The overlooked power of communities in poverty measurement

As with the informal economy, the lack of data on social capital in developing nations has contributed to its exclusion from poverty models. However, if poverty measurement frameworks are to be truly inclusive, culturally sensitive, and reflective of lived realities they must incorporate social capital as a fundamental dimension. Embracing qualitative data and expanding measurement dimensions will not only enrich the dataset but also enhance the depth and significance of the analysis. Doing so will provide a more accurate understanding of economic vulnerability and enable policymakers to design interventions that leverage the strength of social networks to improve livelihoods and resilience.

When I was young, my parents sat me and my sister down to tell us we had to "tighten our belts." It was 2004, and my father had lost millions to a bad business deal. Overnight, luxuries vanished. No eating out, no new toys, no new clothes. My school tuition was cobbled together through garage sales, scholarships, and small monthly installments. This frugality shaped the next decade of our lives, yet, we were never alone. My parents’ siblings stepped in, each contributing in their own way. My aunts covered my voice lessons, bought us clothes, and helped with school trips and competitions. One aunt housed me for free in college, and another later paid for my medical school. I was raised, educated, and supported by my extended family and community, especially in times of hardship.

In the Philippines, we call this bayanihan, a tradition of communal support, where neighbors quite literally carry a house on their shoulders to help a family move. While there is no direct translation, similar concepts have been captured across Sub-Saharan African countries. In Kenya, harambee calls people to pull together resources for a common goal; in Tanzania, ujama embodies “familyhood” and shared responsibility; and in South Africa, ubuntu expresses the idea that we belong to a network of interdependence and trust that gives meaning to the African community. Such concepts are said to exist in virtually all indigenous African histories, celebrating shared identity and collective participation for the benefit of the whole community.

Social capital plays a crucial role in economic resilience and poverty alleviation, especially where traditional financial services and institutional safety nets are often inaccessible. It serves as an alternative means of securing resources and coping with shocks, whether in the form of kinship ties, community support networks, or reciprocal exchange relationships. Its impact has been well-documented across Africa. Interestingly, it functions differently from other forms of capital, appreciating with use and being convertible into economic gains, albeit through complex and context-specific mechanisms. While formal safety nets such as government welfare programs are often incorporated into poverty measurements, informal networks are largely ignored, as it is difficult to quantify and operationalize. This exclusion has significant consequences, as it overlooks an essential mechanism that helps individuals and communities navigate economic hardship.

In the European Union (EU), the importance of social capital has been recognized in the At Risk of Poverty and Social Exclusion (AROPE) Index, a widely used metric for assessing multidimensional poverty. However,this index is designed for high-income countries with comprehensive data collection systems, making it less applicable to regions where data on informal economies and social networks is scarce. The consequences of overlooking social capital are particularly evident in cases of forced displacement due to conflict, climate change, or development-induced relocation. While social capital has been found to form in times of upheaval, particularly among refugees and asylum seekers, its protective effects are unequal across populations, disproportionately affecting women, elderly, and disabled populations whose inherent vulnerabilities are exacerbated. For indigenous populations, whose economic and cultural survival is closely tied to their communities, the severance of these ties can push them further into poverty.

For my family, financial hardship was softened by the strength of our social ties. For many in Sub-Saharan Africa and across other developing nations, this is the only protection they have. Ignoring social capital in poverty measurement does not just overlook an important dimension; it misrepresents the very nature of economic survival in these contexts. The EU has already acknowledged the importance of social exclusion in its poverty assessments, yet the rest of the world relies on incomplete models. If we are serious about capturing the essence of multidimensional poverty, we must push for frameworks that are not only measurable but meaningful and grounded in the realities of the communities they seek to serve.