Lecture 3: Concepts and Indicators Flashcards
Poverty Line Approach
average of national poverty lines of a set of 28 poor countries
Headcount ratio
proportion of population earning an income (Y) below the poverty line (Z). So H measures the incidence of poverty.
Poverty Gap
the average income shortfall across the entire population. This measures the gap between each person’s income to the ‘poverty line’ income, expressed as percent of Z. So the PG approach measures the depth of poverty
What measures the headcount ratio
incidence of poverty
what measures the poverty gap
depth of poverty
Squared Poverty Gap
same as the Poverty Gap approach, but the ‘gaps’ are squared first. This results in extreme shortfalls counting more strongly, so PG2 measures the severity of the poverty
What measures the squared poverty gap
the severity of the poverty
poverty line income
sum of food and non-food component. For the food component, the WHO says that a person needs a daily minimum intake of 2.100 calories
why are national poverty lines higher in richer societies?
in richer societies there are higher economic standards. higher economic standards induce the preference drift, which leads to an expanding list of ‘essentials’
why is calculating from household consumption to poverty per capita not done through dividing the total household consumption by number of members?
- The cost of basic needs are lower for larger families (economies of scale)
- Needs differ across age categories (children versus adults)
Poverty dynamics
the poverty rate is a ‘pool’ with an in- and outflow
Transient poor
people who go in or out the poverty ‘pool’
descend or escape
chronic poor
people stay into the poverty ‘pool’
What does the Gini Index measure
it measures the concentration of income across the entire population
Gini index = 0
full equality (all members have identical incomes)
