quality of life (p. 30). Oxford: Clarendon Press.
Shams, K. (2014). Determinants of subjective well-being and poverty in rural Pakistan: A micro-level study. Social Indicators Research, 119(3), 1755–1773.
Stevenson, B., & Wolfers, J. (2013). Subjective well-being and income: Is there any evidence of satiation? The American Economic Review, 103(3), 598–604.
Van Praag, B. M. (1968). Individual welfare functions and consumer behavior: A theory of rational irrationality (Vol. 57). Amsterdam: North-Holland Pub. Co. Hardcover.
Van Praag, B. M. S. (1971). The welfare function of income in Belgium: An empirical investigation. European Economic Review, 2(3), 337–369. https://doi.org/10.1016/0014-2921(71)90045-6.
Van Praag, B. M. S., Frijters, P., & Ferrer-i-Carbonell, A. (2003). The anatomy of subjective well-being. Journal of Economic Behavior & Organization, 51(1), 29–49.
Vos, K. D., & Garner, T. I. (1991). An evaluation of subjective poverty definitions: Comparing results from the U.S. and the Netherlands. Review of Income and Wealth, 37(3), 267–285.
Warr, P. (1999). Well-being and the workplace. In D. Kahneman, E. Diener, & N. Schwarz (Eds.), Well-being: The foundations of hedonic psychology (pp. 392–412). New York: Russell Sage Foundation.
Winkelmann, R. (2005). Subjective well-being and the family: Results from an ordered probit model with multiple random effects. Empirical Economics, 30(3), 749–761.
Zhou, S., & Yu, X. (2017). Regional heterogeneity of life satisfaction in urban China: Evidence from hierarchical ordered logit analysis. Social Indicators Research, 132(1), 25–45.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Mahmood, T., Yu, X. & Klasen, S. Do the Poor Really Feel Poor? Comparing Objective Poverty with Subjective Poverty in Pakistan. Soc Indic Res 142, 543–580 (2019). https://doi.org/10.1007/s11205-018-1921-4
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11205-018-1921-4