August 15, 2020 House of Trust

Rethinking Classifications of Poverty in Malaysia

Khazanah Research Institute recently published a short opinion piece entitled “Are Both the B40 and M40 ‘Poor’? Evidence from an intergrated income-expenditure analysis” written by Gregory Ho Wai Son and Dr. Suraya Ismail.

  • Households within the Bottom 20 of the income distribution consume basic needs only.
  • Households in the Middle 50 of the distribution initially perceived as the strong “aspirational-class/ middle-class” were merely consuming more of basic needs but with more product differentiation
  • Households in the Top 30 of the income distribution exhibit the consumption pattern of the “aspirational-class/middle-class”.
  • When it comes to well-being, it is less about households’ level of income, but more about the diversity of items that income can buy.
  • The ‘B40’ demarcation is not a good descriptor for ‘poor’ people, especially when a high proportion of the M40 group exhibit remarkably similar consumption patterns.
  • There is a need for a broader conversation on the degree to which our government should intervene as part of a rights-based approach and our choice of a poverty standard.
  • Policies need to focus on expanding the aspirational group as part of both the Shared Prosperity Vision 2030. However, government’s policies surrounding the expansion of this group should differ significantly from social policies targeting poverty.

For the full opinion piece, please refer to the attachment below:

Source: Gregory Ho Wai Son and Suraya Ismail. 2020. Are both the B40 and M40 ‘Poor’? Evidence from an integrated incomeexpenditure analysis: Khazanah Research Institute. License: Creative Commons Attribution CC BY 3.0.

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