Article Contents
People spend huge expenses on their college education with the expectation of high-income opportunity. However, recent research proved that educated people also fell below the poverty line. We have used a PROBIT model to explain this.
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What is income poverty?
India is one of the fastest-growing economies. Officially known as the Republic of India is the second-most populous country in the world. It homes approximately 135.26 crores following belonging to Hinduism (79.8%), Islam (14.2%), Christianity (2.3%), Sikhism (1.7%), Buddhism (0.7%), Jainism (0.4%), Unaffiliated (0.23%) and others. Intriguingly, it also homes 7.3 million people who are living in extreme poverty and comprises 5.5% of the country’s population.
Absolute poverty is the complete lack of the necessary means to meet basic personal needs, such as food, clothing, and shelter.
Extreme poverty is defined by the World Bank as living on less than US$1.90 per day. However, in India, a person is declared poor if the expenditure of a person per day is less than INR 47 in an urban area and INR 37 in a rural area.
Methodology
To conduct this research, data was downloaded from the official website of the Indian Human Development Survey (IHDS). IHDS is an organization that conducts national survey of 41,554 households in 1503 villages and 971 urban neighborhoods across India. The statistical tool used to interpret and understand data was STATA.
Descriptive Statistics of Indian Poor-Population (2004-2005)
NOW let us take a look at the data. The data has been homogenized and arranged in a tabular form for better representation.
| Below Matric | 81.85% |
| Matric | 8.38% |
| Higher Secondary | 9.77% |
| Bachelors and above | 0% |
As per the descriptive statistics of the poor-population 2004 -2005, educated people did not fall below the poverty line. 81.85% of India’s poor-population was comprised of uneducated people. Matric is the minimum required education for a person to be called educated in India. A person with low education suffers low income and hence stays below the poverty line.
It is not an astonishing result that 68.45% of the Indian poor-population belonged to rural India. Rural India suffers from inadequate school infrastructure, ill-qualified teachers, and expensive education that cannot be afforded by all.
| Rural India | 68.45% |
| Urban India | 31.55% |
Tableau Education Visual Representation
Rural Education
The above graph represents that 48,495 people are below matric, 18,282 people are educated up to higher secondary, and 12,026 are secondary educated. Hence it is evident, that the absolute count of the people receiving higher education gradually drops in a developing country like India.
Urban Education
The above graph represents the absolute education count of urban India. According to the sample data, 20,030 people are matric educated, 21,205 have cleared the higher secondary examination, and only 8,014 have secondary education. Hence, approximately, we can see a similar trend irrespective of the geographical area i.e. rural or urban. The absolute count of people receiving higher education gradually drops.
As Education qualification increases, poverty decreases. Education opens income opportunities.
Descriptive Statistics of Indian Poor-Population (2011-2012)
According to the Descriptive statistics of the poor-population 2011 -2012, graduates and scholars also fell below the poverty line. 77.35% of the Indian poor-population had below matric education. According to the Descriptive statistics of the poor-population 2011 -2012, graduates and scholars also fell below the poverty line. Compared to 2004, there was a rise of 2.95% + 1.09% of educated poor in India.
| Below Matric | 77.35% |
| Matric | 8.36% |
| Higher Secondary | 10.25% |
| Bachelors | 2.95% |
| Above Bachelors | 1.09% |
These educated people found it difficult to earn 35 rupees a day (35 RS = ½ US dollar). NO food, No shelter, and no clothing. Forget about medical treatment and clean drinking water.
PROBIT Model
To understand how education determinates poverty in India, a PROBIT model is used.
Pi = βXi + ei
Where Pi is the probability that an individual falls below the poverty line.
Here, Poor (Pi) can take two values
0 = not poor (not below the poverty line)
1 = poor (below the poverty line)
Xi = represents the vector of demographic characteristics
Education (Edu) has been divided into 3 categories.
Low Education or Below Matric (Edu = 0)
Medium Education or Secondary Education or Higher Secondary Education (Edu = 1)
High Education or Graduates and above (Edu = 2)
Here, outcome 0 (or the blue color) means the population is not poor whereas outcome 1 (or the red color) indicates that the population is below the poverty line or poor.
Explanation
We can easily see through the bar graph that the probability to fall below the poverty line decreases as the educational qualification increases. The probability of a person to fall below the poverty line with education lower than matric is 0.28%. Whereas, a person with medium or high education has a probability of 0.15% and 0.09% respectively.
But no matter how educated you are, there are chances you might fall below the poverty line. Education does not guarantee income.
Even though, an investment in knowledge pays the best interest but, education is subject to market risk. Please read all college-related documents carefully before investing.
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So true! Well done! In addition , Dear Graduate, School is General. Education is Personal. Education does not guarantee you money. Education gives you tools to think in a specialised, contextual manner.
Until education creates and delivers value, it is useless to you. Money is a reward for the creation and delivery of value. Beyond your Bachelor’s, Master’s or Doctorate Degree, you need to work on your personality, your character and your skills.
Congratulations Oindrila and team. Very well written.
Thank you sir.
This is a great platform. Good work! Nicely written.
Thank you. You can contribute some knowledge too. Please write to us at contact@ecofunomics.com
Nice article. However I think more analysis was possible with the data that u guys seem to have. May be try bringing out another paper. Overall, interesting and very educational. Thanks!
Sure we will try to. 🙂