More Numbers on Poverty and Education

I met a person the other day; he had educated his servant’s daughter who was now a physician in Los Angeles. “If everyone did that,” he said, “we could take care of the problems of illiteracy and poverty in our country.”

Right or wrong?

Let us see how we can do a very rough back-of-the-envelope calculation to see if the proposition is realistic.

Suppose the population of our South Asian country is 100. (Readers can multiply this by a scale factor to transform the hypothetical example into one that applies to their country. For example, if the population of Bangladesh is 150 million, the scale factor is 1.5 million. Relevant numbers in the example can be multiplied by this factor for the analysis to apply to Bangladesh.)

On average, we know that in South Asia about 25 percent of the population is very poor (below the official poverty line) and another 25 percent is ‘near poor’ (with enough for subsistence but not enough to afford a good education). So that gives us a set 50 people who are poor (from which we will derive the demand for assisted education) and 50 who are not poor (from which we shall derive the supply for assistance in education).

Demand Analysis

We start with a population of 50 poor people. We know that about 40 percent of the population of a South Asian country is comprised of children below the age of 15 years. This reduces our demand pool to 20. Now let us further restrict our need assessment to children between the ages of 5 and 15 and let us assume that this subset is half the size of the set of children below the age of 15. This gives us 10 children whose education requires external assistance. This is our rough estimate of the demand side.

Supply Analysis

We start with a population of 50 non-poor people. Let us assume an average household size of 5. This gives us 10 households in our potential supply pool. Of these we can assume that 6 are not rich enough to afford servants. So we are left with 4 families who are not poor and can afford servants. Now assume that half of these are rich enough to have servants and also have the extra income to afford to spend on educating them. That leaves us with two families. This is our rough estimate of the supply side. 

Matching Demand and Supply

Our rough calculation leaves us with a demand of 10 and a supply of 2. A private household based initiative can take care of 20 percent of the problem. This is significant but not enough to solve the problem of poverty and illiteracy in South Asian countries.

What Have We Done?

Essentially, what we have done is to take a very simplified look at two population distributions. The income distribution tells us the number of poor and rich people in the country. The age distribution tells us the number of people in various age groups. We combine these to arrive at our rough estimates of demand and supply.

A better analysis would use the same two distributions but in a much more careful and sophisticated way.

How the Context Makes a Difference

This analysis was for a country in South Asia and our assumptions reflected that context. The assumptions would be very different if our context had been a country in Scandinavia, for example. We know that both the income distributions and the population pyramids in Scandinavia are radically different from those in South Asia.

A private initiative to take care of the education of poor children could well be feasible in Scandinavia. Of course, as we know, the state has already taken care of the problem there.

Follow up

I would appreciate if readers could check the analysis and let me know if the rough conclusions make sense or not. Let me know if I have made any mistake in the assumptions or calculations.

Readers should also look at the two distributions for various countries and note the essential differences across countries. Comparisons between South Asian and Scandinavian countries should provide much food for thought. Note the key differences and speculate on the main reasons for the differences.

Information on Population Pyramids is available here.

Information on Income Distributions is available here.  Choose a country and then look under Income Distribution. The data show the percentage of total income earned by the richest and poorest sections of the population and also the number of people living below the poverty line.

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