Poverty and Famines
An area that has not yet been mentioned in this review but which has propelled Sen’s reputation and fame in third world countries is development economics. In his investigation on Poverty and Famines from 1981, Sen tried to shed some light on the causes of famines.
The author focused in particular on large-scale famines in Africa and Asia in recent times. Frequently, famines and a drastically restricted availability of food products go hand in hand. In the large-scale famine in Bangladesh in 1974, however, there were other factors that increased the suffering of the population. Owing to an earlier flooding of the country, the price of rice, a basic food product, increased considerably. At the same time, large numbers of rural workers lost their work as no harvest was possible in the flooded areas. Real wages fell dramatically among the rural population so that starvation took its death toll. Sen argued that in order to prevent a deterioration of the situation of those who did not possess much anyway, public interventions would have been needed These could have taken the form of distributing cash money to the poor, starting publicly financed employment programmes and even intervening in the formation of food prices. During recent decades, this recommendation was followed by a larger number of developing countries. There is still another aspect to which Sen drew attention. He asserted that multi-party democracies never witnessed serious famines. Both a free press and a functioning opposition in parliament would force the ruling party to introduce effective measures against the threat of a beginning famine.Before proposing his capability approach, Sen offered contributions to the measurement of economic inequality and suggested a new poverty measure. In 1974, he published an alternative characterization of the Gini Index which has been widely used as a measure of inequalities in income and wealth.
His characterization is based on an equi-distanced weighting scheme a la Borda. The new poverty measure, suggested by Sen in 1976, combined the Gini Index with two hitherto used measures, the “headcount ratio”, which determines the ratio between the number of people who have an income below or equal to the poverty line and the total number of people in a country, and the “income-gap ratio” which focuses on the ratio between the average poverty gap and the poverty line. While the headcount ratio does not measure the actual distance of the individual incomes below the poverty line to this line, the income-gap ratio does not consider the absolute number of the poor. Sen combined both indexes with the Gini coefficient of the income distribution of the poor. Doing this results in an index number that reflects the exact structure of the income distribution of the poor. Analogous to Sen’s axiomatization of the Gini coefficient, an ordinal weighting scheme is needed such that the weight attached to the income gap of a particular person below the poverty line is the same as the rank number of this person in the interpersonal welfare ordering among the poor.