Thursday, January 31, 2013

Hunger-based Poverty Traps

A hunger-based poverty trap is the idea that an individual that does not consume enough food to work for a living will not be employable. Because that worker is unemployable, they will not be able to earn income. Because they do not earn any income, they cannot purchase enough food to work for a living. Thus, it is a self-reinforcing phenomenon.

To support the authors argument, they use an example of an individual who seemed to be stuck in hunger-based poverty trap. The following statement could then be inferred: If the individual could have enough to eat one day, they would be able to escape the trap and work for food. So an individual stuck in a poverty trap should be spending all of their money on food, right?

When the authors then look at the data, the results they find are startling. In their data set of the rural poor, food represents only 45-77% of their consumption. Thus, they are not doing the rational thing and buying more food, but choose to spend money on other goods such as tobacco.

The theory of the hunger-based poverty trap makes sense, and implies that if an individual had more food, then they could escape the trap. But when these individuals have the capacity to spend more on food, they choose not to. Therefore the logic behind the hunger-based poverty trap makes sense to me, but we do not see individuals escaping it due to personal preference for the consumption of other goods.

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