Types of Poverty

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

This quiz explores the different types of poverty, including transient, chronic, and persistent poverty, and how they can be measured beyond income.