Types of Poverty
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What is the main limitation of using income to measure poverty?

  • Income is imperfectly measured and its advantages greatly differ depending on circumstances. (correct)
  • It is difficult to define a universal poverty line.
  • It is only applicable to developed countries.
  • It only captures one dimension of poverty.

    • What replaced the Human Poverty Index (HPI) in 2010?

  • Poverty Dynamics Index (PDI)
  • Income Poverty Index (IPI)
  • Sustainable Development Goals Index (SDGI)
  • Multidimensional Poverty Index (MPI) (correct)

    • 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. (correct)
  • Inequality is a temporary phenomenon, whereas poverty is persistent.
  • Inequality is only measured using income, while poverty is measured using multiple indicators.
  • Poverty is only applicable to developing countries, while inequality is a global issue.

    • What is the characteristic of the 'Transient poor'?

    <p>They are on average above the poverty line, but sometimes fall below it. (A)</p> Signup and view all the answers

    What is the purpose of the Multidimensional Poverty Index (MPI)?

    <p>To identify the poor using dual cutoffs for levels and numbers of deprivations. (B)</p> Signup and view all the answers

    What is the main advantage of using Amartya Sen's capability framework?

    <p>It captures multiple dimensions of poverty beyond income. (C)</p> Signup and view all the answers

    What is the characteristic of the 'Chronic poor'?

    <p>They are on average below the poverty line, but sometimes rise above it. (A)</p> Signup and view all the answers

    What is the characteristic of the 'Persistent poor'?

    <p>They are always in poverty. (B)</p> Signup and view all the answers

    What is the primary purpose of measuring poverty?

    <p>To keep poor people on the agenda (D)</p> Signup and view all the answers

    What is the second step in measuring poverty?

    <p>Setting the poverty line (B)</p> Signup and view all the answers

    What is the most commonly used measure of household welfare?

    <p>Income (B)</p> Signup and view all the answers

    What is the potential problem with using the Haig and Simons definition of income?

    <p>It is not clear what time period is appropriate (A)</p> Signup and view all the answers

    Which of the following is a demographic characteristic?

    <p>Family size (A)</p> Signup and view all the answers

    What is the purpose of generating a summary statistic in measuring poverty?

    <p>To aggregate the information from the distribution of the welfare indicator (C)</p> Signup and view all the answers

    Which of the following is a factor that affects poverty dynamics?

    <p>All of the above (D)</p> Signup and view all the answers

    Why is it important to choose an appropriate indicator of welfare?

    <p>To accurately measure poverty (C)</p> Signup and view all the answers

    What does the Poverty Gap Index express as a percentage of the poverty line?

    <p>The extent to which individuals on average fall below the poverty line (B)</p> Signup and view all the answers

    What is the main difference between the Poverty Gap Index and the Poverty Severity Index?

    <p>The Poverty Gap Index is weighted equally, while the Poverty Severity Index is weighted by poverty gaps (C)</p> Signup and view all the answers

    What is the role of the parameter α in the Foster, Greer, and Thorbecke (1984) formula?

    <p>It is a measure of the sensitivity of the index to poverty (D)</p> Signup and view all the answers

    What is the special case of the Foster, Greer, and Thorbecke (1984) formula when α=0?

    <p>The headcount index (D)</p> Signup and view all the answers

    What is the focus of the dynamics of poverty?

    <p>Capturing the mobility in and out of poverty (C)</p> Signup and view all the answers

    What is the category of poor individuals who are on average above a poverty line and never in poverty?

    <p>Never Poor (B)</p> Signup and view all the answers

    What is the main purpose of the Poverty Gap Index?

    <p>To measure the depth of poverty (D)</p> Signup and view all the answers

    What is the Poverty Severity Index a measure of?

    <p>Poverty (A)</p> Signup and view all the answers

    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:
      1. Defining an indicator of welfare
      2. Setting the poverty line
      3. Generating a summary statistic

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    Description

    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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