Assets, livelihoods and poverty

Policies aimed at addressing poverty have progressed significantly over recent decades. For instance former residual welfare strategies have been replaced by social protection poverty reduction policies, which incorporate wider aims and concepts around risk reduction and mitigation. At the same time the limitations of poverty analysis and measurement based solely on income or consumption have also been increasingly recognised. This has led to widening understandings of poverty which incorporate a range of other concepts, such as livelihoods, vulnerability and risk. These help widen the focus to a multi-dimensional understanding of poverty and emphasise the role that assets and capabilities have in improving social and economic well-being.

Assets are typically categorised into five types of capital – physical, natural, human, financial and social. Individually and together, they affect the capacity of individuals to be productive, take advantage of opportunities and protect themselves against shocks. Changes in the values or endowments (stocks) of assets affect both income and non-income dimensions of well-being. OPM’s work across a number of sectors aims to build equitable access to a range of assets, for instance through increasing access to financial services or education and health services.

Increased or changing asset values and endowments in these areas above are often easily measurable. Others, however, such as various types of social capital – the rules, norms and systems of reciprocity and trust which are embedded within social structures and institutions – are less tangible. This can make them less understandable, and hence perhaps less relevant, to policy makers. However, they still have an important influence on development outcomes and well-being, and often influence levels of inclusion and equitable access to other assets. In the Maldives, OPM is currently conducting the monitoring and evaluation of an Integrated Human Development Project. This has raised interesting issues regarding how the levels and types of social capital in different locations appear to influence the implementation of the project, and we integrated a social capital module into the latest research to help policy makers understand this better.

Aside from social capital, other less tangible assets such as informational assets and psychological assets – e.g. the capacity to aspire, or envision change – are also important in determining development outcomes. The capacity to envision an alternative, for instance, can affect how individuals and groups choose to invest in or build up other assets: if social norms and institutions have traditionally led parents and others to view children working in the fields at busy times of the farming year as a natural requirement of their supporting role within the family (as in Egypt, for instance, where OPM conducted a Situation Analysis of Children and Women), then this can lead to under-investment in other forms of capitals, such as education (and this may also be affected further by other informal institutions, such as gender based social norms and customs).

These more intangible types of assets are often overlooked, but our experience shows the value of various types of analysis (e.g. vulnerability analysis, livelihoods analysis, gender analysis, etc.) in providing an understanding of the different asset endowments of different groups in both development policy and practice.