Redefining the poverty line in Indonesia

Redefining the poverty line in Indonesia

A cashew nut farmer on the island of Flores, located in the Nusa Tenggara Timur province of Indonesia. Photo: <a href="http://www.flickr.com/photos/jelle/2330986745/in/set-72157604109125532/">jasperwiet (flickr)</a>
A cashew nut farmer on the island of Flores, located in the Nusa Tenggara Timur province of Indonesia. Photo: jasperwiet (flickr)

Indonesia is setting its own poverty line at less than $1 a day. When a country comes up with its own definition of "poverty", can global policy makers trust it.

Indonesia’s equation to measure its own poverty line is based on a series of calculations for what poor people spend money on — including housing, food, education and health care, also accounting for cost differences between urban and rural areas, according to a recent blog post from The Economist. And conveniently, this homegrown equation says only 30 million out of Indonesia's 245 million population live below the poverty line.

What the equation doesn’t account for is more important. From 2004 to 2009, during which Indonesian GDP per capita shot up 38 percent, the World Bank's estimate of Indonesia's poverty rate fell only slightly, from 16.7 percent to 14.2 percent. The Indonesian poverty equation doesn't capture the deep socioeconomic differences between urban and rural areas that has preserved this inequality.

Despite Indonesia's efforts to eliminate statistical poverty, the facts are clear — 100 million Indonesians still live under $2 a day. Considering the World Bank sets the poverty line at $1.25 a day, the Indonesian government's insistence that only 30 million are living in poverty becomes clouded.

Although countries creating their own measurements for the poverty line may be useful, in the Indonesian case it seems wrought with discrepancies. Setting the poverty line below $1 a day may look good on paper, but doesn’t help those who are struggling and certainly can’t be utilized on an international basis.

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