Understanding poverty amongst older people in India

23-Mar-2010    This research paper by Pal and Palacios (2008) investigates the poverty rates among older people in India. According to the outcome, there is no significant difference between the poverty rates among elderly and non-elderly households, which is mostly explained by a "survivorship bias" - the fact that people with lower income have a lower level of life which causes their earlier death.

The authors suggest that this pattern may cause a counter-intuitive results of the social pension programs, namely, a rise in the poverty rates. This would happen because the higher remittances, better health care or an increase in social pension benefits could all improve the chances that the poor survive to old age and could therefore increase the proportion and number of poor elderly. As a result, the authors argue that it might be better to use other indicators such as mortality and morbidity rates of the elderly when assessing the impact of different policies and programs.

The evidence of an income-mortality link should also influence thinking about social pension design. The system as for example the one implemented in Nepal, when universal pensions are paid to all citizens above a certain age, cause the rich to receive a transfer for much longer than the poor. In contrast, well targeted schemes with lower initial eligibility ages could pay higher benefits to more poor elderly.

About the author
Mr. Andrea Colombo worked as an intern for the Pension & Development Network between April and July 2010. 
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