Chapter 41 Poverty and policy The structure efficiency and growth of production affect (and are affected by) the distribution of consumption. Poverty analysis has three tasks: (1) to define and describe poverty (2) to understand its causes and (3) to inform policy. This chapter outlines history of economic thought on poverty since the mercantilists concentrating on relevance to current economic analysis and policy. It examines how poverty is defined and measured. Evidence from modern household surveys has allowed in the examination of the interactions between demographic nutritional and labor force characteristics of poverty groups. In this process modern economics is developing some of the central insights of the classical economists though with measurement and modeling methods not available to them. The chapter discusses the classic development issue of the effect of growth on poverty and inequality and (the recent classic) macroeconomic adjustment and the poor. It explores several issues that arise in governmental attempts to reduce poverty through direct interventions.