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September 16, 2012, Sunday

Poverty in Turkey

The state of poverty is one of the critical issues in all democratic societies. The social cohesion, electoral outcomes and even the stability of democracy depend on the level of poverty and its evolution.

If it is decreasing, even from a high level, it can effectively contribute to the functioning of the democratic system, allowing the incumbent party (or parties) to solve political and economic problems that often requires difficult structural reforms. However, when poverty is increasing, all kinds of extremist movements can easily find large support, which can jeopardize the stability of the democratic regime.

Everyone would easily agree on this assertion, but when it is questioned whether poverty is increasing or decreasing, a consensus is not so easily found. Indeed, the measure of poverty is not an easy task. I am not talking of course about personal observations expressed so frequently in my county in cheap talk, even sometimes in television debates during which we can hear serious opposition members and even academics express that “since it is obvious (sic) that poverty is increasing, one cannot understand how the Justice and Development Party [AK Party] could increase its voter support.”

For readers who are not experts on the matter, I can briefly speak about the difficulties to measure poverty and say that the critical issue is the definition of poverty. Unfortunately or obviously, there is more than one, each with their own flaws. Since each definition contains partly subjective judgments, it is tricky to define the poverty line and for this reason they are all open to criticism from the people as well as from competing political movements and academics. Till now, Turkish Statistics Institute (TurkStat) essentially produced two poverty estimations -- the first being “Complete poverty [food+non food],” based on Households Budget Surveys (HBS), and the second called “Relative poverty,” based either on HBS and Income Distribution and Living Conditions Surveys (IDLCS).

TurkStat recently decided to abandon the “Complete poverty” measure because of its flawed methodology producing paradoxical results originating from the definition of the poverty line expressed in terms of consumption expenditures; the line was increasing along with the diminution of the share of food expenditure, which is, in fact, a sign of increasing welfare. TurkStat is now in search of a new definition of the poverty line. The definition of the poverty line for “Relative poverty” is not so difficult because the individual income as a certain percentage of the median income defines the line. But the problem is that a relative poverty concept measures income inequality rather than poverty. According to IDLC figures, the poverty rate (the share of individuals having an income below 60 percent of the median income) has been estimated by TurkStat as 16.7 percent in 2010. When, say, in 10 years, per capita income reaches $15,000 ($8,000 actually), the share of “relatively poor” would not be far from 16.7 percent; this will depend on the impact of income growth on income distribution.

OK, I agree that the introduction was too long, so I am coming to my point: The IDLC surveys produced in accordance with EU standards since 2006 are not only more reliable than HBS but also contain questions on living conditions, allowing us to produce straightforward measures of poverty. I suggest taking three of these questions and defining as poor whoever responds negatively to all of them. The three questions are: 1) Are you able to eat at least every two days either meat, chicken or fish? 2) Are you able to replace your used clothes? 3) Are you able to adequately heat your house? These three abilities are all about basic needs and we can define those who are not capable of meeting them as poor.

Using the micro data of IDLC statistics and according to the definition above, we calculated in Bahçeşehir University's Center for Economic and Social Research (BETAM),  the poverty rate or the share of poor households from 2006 to 2010 as following: 2006 (25.7 percent), 2007 (25.2 percent), 2008 (24.1 percent), 2009 (21.2 percent), 2010 (19.1 percent). So, one can assert without hesitation that, considering the ability to access basic needs, poverty is still quite high in Turkey, but it has decreased remarkably in recent years. The factors behind this improvement have to be determined through more detailed analysis, but we can already assert that the increase of per capita income during this period (approximately 10 percent) should be the main driver.

The distribution of poverty among the regions is also interesting, albeit without surprise. In 2010, the lowest poverty rate belongs to western Anatolia (10 percent), followed by Central Anatolia (12.7 percent) while Southeast Anatolia by far is the poorest with 35.3 percent, followed by the East Black Sea with 25.7 percent.

I think that decreasing poverty in Turkey is very consistent with the increasing electoral support for the AK Party, and the opposition -- rather than speculating on the “obvious increase in poverty” -- should focus on the alternative policies able to produce better results. Or, to wait till the low growth, in which Turkish economy seems to be trapped nowadays, produces adverse effects on poverty.

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