EDIAIS :Conference papers

Poverty assessment is critical to analysis of outreach (is a programme reaching the poorest?) and of impact (does participation in a programme lead to poverty reduction?). Yet methods of assessment seem to be as elusive as the development goal.

Broadly, there are three approaches to poverty assessment: participatory wealth ranking, a scored index, household income/expenditure. Each has strengths and some drawbacks - in terms of practicality, validity and standardisation. This paper will describe the experience of applying the three approaches for a national level impact assessment of microfinance in India, covering different regions and a large sample. The starting point of the study was an emphasis on the multi-dimensional aspects of poverty and the need to incorporate local knowledge (for both indicators and household ranking). Whilst retaining this emphasis, the methodology evolved by using a combination of the three approaches to generate data which may be analysed across different regions, compared with an official 'poverty line' and still reflect multiple dimensions of poverty.

Review of the approaches : (i) participatory or community wealth ranking reflects local indicators, perceptions and relative ranking, resulting in non-standardised categories; PRA works well with small, rural clusters; but it can be very time consuming in larger clusters, may lead to fights and resentment, and could be unworkable in urban areas where neighbours are unable to comment on each other. (ii) a scored index on selected indicators - enables a standardised ranking, but usually still relative to local conditions (as in the CGAP poverty assessment tool); can be very effective as a targeting tool (e.g. CASHPOR) but may be less effective for impact assessment when the selected indicators tend to reflect output indicators of the programme under study (assets, housing, increase in income sources) (iii) household income or expenditure measurement - single dimensional standard but enables comparison with national and international 'poverty lines'. Yet, measurement within the informal economy is complex task, entailing several additional questions to a questionnaire already covering a range of indicators.

Integration of the approaches enables cross checking on each approach, and a standardisation of wealth ranks. On the basis of community level indicators emerging from PRA exercises and other studies of poverty indicators, key dimensions of economic status were identified and indicators 'standardised' across 5 wealth rank categories - 3 poor, 2 non-poor. This was further developed into a scored index, covering selected production/employment and consumption/quality of life indicators. A sub-sample survey including detailed income estimates for the different wealth ranks relates the categories to national and international measures.

Utility - enables clear assessment of outreach issues and analysis of all data for different wealth ranks, with comparison between clients and non-clients of the same wealth ranks. (Also, in the Indian context, a cross-check on 'BPL' = 'Below Poverty Line' families identified by local officials for poverty targeted programmes). It will be possible when revisiting the same sample, to assess poverty reduction in terms of possible shifts between wealth ranks as well as household income level.

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