Is it worse to be poor in India or in Britain?

According the Economist, Natalie Bennett, leader of the Green Party of England and Wales, believes it is worse to be on benefits in the UK than poor in India “because at least everyone else there is poor too”.* Is she right?

A useful starting point is to distinguish between goods that depend on a person’s absolute level of income and wealth, and goods which depend on their position relative to others. Avoiding hunger, having adequate shelter, accessing basic medical care and avoiding illiteracy are goods that fall into the first category, and are determined by a person’s absolute poverty. There can be no doubt that the poor in India are definitely worse off in terms of these absolute goods. There are few in the UK who are undernourished, as 17% of Indians are. Life expectancy for the males in the most deprived parts of England is 75 – compared to 66 for all Indians (rich and poor, men and women). 0.4% of Britons are estimated to be homeless – in India the rate is over 5%.** And that is before accounting for the much lower quality of housing available to the Indian poor  – for example, they are less likely to have air conditioning than the British poor are to have central heating.

However, Bennett’s comments hint at the truth that there are some goods which depend on a person’s relative financial position. For example, the value of self-respect and avoiding embarrassment in public has long been linked to a person’s relative financial position. As Adam Smith famously observed, necessities are not just determined by physical needs, but also “the established rules of decency”, which are dependent on social context – illustrated by the examples of linen shirts and leather shoes that even the poorest could not be without in his day. Bennett makes the plausible claim that the cost of  these ‘relative goods’ – the goods necessary to feel legitimate member of the community – is cheaper in India, and so more attainable for the poor.

Nevertheless, there are at least three reasons to be sceptical of Bennett’s argument that the British poor are worse off than the Indian poor. Most obviously, we can object that the relative goods which she claims they have do not compensate for the absolute goods which they clearly lack. Even if they have a greater sense of social inclusion or self respect, that does not make up for their hunger or poor accommodation.

The second objection is to challenge Bennett’s empirical claim that Indians are better off in terms of relative goods. Implicit in the relative goods argument is the idea of reference groups. To secure relative goods we cannot be too much worse off than other members of the same reference group – the society we wish to be included in, or the people who set our standards of acceptability. Bennett claims that the Indian poor have a  poorer reference group than the British poor. But this is not obviously so. There are a number of fabulously wealthy people in India – the country has more multimillionaires than the UK. Are they part of the reference group for the Indian poor? Why should the awareness of the super rich among them not affect the self-esteem of the Indian slum dweller? Moreover, in an increasingly globalised world with an international media, how can Bennett be sure that the Indian poor do not consider those in the rich West as part of their reference group? If poor Indians do recognise these richer elements in their reference groups, this implies that they suffer at least some of the relative harms of the poor in the UK.

The final issue with the argument also comes from its reliance on reference groups. It leads to the repugnant conclusion that one solution to the issue of relative poverty is segregation. If the poor were moved to different parts of the country, had less interaction with the rich and developed a distinctive culture, they would be less aware of the rich and would exclude them from their reference group. In these poor areas, despite the wealth outside them, people would be better off because, in Bennett’s terms, everybody would be poor within them. An example of this mechanism in action might the ‘Hispanic paradox’, where it has been suggested that the cultural insulation of poor Hispanics in the USA explains their relatively good heath outcomes compared to other races.

For many people, this implication that segregation like this could be a good thing gives us reason to be sceptical about the underlying theory. If placing a high premium on relative goods allows for the possibility of segregation, perhaps we have missed something of value, or perhaps we have misunderstood their nature.

Ultimately, the claim that the Indian poor are better off than their British counterparts is hard to defend. Nevertheless, the question sheds light on some interesting issues in how we should think about global inequalities – and in particular the difficult idea of reference groups.

 

 

*I’ll set aside the question of whether this accurately reflects Green party principles and policy. In their article, Bagehot seeks to portray the Greens as “parochial and recidivist”, but this sits uneasily with the party’s commitment to open borders and foreign aid. Indeed, official party policy insists that “Richer regions and communities do not have the right to use migration controls to protect their privileges from others in the long term”, a position showing far greater concern for the situation of the global poor than any of the major parties.

** In 2003, there were 78m homeless in India. Assuming that population growth and a declining homelessness rate cancel out, I have divided this by the current Indian population of 1.2bn – this gives us a homelessness rate of 6%.

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