A formula developed by a Cornell professor that is the standard used by the United Nations, most government agencies and scholars to measure the depth of poverty in developing countries has now become part of one country's constitution.
The Foster-Greer-Thorbecke (FGT) measure, a poverty assessment tool developed by Erik Thorbecke, the H.E. Babcock Professor of Economics and Food Economics and the director of the Program on Comparative Economic Development at Cornell, and two former Cornell graduate students in 1984, is part of Chapter V, Article 34 of the Mexican Constitution.
"The formula measures how income is distributed below the poverty line and takes into account the intensity and severity of poverty," says Thorbecke, who has been on the Cornell faculty since 1974 and now is in the Department of Economics and the Division of Nutritional Sciences. "It allows researchers to glean how really poor the poor are by determining how many poor fall far below the poverty line and how many hover close to it."
The FGT measure, as it is called, has been adopted as the standard poverty measure by the World Bank, the Inter-American Development Bank and practically all UN agencies, and it is used universally in empirical work on poverty. It was developed by Thorbecke and Joel Greer (now an economist with the Federal Health Care Finance Administration in Washington, D.C., which runs the Medicare and Medicaid programs) while they were working on a large-scale study of food consumption and poverty in Kenya in the early 1980s. Subsequently, they asked James Foster, another graduate student in economics and now a professor at Vanderbilt University, to help them formalize the measure and derive some of its axiomatic properties.
Mexico uses the FGT measure to redistribute 14 billion pesos ($1.6 billion) gathered by taxation to education, health and welfare programs for the poor.
"Benefits and transfers from the [Mexican] central government are allocated among regions according to the depth and severity of poverty," says Thorbecke, who has published more than 150 scientific papers and 20 books. "If in one region many households are very poor, those households will be weighed more heavily than households that are just below the poverty line."
That Thorbecke's work has taken on international significance impacting millions of lives should come as no surprise to family historians. Born in 1929, he is the son of an American mother who was born and raised in France and a Dutch diplomat father who served as the Netherlands' ambassador to China. Thorbecke is the great great-grandson, on his mother's side, of Fernando Wood, the New York City mayor in the 1860s who initiated Central Park and later served as chair of the federal Ways and Means Committee; on his father's side, he is the great-grandson of J.W.R. Thorbecke, one of the Netherlands' greatest statesmen, who served as prime minister twice and rewrote the Dutch constitution in 1848.
Thorbecke lived in China as a toddler until his parents divorced. Upon returning to Paris, his mother took him to Geneva in 1939 to have his whooping cough treated, a move that was a blessing in disguise. The war stranded them in neutral Switzerland, where Thorbecke continued his education in French while taking German, English and Latin as foreign languages. He continued his education in Dutch at the Netherlands School of Economics (where he studied under Jan Tinbergen, the first Nobel laureate in economics) and then in English for his doctorate at the University of California at Berkeley. Spanish was added to his language repertoire several years later, when he worked in Peru as a senior economic adviser.
After 14 years at Iowa State University and two years in a high-ranking position at the U.S. Agency for International Development, Thorbecke came to Cornell, where he has been teaching a graduate course on macroeconomic issues in economic development and an undergraduate course in national and international food economics ever since. His work has focused on economic development, particularly as it relates to food consumption, world food problems and poverty alleviation.
Thorbecke's latest work is a 1999 book he co-edited called Taiwan's Development Experience: Lessons on Roles of Government and Market. He also is the co-coordinator of a large-scale program of training and research on poverty, income distribution and labor markets in Sub-Saharan Africa, under the auspices of the African Economic Research Consortium. Over the past four years, the program has trained about 130 African economists in poverty methodology and has funded 12 case studies of poverty undertaken by 12 different teams of African economists on the various dimensions of poverty. Five of the national teams are paired with the Cornell Food and Nutrition Policy Program.
Although Thorbecke plans to retire from his current positions by the end of the year, he hopes to remain actively involved in research in his two departments at Cornell by staying on as a professor in the Graduate School.
Meanwhile, the FGT measure will continue to improve impoverished lives worldwide, perhaps especially in Mexico.
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