On World Poverty: Its Causes and Effects

Recent advances in modeling directed acyclic graphs are used to sort-out causal patterns among a set of thirteen measures deemed relevant to the incidence of world poverty. Cross-section measures of the percent of population living on one and two dollars or less per day from eighty low income countries are exposed to a battery of tests of conditional independence with respect to measures of economic and political freedom, income inequality, income per person, agricultural income, child mortality, birth rate, life expectancy, relative size of rural population, illiteracy rate, foreign aid as a percentage of national income, international trade as a percentage of national income and percentage of population that is under-nourished. Motivation for the method of analysis precedes results. Results are presented as a graph that shows our measures of economic and political freedom, income inequality, illiteracy and agricultural income to be exogenous movers of poverty when measured as the percent of the population living on two dollars or less per day. Foreign aid and international trade are not connected to the other variables in the graph. Results on our measure of extreme poverty (people living on one dollar or less per day) show that such populations are immune from improvements in economic progress of the general economy. The “rising tide lifts all boats” argument apparently doesn’t cover the extreme poor of our sample. Word count: 19 632. David Bessler ([email protected]) is a professor of Agricultural Economics at Texas A&M University. Partial financial support for the work reported here is from the Food and Agricultural Organization (FAO) of the United Nations (UN). Results and implications, either stated or implied, are not necessarily endorsed by any of the above-mentioned institutions. Comments by Aysen Tanyeri-Abur and Tanveer Butt improved the paper. In addition, the editorial suggestions of Michele Zinn are gratefully acknowledged.