1 IFPRI Suresh Babu International Food Policy Research Institute Poverty Measurement and Poverty Measurement and Analysis Analysis
Dec 20, 2015
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Suresh BabuInternational Food Policy Research Institute
Poverty Measurement and Poverty Measurement and AnalysisAnalysis
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Dietary IntakeMacro-nutrientsMicro-nutrients
Health Status
Access to food
Household income/ expenditures on food
Maternal & child care practices
Quality & quantity of care
Health environment & services
Access & quality of health, sanitation & water
Policies that encourage
-food production-income generation-transfer food in-kind
Policies & programs that increase-caregivers access-caregivers resource control-caregivers knowledge, adoption & practice
Policies that improve
-adequate sanitation-safe water supply-health care availability-environmental safety/ shelter
Political & legal Institutions
Political commitment, legal structures for implementing food laws
Potential resources
Poverty/natural resources availability/ agricultural technology
Resource control, ownership, use
Resource use & pricing policies
Adult development and
Labor productivity
Immediate Causes
Underlying Causes
Basic Causes
Nutrition Security
Conceptual Framework of Linking Poverty & Nutrition
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Nutrition Security
Dietary IntakeMacro-nutrientsMicro-nutrients
Health Status
Access to food
Household income/ expenditures on food
Maternal & child care practices
Quality & quantity of care
Health environment & services
Access & quality of health, sanitation & water
Immediate Causes
Labor productivity
Adult development
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Policies that encourage
-food production-income generation-transfer food in-kind
Policies & programs that increase
-caregivers access-caregivers resource control-caregivers knowledge, adoption & practice
policies that improve
-adequate sanitation-safe water supply-health care availability-environmental safety/ shelter
Underlying Causes
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Political & legal institutions
Political commitment, legal structures for implementing food laws
Potential resources
Poverty/natural resources availability/ agricultural technology
Resource control, ownership, use
Resource use & pricing policies
Sources: Adapted from UNICEF (1998); Haddad (1999); and Smith and Haddad (2000)
Basic Causes
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Introduction to Poverty Analysis
Why poverty analysis?Who wants poverty information?Role of policymakers & policy analystsPoverty estimates for policy analysisPoverty estimates for policy evaluationCost-effectiveness of poverty analysis
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What is Poverty?
Poverty is “welfare level below a reasonable minimum.”Poverty has various dimensions
Income povertySecurity povertyEducation povertyHealth – Nutrition PovertyMultiple deprivation
Poor people’s perception of poverty level
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What do we mean by “Poverty”?The primary focus is on individuals or groups suffering from multiple deprivations
Core Poor
Education poor
Health Poor
Security Poor
Income Poor
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Poverty Lines and Poverty Measurement
Two Issues in Generating Poverty Estimates
Fixing a poverty line: Identification
Measuring poverty: Aggregation
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Methods of Fixing Poverty Lines
Cost-of-basic-needs method (Food-share method)
Cost of basic food needsCost of basic non-food needs
Food-energy methodExpenditure level that meets the food energy requirementBased on calorie-income relationshipsFitting and tracing calorie-expenditure graph
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Cost-of-Basic-Needs Method
Total Poverty Line = Z
Z=ZF + ZN
ZF = Food Poverty LineZN=Non-food Poverty Line
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How to calculate the Food Poverty Line
1. Calculate average household (HH) size2. Find minimum requirement of daily per-capita
calories for WHO3. Find the typical food bundle of the relative poor HH4. Calculate the calories of this food bundle
5. Determine the cost of this food bundle
WHO’s average minimumZF = calorie requirement calories in average food bundle for relatively poor HH
Cost of the average food bundle
*
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How to Calculate the Non-food Poverty Line1. Find typical Household (HH) on the food poverty line.2. Calculate the non-food expenditures of the HH.
xF = per capita expenditures on food XN = per capita expenditure on non-foodX = total per capita expenditure
ZN = E {XN|xF= ZF} for the poor (Non-food poverty line is the per capita non-food expenditure level when
the per capita food expenditure level is equal to the food poverty line)
ZN = E {XN|x= ZF} for the ultra (extreme) poor (The non-food poverty line is given by the per capita non-food expenditure
when the total expenditure is equal to the food poverty line. The food poverty line in essence becomes the total poverty line for the ultra poor)
Z = ZF + ZN
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Minimum daily caloric requirements by sector and gender Urban Rural
Age categories Male Female Male Female0 to 1 year 820 820 820 820>1 to 2 years 1,150 1,150 1,150 1,150>2 to 3 years 1,350 1,350 1,350 1,350>3 to 5 years 1,550 1,550 1,550 1,550>5 to 7 years 1,850 1,750 1,850 1,750>7 to 10 years 2,100 1,800 2,100 1,800>10 to 12 years 2,200 1,950 2,200 1,950>12 to 14 years 2,400 2,100 2,400 2,100>14 to 16 years 2,600 2,150 2,600 2,150>16 to 18 years 2,850 2,150 2,850 2,150>18 to 30 years 3,150 2,500 3,500 2,750>30 to 60 years 3,050 2,450 3,400 2,750>60 years 2,600 2,200 2,850 2,450
Source: Caloric requirements are from WHO (1985, Tables 42 to 49).Notes: Requirements used are for men weighing 70 kilograms and for women weighing 60 kilograms. Urban
individuals are assumed to need 1.8 times the basal metabolic rate (BMR), while rural individuals are assumed
to need 2.0 times the average BMR. Children under one year of age are assigned the average caloric need of
children either 3–6, 6–9, or 9–12 months old.
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Poverty lines and spatial price indexes by region
Region
Food poverty
line
Reference poverty
line
Ultra poverty
line
Relative priceindex
Metropolitan 50.18 129.19 75.36 1.000
Lower urban 45.94 101.72 67.52 0.787
Lower rural 44.29 85.38 64.71 0.661
Upper urban 45.19 67.51 0.785
Upper rural 40.36 53.37 0.641
101.36
82.81
Notes: Poverty lines are monthly, per capita figures in Egyptian pounds. The Metropolitan poverty line is used as abase line to create the relative price index, which is simply the ratio of each region's reference poverty line tothe base line.
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Issues in the Poverty Line
Does a poverty line exists?Can it be used & is it well accepted?Are international standards for setting poverty lines accepted in all countries?Can we use the same poverty line throughout a country?Can the nutritional basket underlying the poverty line be derived from surveys?
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Measures of Poverty
Incidence of Poverty: poverty rateUse the headcount rate to calculate the poverty rate of the % of population below the poverty line
Depth of Poverty – how far a person is below the poverty linePoverty Gap – aggregation of depth of povertyPoverty Severity – aggregation with weights
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Head-count Index of Poverty Proportion of population whose consumption (y) is less than the poverty line Z
Y1, Y2,..…Z, ..…Yn q
H =q/n
H = Head-count index q = number of poor n = size of the populationEg: if n=100; q=50 then H=0.5 or 50%
ProblemsInsensitive to the depth of povertyH will not change when a poor persons welfare changes if he/she remains below the poverty line
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Example of the Head-count Index Calculation
Income of 4 individuals in a sample: 1,2,3,4
Poverty Line Z = 3.0
H = q/n =3/4 = 0.75 or 75%
+ food energy method * BSS 1991 and BSS 1995 20 IFPRI
Year Sector BBS Graph* Fitting Method +
Ahmed et al. (1991)+
Ravallion & Sen (1994)
Rahman & Haque (1988)
Hossain & Sen (1992)
Sen & Islam (1993)
Muqtada (1986)
1973/1974
Rural
Urban
82.9
81.4 (5.6)
- - 65.3
62.5
71.3
n.a.
n.a.
63.2
55.9
37.8
1981/1982
Rural
Urban
73.8
66.0
71.8
65.3
- 79.1
50.7
65.3
n.a
n.a.
48.4
-
1983/1984
Rural
Urban
57.0
66.0
n.a.
n.a.
53.8
40.9
49.8
39.5
50.0
n.a.
n.a.
42.6
-
1985/1986
Rural
Urban
51.0
56.0
51.6
66.8
45.9
30.8
47.1
29.1
41.3
n.a.
n.a.
30.6
-
1988/1989
Rural
Urban
48.0
44.0
- 49.7
35.9
- 43.8
n.a.
n.a.
33.4
-
1991/1992
Rural
Urban
50.0
46.8
- 52.9
33.6
- - - -
Head-count of Absolute Poverty for Bangladesh
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Poverty Gap Index (PGI)Aggregate short-fall of the poor relative to the poverty line Z
Y1, Y2,…, Yq; Yq ZPoorest Least poor
q
PG = 1/n Σ [(Z-Yi)/Z] = mean proportionate
i=1 poverty gap across the whole population (zero gap
for the non=poor)
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Example of Poverty Gap CalculationIncome of4 individuals in a sample: 1,2,3,4
Poverty line = Z = 3; n=4
PG = [(3-1)/3 + (3-2)/3]/4 = [(2/3) + (1/3)]/4 = [(3/3)/4] = ¼ or 0.25
Poverty gap index does not capture differences in severity of poverty.
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Why?
Region A = (1,2,3,4)
Region B = (2,2,2,4)
Poverty line = Z = 3HA = 0.75 HB = 0.75
PGA = 0.25 PGB = 0.25 Poverty gap will be unaffected by an income
transfer from a poor person to another poor person who remains below the poverty line
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Squared Poverty Gap Index (SPG)Mean of the squared proportionate poverty gapReflects severity of povertySensitive to the distribution among the poor
q
SPG = 1/n Σ [(Z-Yi)/Z]2
i=1 Eg: Region A = (1,2,3,4) Region B = (2,2,2,4) with Z=3 SPGA = 0.14 SPGB = 0.08
Poverty in region A > Poverty in region B
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Poverty AnalysisIncome/Consumption Poverty Profile
Correlates poverty with: Gender Age Residential location Ethnic characteristics Income source Employment sources Share of food/ non food consumption Education outcomes Malnutrition outcomes
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Qualitative Analysis of Poverty
Role of informal sector?Social analysis of poverty?Institutional analysis of poverty reducing institutionsIntra-household distribution of resources
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Use of Qualitative Methods
Subjective meaning of povertyIntra-household dimensions of povertyPoor people’s priorities for actionSocial, political, and cultural factors, gender roles, and traditional beliefsParticipants help in designing household surveysAssess the validity of HHS results at local level
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Income or Consumption?
Consumption reflects income as well as past savings, access to credit markets, and seasonal variation in incomeNo records of income or seasonal fluctuationsLarge informal sectorsConsumption data helps in deriving the poverty line
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Measuring Income/ Consumption Poverty
Household data availability – toolsMeasurement of income povertyQuantitative analysis toolsQualitative analysis toolsIncome poverty dynamics – tools
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Data Needs for Poverty Analysis
National level dataNational accounts – GDP, consumption, savings, investment, imports, exports, etc.Ministry of Finance, Central Statistical AgencyBudgets, price surveys, and data collectionMonthly, quarterly, and yearly
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Data Needs for Poverty Analysis cont.
Local level dataConsumer and producer prices, climatic data, availability and use of markets and services CSA, local service providers, regional departmentsPrice and market surveysMonthly, yearly
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Data Needs for Poverty Analysis cont.
Household – Individual level dataHousehold income, consumption, employment, assets, production, demography, etc.CSA, sectoral ministries, NGOs, academicsHousehold survey, rapid assessments, monitoring and evaluationYearly, 2-3 years, every 5 years
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Data Sources for Poverty Analysis
Administrative dataPopulation CensusHousehold surveys – LSMS, I&E, Labor, DHS, RRAQualitative and Participatory Assessments – ethnographic, village studies, beneficiary assessments, etc.
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Types of Household Surveys
Single-topic surveysMulti-topic surveysCensus dataPoverty monitoring surveysTimes series dataPanel data sets