24 Questions
What is the main limitation of using income to measure poverty?
Income is imperfectly measured and its advantages greatly differ depending on circumstances.
What replaced the Human Poverty Index (HPI) in 2010?
Multidimensional Poverty Index (MPI)
What is the main difference between poverty and inequality?
Poverty is a narrower concept, focusing on a subset of the population, while inequality is broader, encompassing the entire population.
What is the characteristic of the 'Transient poor'?
They are on average above the poverty line, but sometimes fall below it.
What is the purpose of the Multidimensional Poverty Index (MPI)?
To identify the poor using dual cutoffs for levels and numbers of deprivations.
What is the main advantage of using Amartya Sen's capability framework?
It captures multiple dimensions of poverty beyond income.
What is the characteristic of the 'Chronic poor'?
They are on average below the poverty line, but sometimes rise above it.
What is the characteristic of the 'Persistent poor'?
They are always in poverty.
What is the primary purpose of measuring poverty?
To keep poor people on the agenda
What is the second step in measuring poverty?
Setting the poverty line
What is the most commonly used measure of household welfare?
Income
What is the potential problem with using the Haig and Simons definition of income?
It is not clear what time period is appropriate
Which of the following is a demographic characteristic?
Family size
What is the purpose of generating a summary statistic in measuring poverty?
To aggregate the information from the distribution of the welfare indicator
Which of the following is a factor that affects poverty dynamics?
All of the above
Why is it important to choose an appropriate indicator of welfare?
To accurately measure poverty
What does the Poverty Gap Index express as a percentage of the poverty line?
The extent to which individuals on average fall below the poverty line
What is the main difference between the Poverty Gap Index and the Poverty Severity Index?
The Poverty Gap Index is weighted equally, while the Poverty Severity Index is weighted by poverty gaps
What is the role of the parameter α in the Foster, Greer, and Thorbecke (1984) formula?
It is a measure of the sensitivity of the index to poverty
What is the special case of the Foster, Greer, and Thorbecke (1984) formula when α=0?
The headcount index
What is the focus of the dynamics of poverty?
Capturing the mobility in and out of poverty
What is the category of poor individuals who are on average above a poverty line and never in poverty?
Never Poor
What is the main purpose of the Poverty Gap Index?
To measure the depth of poverty
What is the Poverty Severity Index a measure of?
Poverty
Study Notes
Types of Poverty
- Transient poor: above poverty line on average, but sometimes in poverty
- Chronic poor: below poverty line on average, but sometimes out of poverty
- Persistent poor: always in poverty
Multidimensional Poverty
- Cannot be measured by income alone
- Human Poverty Index (HPI) used by UNDP from 1997 to 2009
- Multidimensional Poverty Index (MPI) replaced HPI in 2010
- MPI uses dual cutoffs for levels and numbers of deprivations
- MPI multiplies percentage of people living in poverty by percentage of weighted indicators for which poor households are deprived on average
Inequality
- Broader concept than poverty, defined over entire population
- Measures are calculated for distributions other than expenditure (e.g. income, land, assets, tax payments)
Poverty Indices
- Poverty Gap Index (P1): adds up extent to which individuals fall below poverty line, expressed as percentage of poverty line
- Poverty Severity Index (P2): weighted sum of poverty gaps, takes into account inequality among poor
- Foster, Greer, and Thorbecke (1984) poverty indexes: general class of poverty indexes with poverty aversion parameter (α)
- α=0: headcount index, α=1: poverty gap index, α=2: poverty severity index
Dynamics of Poverty
- Capturing mobility in and out of poverty
- Distinguishing categories of poor based on dynamics of poverty:
- Never Poor: above poverty line and never in poverty
- Transient Poor: above poverty line on average, but sometimes in poverty
- Chronic Poor: below poverty line on average, but sometimes out of poverty
- Persistent Poor: always in poverty
Factors Influencing Poverty
- Demographic characteristics (age, gender, ethnicity, family size, dependency ratio)
- Asset possession (land, education, social capital)
- Activity (choice of crops, type of employment)
- Location (rural-urban, region, neighbourhood effects)
- Access to public services (health, school, social protection programs)
- Access to market (distance, financial services)
Measuring Poverty
- Reasons to measure poverty:
- Keep poor people on agenda
- Identify and target poor people
- Monitor and evaluate projects and policy interventions
- Evaluate effectiveness of institutions helping poor people
- Steps in measuring poverty:
- Defining an indicator of welfare
- Setting the poverty line
- Generating a summary statistic
This quiz explores the different types of poverty, including transient, chronic, and persistent poverty, and how they can be measured beyond income.
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