Drawing the Line: A Consensual Approach to Setting Poverty Standards in the Maldives and Examining the Implications for Policy

Abstract

The identification of minimum income standards is important for the development of policies to alleviate poverty. This thesis examines the possibility of developing such standards for the Maldives. The only minimum income standards that are currently available in the Maldives are the poverty lines based on the international poverty lines of $ 1 PPP or $ 1.25 PPP used by the World Bank. However, these standards are arbitrary to the extent that they are not based on the direct views of the people. They are also less relevant for a country such as the Maldives which has seen rapid increase in average incomes. This research argues that a consensual approach to setting poverty standards is the most useful methodology for setting adequacy standards in the Maldives and similar countries, as it incorporates the full participation of the people in deciding minimum income standards. The aims of the research are to: - Assess the usefulness of a consensual approach to identifying a minimum income standard. - Identify an appropriate minimum income level for the Maldives. - On the basis of the poverty standard identified here, assess the level and severity of poverty at individual and household levels. - Explore the policy implications of the new minimum income standards developed in this research. To this end, this research sets out a new methodological framework to develop suitable minimum income standards for the Maldives. This framework is based on a consensual approach to poverty assessment, and involves the use of focus groups to determine a minimum income level for the Maldives by estimating household minimum income budgets. This approach allows people to directly participate in determining a minimum income level that they believe is appropriate within the social and economic conditions of the Maldives. Using this new approach this research finds that the minimum income requirements for all the major expenditure categories determined by focus groups closely mirror household survey estimates, providing a useful and credible basis for the development of poverty thresholds. Using the consensual method a set of new poverty lines is developed for the Maldives. These lines are substantially above the international poverty lines, and are reflective of the living standards in Maldives. This research finds that the consensual poverty lines provide a sound basis for the assessment of poverty in Maldives. It is found that under the line of Rf. 23, which is considered the most appropriate, the poverty rate is about 12 per cent higher than previous estimates using conventional poverty line methodologies. To address the needs of those in greatest poverty, two benefit packages are proposed. One is a universal child benefit scheme and the other, a household benefit for the poor. These proposals underline the importance of child development and eliminating poverty, and for providing welfare as a right, in an efficient, affordable and equitable manner. The consensual approach also has relevance to other countries with similar levels of development as the Maldives.