How Can We Rethink Poverty Measurement to Include People with Disabilities?

The traditional approach that countries usually use to measure poverty compares household per capita income with a poverty line that represents the minimum level of resources needed to cover basic needs such as food, health, education, and housing. However, this approach does not account for the additional costs associated with living with a disability. As a result, it underestimates the level of income required to meet the basic needs of households with persons with disabilities, making their situation invisible and limiting their access to social programs designed for those most in need.

In this article, we present the main findings of the study Adapting Monetary Poverty Lines to Reflect the Costs of Disabilities: An Empirical Application in Peru, which proposes an adjustment to the monetary poverty line to more accurately reflect the economic needs of people with disabilities. The analysis combines national household survey data with testimonies from people with disabilities, caregivers, and public officials in the country. 

In Peru, around 1.5 million people aged five and older live with some form of disability, according to data from the 2022 National Household Survey (ENAHO). Living in a household with a member with a disability reduces income levels by an average of 12.8% compared to similar households without persons with disabilities. This is partly because both people with disabilities and their caregivers face constraints on the labor market. 

I am currently not working because my eldest daughter studies in the morning, and I have no one to leave my son with because of his therapies. 
— Focus group 4, Chancay, caregiver. 

Beyond its impact on income, disability is often associated with higher spending on essential goods and services. In Peru, households with members with disabilities allocate, on average, 17% of their total consumption to health, compared to 12% in households without persons with disabilities. To compensate for these expenses, these households tend to adjust their budgets in other basic areas, such as food, substituting higher-quality products with cheaper and less nutritious options.

As several people interviewed for the study pointed out, these decisions are not driven by preference, but rather by a survival strategy to “stretch their money” and meet basic needs. 

Sometimes I am unwell, but sometimes I treat myself with herbs, because they are cheaper than pills.
— Interview 3, Ventanilla, person with psychosocial disability. 

One way to address this issue is to adjust the per capita income compared to the poverty line using an “equivalence scale.” This approach assigns a higher relative weight to people with disabilities when calculating household income, in order to reflect the greater resources needed to cover an equivalent set of basic needs.

Based on the analysis, we estimate that a person with a disability needs 1.47 times more income than a person without a disability to cover the same basic economic needs included in the basket that defines the poverty line. In other words, to not be considered poor, a person with a disability must have an income equivalent to 147% of the poverty line.

In single-person households, the required adjustment is even larger: a person with a disability living alone is equivalent, on average, to two people without disabilities in terms of basic economic needs.

So how does the poverty estimate for Peru change when the additional costs associated with disability are considered? The following results correspond to 2022: 

• The poverty rate among people with disabilities and their families increases from 35% to 50.1%, meaning that approximately 760,000 people move from being classified as non-poor to poor.
• The overall poverty rate increases from 29.6% to 31.9%.
• The poverty gap increases by 4.4 percentage points for people with disabilities and their families and by 0.7 percentage points for the total population. 

In Latin America and the Caribbean, one in seven people lives with some form of disability. Moreover, due to rapid population aging, the number of people with disabilities is projected to reach 150 million by 2050. 

Some countries have already begun to take action. In 2016, Panama established a higher poverty line to assess eligibility for the Ángel Guardián cash transfer program, which targets people with disabilities. This adjustment was made in the context of a project supported by the IDB. 

Costa Rica has worked on estimating consumption baskets that consider the additional expenses associated with different types of disabilities. The results suggest that the poverty line for people with disabilities should range between 1.4 and 3.3 times the official monetary poverty line for the general population. In addition, the country has developed differentiated baskets based on levels of care dependency (mild, moderate, and severe).

Adjusting the monetary poverty line is not sufficient to address the wide range of additional costs faced by people with disabilities or to ensure their full participation in society. However, it is a fundamental step toward improving the accuracy of official statistics and designing more inclusive social protection systems that contribute to improving the well-being of people with disabilities and their families.

You can access the full study by clicking here.