February 3, 2013

Georgetown Professor Introduces Global Issues of Poverty and Inequality to Students in New University-wide Class

In spring 2014, Martin Ravallion introduced a new university-wide course to Georgetown—ECON-156: Poverty. In the inaugural class, well over half of the 150 undergraduate students came from backgrounds other than economics, such as the social sciences and philosophy.

Ravallion is the Edmond D. Villani Chaired Professor of Economics. Prior to joining Georgetown in December 2012, he was director of the World Bank’s research department, the Development Research Group. During his 24 years at the World Bank, he worked in almost all sectors and regions.

Ravallion’s experience and ongoing research contribute directly to his new course. Students learn about some of the latest issues in poverty and inequality in real-time as Ravallion explores them himself. “Many lectures start with a class discussion of some poverty or inequality issue from the current news media, which we use ideas from the course to help understand,” says Ravallion.

Global Poverty Measures

In describing his work, Ravallion says “poverty and inequality are major global issues of today, in both developing and developed countries. While there is optimism about progress made against extreme poverty, there are still persistent and new challenges.”

Among the contemporary challenges that students study are global poverty measures, explored by Ravallion in the September 2013 issue of Global Policy. As Ravallion describes it, poverty “is one important topic where two distinct views of the world still coexist.” In the developing world, poverty is viewed in absolute terms, such as anyone living below the World Bank’s international poverty line of $1.25 a day. Alternatively, in high-income countries, poverty is viewed in relative terms among people living in the same location.

Although each approach offers a valuable perspective, each also has its own limitations. Therefore, new measures are needed in order to have a truly global and inclusive perspective on poverty. Ravallion’s co-authored article in Global Policy proposes a new approach to measuring global poverty that bridges the absolute and relative models.

Different Perspectives on Inequality

Just as there are distinct approaches to poverty measurement, there are also different perspectives on inequality. The traditional economics perspective views inequality in terms of incomes relative to the mean, emphasizing the proportionate differences between rich and poor. However, an alternate perspective views inequality in terms of the absolute differences. These different views become particularly apparent when income levels change. For example, income levels can rise proportionately and maintain the same ratio between rich and poor, but the absolute difference will increase.

“We need to realize that these different perspectives exist,” explains Ravallion. “People can look at the same exact situation and come to different conclusions regarding the state of inequality.”

Ravallion had his students examine various hypothetical situations to determine how they thought about inequality. Approximately half judged inequality from the ratio perspective, and the other half took an absolute difference perspective.

As Ravallion puts it, “it is not that one of these concepts of inequality is right and the other wrong. They reflect different value judgments. Only by appreciating these different concepts can we properly understand some important public debates going on today about development policy.”

Ravallion discusses this and other issues in his article titled “Income Inequality in the Developing World” in Science.

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