Measurements of poverty

Measurements of Poverty

Poverty

Absolute Poverty Relative Poverty

Human Poverty Index

Poverty Line

Food Poverty Line

Non food Poverty Line

Lorenz Curve ( Gini index)

National Poverty Line

• Absolute poverty is a level of poverty as defined in terms of the minimal requirements necessary to afford minimal standards of food, clothing, health care and shelter.

• Relative poverty defines people are relatively impoverished if the customary (average) standard of living in their society requires more spending than the income they have available.

( Source:http://www.unc.edu/depts/econ/byrns_web/Economicae/Essays/ Poverty_RelAbs.html)

Absolute Poverty Measurements

2. Human Poverty Index

1. Poverty Line

“Possible sources of additional family income”

1. Poverty Line ( Poverty Threshold)

Source: B.seebohm rowntree,Poverty: a study of townlife,100th edition,british Library,2000

Food poverty line Non food poverty line

National poverty Line


Food poverty line

Minimum amount of food an individual must consume to stay healthy

Source: Moazzem Hossain, Iyanatul Islam, Reza Kibria, South Asian Economic Development: Transformation, Opportunities and Challenges,

Non food poverty line

Average per capita non-food expenditure of households whose per capita total expenditure is close to the food poverty line.

Source: The Department of Census and Statistics Announces the Official Poverty Line for Sri Lanka, 2004

National poverty LineThis is the percentage of people living below the national poverty line.


Food poverty line measuring method in Sri LankaIn Sri Lanka, the method outlined below is

implemented to derive the food poverty line in the following way:

(i) the households in the 2nd to 4th deciles ranked by real per-capita total consumption expenditure are chosen as the reference group;

(ii) all food items for which information on expenditure, quantity and

estimated calorie value are available are selected;

(iii) the aggregates of food expenditures and calorie intakes in the reference group are calculated;

(iv) the cost per calorie is derived by dividing the former with the latter;

Source: The Department of Census and Statistics Announces the Official Poverty Line for Sri Lanka, 2004


Non Food Poverty Line

The lower bound of the non-food poverty line means average per capita non-food expenditure of households whose per capita total expenditure is close to the food poverty line.

The upper bound is defined means average per-capita non-food expenditure of households whose per-capita food expenditure is close to the food poverty line.


The National Poverty Line


The national poverty line is Rs.3178 of October 2010

- Policy Research and Information Unit ,Sri Lanka-

Criticisms on Poverty Line

Poverty Line is a measure based solely on the cost of food.

It is needed to measure poverty through multiple factors such as housing, transportation, and regional economic differences.

The thresholds are low

Current poverty thresholds were established in the 1960s. Thresholds should vary geographically to reflect variations in the costs of meeting the needs in the thresholds.

The analytical data is low to find the solution to reduce the poverty

It is essential to have the categories (sex,age etc) what affect from poverty more. Then the solutions can be used to that affected group.


The Human Poverty Index (HPI) was an indication of the standard of living in a country, developed by the United Nations.

Not only poor countries but also but also industrial countries also are suffering from the human poverty . So economists introduced separate two indexes to measure the poverty.

1 . Human poverty index for developing countries. (HPI 1)

• Percentage of people who are living more than 40 years.(Longevity)• Adults percentage with illiteracy .(Knowledge)• Percentage of people who are impossible to access for pure water.• Percentage of low weight infants below 5 year old.( Decent

standards of Poverty)

2. Human poverty index


http://en.wikipedia.org/wiki/Standard_of_living

http://en.wikipedia.org/wiki/United_Nations

2. Human poverty index for developing countries.(HPI 2 )

Percentage of people who are not living more than 60 years from

the total population.

Percentage of people who are inability to read and write in day

today activities from the total population.

Segment of people who suffer from income poverty.

Group of population suffer from the unemployment more than 12

months.


Summary of poverty lines at 2002 national prices

Poverty line Rs./month

1. Food poverty line 973

2. Lower poverty line 1267

3. Upper poverty line 1579

Sector 1990-91(%)

1995-96(%)

2002(%)

National26.1 28.8 22.7

Urban 16.3 14.0 7.9

Rural 23.4 30.9 24.7

Estate 20.5 38.4 30.0

Poverty headcount ratio National and by sector (%).

Lorenz curve and Gini coefficient

Lorenz curve is the line which shows the distribution of income among the households.

Relative Poverty measurements

Relative Poverty Measurements

It was developed by Max O. Lorenz in 1905 for representing inequality of the wealth distribution

The Lorenz Curve is a graphical representation of the proportionality of distribution.

To map the Lorenz curve, the cumulative income share is plotted on the vertical axis and distribution of the population on the horizontal axis.

The more curved a Lorenz curve is, and the further it lies below the line of equality,

A linear Lorenz curve is evidence of “perfect” equality.


Gini Index

This index shows the inequality among the household income

Source: Household Income and Expenditure Survey -2005, Department of Census and Statistics, Sri Lanka


Other Poverty Indexes used by the World Bank

• The Human Suffering Index (HSI)• The Physical Quality of Life Index (PQLI)• The Human Development Index (HDI)• Incidence of poverty: The percentage of a country's population that

cannot afford basic necessities (a "basket of goods and services").

This is also known as living below the poverty line (an income level below which a person is unable to meet basic needs)

• Depth of poverty: How far below the poverty line the poor population lives; also called the poverty gap.

• Poverty severity (squared poverty gap): Measures how poor the poor are.

In other words, poverty severity measures how far below the poverty line individuals and households are, with more consequence given to those at the very bottom.

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Group membersH.H.K.R.N.Elizabeth 102308TP.M.S.Jayamali 102313ET.E.T.P.Gunapala 102309XD.S.N.Jayakodi 102312B

Education

Measurements of poverty