Bolivians feel poor, but not that poor
By Lykke E. Andersen*, La Paz, 6 August 2007.

“Poverty, like beauty, lies in the eyes of the beholder.”
Mollie Orshansky

According to official estimates, there are at least 3 million extremely poor people in Bolivia (about 38% of the total population). Judging from their very low incomes, they shouldn’t be able to buy even the minimum basket of subsistence goods. The majority of people in this group does not have electricity in the house, and thus none of the convenient inventions that run on electricity. Still, only a minority of them (18.5%) actually feel extremely poor (see Table below).

Source: MECOVI 2003-2004.

In contrast, more than half of the people who are classified as not poor, do feel poor.

In total, less than half of the population is classified in the same poverty group (extremely poor, moderately poor, not poor) as they themselves feel they belong to.

This suggests that our usual monetary measure of poverty does not really capture the deprivation concept that we would like it to capture. There are several partial explanations for that:

1. Income fluctuates a lot from month to month, so last month’s income is not necessarily a good indicator of permanent (normal) income. This is particularly true in a country like Bolivia, where less than 5% of the working age population has a steady, formal job with a regular salary.
    

2. People may judge their poverty relative to others in the country, rather than in absolute terms. Since Bolivia has astounding levels of inequality, it is easy to find someone that are definitely much poorer, but it is also easy to find groups that are definitely much better off. As a consequence, the majority of people will consider themselves as belonging to the middle group, which is also what the table above indicates.
    

3. People adapt their needs to the available income. Approximately half the Bolivian population say that they can get by on less than 30 dollars per month (1). Of course it could also be the other way around: people adapt their income to their needs. In any case, there is a very strong correlation between actual income and necessary income.

Especially the last point needs to be understood better. If our policies and interventions stimulate an increase in needs, then people will always struggle to make their income strech far enough to cover their ever increasing needs. When incomes lack behind needs, people will feel poor, no matter what the level of income.

Do our policies create needs? Probably. The terminology we use suggests so. Poverty measures are completely materialistic, based on a minimum basket of goods or on unsatisfied basic needs. The extreme focus on per capita GDP and GDP growth rates also implicitly weigh the materialistic part of life much more heavily than all the other aspects that make life worth living.

Are there any alternatives? Well, we could listen a bit less to the advertising industry and a bit more to some of the great philosophers of all time (Gandhi: “Earth provides enough to satisfy every man's need, but not every man's greed” Nietzsche:” Possessions are usually diminished by possession”; Thoreau: “It is preoccupation with possessions, more than anything else, that prevents us from living freely and nobly” and “That man is the richest whose pleasures are the cheapest.”

Rather than imposing the materialistic world view indiscriminately on the so-called developing countries, we should find out what makes people happy. Maybe it is freedom, independence, plenty of quality time in large and close-knit families, playing, dancing, singing, seeing animals getting born and plants grow up, or just sitting on the top of a mountain and feel peace settle in every cell. If so, it is difficult to imagine that the TV, couch and designer jeans you could buy if you had more money could possibly compensate for being locked up in an office or factory every day, away from everything that makes you happy.