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Poverty Measurement

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Lectures on Inequality, Poverty and Welfare

Part of the book series: Lecture Notes in Economics and Mathematical Systems ((LNE,volume 685))

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Abstract

This chapter refers to the measurement of poverty, focusing on objective poverty measures, referred to a single period, taking “income” as the key reference variable and using a relative poverty line to define who are the poor. It also discusses multidimensional (objective) poverty measures. Following the standard approach, a poverty index is conceptualised as a function that combines three different aspects of poverty: Incidence (how many poor people are in society), Intensity (how poor they are) and Inequality (how unequal are the poor). We also refer here to some measures of deprivation and non-monetary poverty indicators.

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Notes

  1. 1.

    There is a long collection of properties that have been discussed in the literature. We mention here the most common ones. For a review of all those properties, see Chakravarty (2009, Ch. 2).

  2. 2.

    Decomposability is a particular case of consistency (see Foster and Shorrocks, 1991).

  3. 3.

    Note that p depends on the whole income distribution y and the poverty line. Precision would require writing p(y, z). Yet we shall renounce to that precision to get a lighter notation.

  4. 4.

    We discuss further this family of indices in the next Lecture.

  5. 5.

    Note that we can write the square of the coefficient of variation as:

    $$ C{V}^2=\frac{\sigma^2}{\mu^2}=\frac{1}{n}{\displaystyle \sum_{i=1}^p\frac{{\left({y}_i-\mu \right)}^2}{\mu^2}}=\frac{1}{n}{\displaystyle \sum_{i=1}^p\left(1+\frac{y_i^2-2\mu {y}_i}{\mu^2}\right)} $$
  6. 6.

    A working-age person is a person aged 18–59 years, with the exclusion of students in the age group between 18 and 24 years. Households composed only of children, of students aged less than 25 and/or people aged 60 or more are completely excluded from the indicator calculation.

  7. 7.

    The European Union Statistics on Income and Living Conditions (EU-SILC) is an instrument aiming at collecting timely and comparable cross-sectional and longitudinal multidimensional microdata on income, poverty, social exclusion and living conditions. This instrument is anchored in the European Statistical System (ESS). The EU-SILC provides two types of data: (a) Cross-sectional data pertaining to a given time or a certain time period with variables on income, poverty, social exclusion and other living conditions. (b)Longitudinal data pertaining to individual-level changes over time, observed periodically over a four-year period. Social exclusion and housing condition information is collected mainly at household level while labour, education and health information is obtained for persons aged 16 and over. The core of the instrument, income at very detailed component level, is mainly collected at personal level.

  8. 8.

    Extracted from Seth and Villar (2016)

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Authors and Affiliations

  1. Department of Economics, Universidad Pablo de Olavide, Seville, Spain

    Antonio Villar

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  1. Antonio Villar
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Villar, A. (2017). Poverty Measurement. In: Lectures on Inequality, Poverty and Welfare. Lecture Notes in Economics and Mathematical Systems, vol 685. Springer, Cham. https://doi.org/10.1007/978-3-319-45562-4_7

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