Three Shades of Poverty: Identifying, Classifying and Dividing the Poor in India

• In Event: 212 - Section on Inequality, Poverty and Mobility Roundtables (one-hour)
  In Refereed Roundtable: Table 09. Policy and Politics I

Abstract

Even as social policies are increasingly targeted at the poor, the social costs of means testing remain ignored by policymakers. Previous studies have shown that means testing generate stigma and exclude rather than include the poor. The contours and determinants of exclusion are worthy of further exploration. I use the identification and classification of the poor into above and below poverty line for the purposes of the administration of India’s largest anti-poverty program, the Public Distribution System, to answer some of these questions. Using data from the National Sample Survey of 2004-05, I document the extent to which (a) the poorest quartiles and deciles are not classified as poor and (b) the relatively non-poor are identified as below poverty line and thus eligible for social programs. Next, I investigate whether there are patterns to this exclusion. I find that households belonging to historically disadvantaged communities have higher odds of being classified as poor even after taking economic characteristics of households into account. However, this effect of belonging to these communities is lowered for those in the lowest quartile. The findings are consistent with prior literature on this topic, that is, means tested policies mirror existing inequalities rather than eliminate them and have the potential to create resentment among those excluded, leading to reduced support for the program. Additionally, the paper demonstrates that the misclassification of the poor under means testing contributes to the exclusion of the poor from social policies meant to ameliorate poverty.

Author

• Madhavi Cherian, New York University