POVERTY IN EUROPE1

In this paper a definition of poverty in terms of welfare is given. A method is developed to derive poverty lines from an individual welfare function of income. The model is extended to analyse the effect of several socio-economic characteristics on the level of the poverty line. An empirical application of the method is given based on data from a survey in eight European countries in 1979. Differences in the poverty lines both between countries and between socio-economic groups within each country are considered. Finally the number of people below these poverty lines is estimated for all countries in the group.     

NEW BUDGET STANDARD POVERTY LINES FOR MALAYSIA

In this paper, shortcomings of the official poverty line are examined. A new set of budget standard poverty lines were derived for various years between 1959 and 1981, by first estimating the food budget for Malaysian households. Then, an allowance for non-food items was obtained on the basis of the estimated food budget, and the relationship between the proportion of income allocated on food and non-food items, together yielding the poverty line. The results suggest that the official and other estimates of the poverty line income were generally higher, and thus have overestimated the extent of poverty in Malaysia.     

A SYNTHESIS OF POVERTY LINE DEFINITIONS*

A fundamental point of discussion in poverty research is whether poverty is an absolute or a relative concept. If poverty is seen to be a situation of absolute deprivation, a poverty line will usually be defined to be independent of the general style of living in society. If poverty is considered to be a situation of relative deprivation, a poverty line will be defined in relation to the general style of living in society. The choice for one of these two approaches has important consequences for social policy, as absolute poverty may be reduced by economic growth, while relative poverty will only decrease when income inequality decreases. This paper suggests a poverty line definition that is not a priori meant to be either absolute or relative, but depends on the perception of poverty in society. If the poverty line is higher in countries with higher median income (as an indicator of “general style of living”) the poverty line is said to be relative; if the poverty line does not vary with median income, it is said to be absolute. The poverty line definition suggested appears to be a generalization of almost all well-known poverty line definitions. Poverty lines thus defined are estimated for eight European countries on the basis of a 1979 survey. The resulting lines appear to have an elasticity with respect to median income of 0.51, and hence can be said to be halfway on the scale between absolute and relative.     

TESTING POVERTY LINES

In theory, a poverty line can be defined as the cost of a common (inter‐personally comparable) utility level across a population. But how can one know if this holds in practice? For groups sharing common consumption needs but facing different prices, the theory of revealed preference can be used to derive testable implications of utility consistency knowing only the “poverty bundles” and their prices. Heterogeneity in needs calls for extra information. We argue that subjective welfare data offer a credible means of testing utility consistency across different needs groups. A case study of Russia's official poverty lines shows how revealed preference tests can be used in conjunction with qualitative information on needs heterogeneity. The results lead us to question the utility consistency of Russia's official poverty lines.     

RELATIVE OR ABSOLUTE POVERTY LINES: A NEW APPROACH

When measuring poverty over time analysts must choose the value of the income elasticity of the poverty line, which essentially determines whether an absolute or relative poverty line is being used. The choice of this parameter is ultimately a value judgement, but this paper suggests an approach which has some empirical basis. Borrowing from the life-style and deprivation approach to poverty, various dimensions of poverty and deprivation are identified and the income elasticity of these items is used as the income elasticity of the poverty line. Data from the 1987 and 1994 Irish Household Budget Surveys suggest an upper bound of 0.7 for this parameter. Poverty measures using a number of values of the income elasticity of the poverty line are presented and test statistics are presented to determine whether observed differences in poverty measures are statistically significant.     

THE EFFECT ON POVERTY STATUS IN ISRAEL OF CONSIDERING WEALTH AND VARIABILITY OF INCOME

This paper assesses the effects of including wealth and the variability of income on the incidence of poverty and the degree of income inequality in Israel. A special survey, which includes data on the wealth and income of a national sample of Israeli families in 1963–64 and 1964–65, allows us to go beyond measures based on current income alone.
The first section reviews earlier studies of poverty in Israel. The next section looks at poverty and inequality in terms of current income, current wealth, and a combined measure of income and wealth. The combined measure is the Hansen-Weisbrod measure (HW), which equals income plus the annuity value of wealth, assuming all wealth is just consumed at the time of death. It is interesting that, in spite of the much higher wealth inequality than income inequality, the HW measure was slightly more equally distributed than income. This result occurred because the annuity component made up a low share of the total HW measure and the correlation between income and wealth was well under 1. Although overall inequality and poverty were similar for income and HW measures, the incidence of poverty by subgroup depended on the measure used.
The final section presents a dynamic view of poverty and inequality. Year-to-year changes in poverty were substantial. Because of the use of a relative poverty concept and the rise in real incomes, the real income poverty line rose by 15 percent between 1963 and 1964. Still, of those in income poverty in 1963, 37 percent managed to escape poverty in 1964. The paper shows how the degree to which poverty was stable or transitory varied substantially by age and country of origin.     

ASPECTS OF POVERTY IN MALAYSIA

This paper is concerned with the definition and measurement of poverty in Malaysia. A poverty line is estimated after considering both the absolute and relative approaches to the definition. Various indices of poverty are discussed, ranging from the simple "incidence of poverty" measure to others which take account of the "poverty gap". There is a derivation of a new index due to Sen, and alternative normalizations are suggested for it. Estimates of all these measures are presented for Malaysia. Finally, the simple "incidence of poverty" measure, which is decomposable, is adopted to construct a "profile" of the poor in Malaysia.     

THE MEASUREMENT OF POVERTY WITH GEOGRAPHICAL AND INTERTEMPORAL PRICE DISPERSION: EVIDENCE FROM RWANDA

It is not known to what extent welfare measures result from seasonal and geographical price differences rather than from differences in living standards across households. Using data from Rwanda in 1983, we show that the change in mean living standard indicators caused by local and seasonal price deflation is moderately significant at every quarter. By contrast, the differences in poverty measures caused by this deflation can be considerable, for chronic as well as transient or seasonal poverty indicators. Thus, poverty monitoring and anti-poverty targeting can be badly affected by inaccurate deflation of living standard data. Moreover, when measuring seasonal poverty, the deflation based on regional prices instead of local prices only partially corrects for spatial price dispersion. Using annual local prices instead of quarterly local prices only yields a partial deflation, which distorts the measure of poverty fluctuations across seasons and biases estimates of annual and chronic poverty.     

MEASURING POVERTY AND DEPRIVATION IN SOUTH AFRICA

This paper compares a standard expenditure-based poverty measure with a specifically created composite measure of deprivation using household survey data from South Africa. While there is a strong overall correlation between expenditures and levels of deprivation, the correlation is much weaker among the worst-off South Africans. In addition, the two measures differ considerably in the impact of race, headship, location (urban, rural), and household size on expenditure poverty versus deprivation. In general, the deprivation measure finds more Africans, rural dwellers, members of de facto female-headed households, and members of smaller households deprived than expenditure poor. Only the differences in the effect of household size on poverty are sensitive to assumptions about equivalence scales. As a result, the two measures diverge greatly in identifying the poorest and most deprived sections of the population, which may have considerable consequences for targeting.     

贫困线研究综述

本文对当前贫困问题研究所采用的贫困线指标的制定方法进行了系统梳理,以促进我国贫困问题研究的进一步完善。本文依次对绝对贫困线、相对贫困线、主观贫困线以及其他贫困线指标进行了研究,最终得出在贫困研究中适宜采用相对贫困线指标的结论。     

THE SIZE AND DISTRIBUTION OF THE POVERTY GAP IN CANADA: A MICRO ANALYSIS OF VARIATIONS AMONG DEMOGRAPHIC GROUPS

Poverty is a much used term by politicians, economists, sociologists, the media and interest groups. Although there is some common consensus that the word poverty means some type of deprivation, there is a lack of comprehensive measures to quantify this term. Although deprivation can relate to a number of areas such as health and education, the focus in policy development has been aimed at economic deprivation or more specifically, income adequacy. Even in this perspective, the availability of comprehensive measures are limited. The United States is the only major industrial nation that has an official poverty line. Several unofficial poverty lines have been developed in Canada, but the poverty measures have not gone beyond head counts of people who fall below these lines. In an environment where the goal is to further progressive social development constrained by inadequate public resources, the emphasis has been on first directing scarce resources to those "most in need". To get a better perception of economic need, this paper provides a micro analysis of the size and distribution of the poverty gap so that meaningful comparisons can be made between demographic groups. The results of this analysis yield some interesting findings. For example, there are virtually no poor elderly couples and although there are a large number of poor single elderly, their income shortfalls are relatively small and are highly concentrated near the poverty line; the poverty rate among families with children is quite low but their incomes on average fall well below the poverty line and are widely dispersed; and single parents fare badly on all measures.     

PREMATURE MORTALITY AND POVERTY MEASUREMENT

There is a glaring paradox in all commonly used measures of poverty. The death of a poor person, because of poverty, reduces poverty according to these measures. This surely violates our basic intuitions of how poverty measures should behave. It cannot be right in concept that differentially higher mortality among the poor serves to reduce poverty. This article begins the task of developing poverty measures that are not perversely mortality sensitive. A family of measures is proposed that is an intuitive modification of standard poverty measures to take into account the fact that the rich live longer than the poor.     

HAS WORLD POVERTY REALLY FALLEN?

We evaluate the claim that world consumption poverty has fallen since 1990 in light of alternative assumptions about the extent of initial poverty and the rate of subsequent poverty reduction in China, India, and the rest of the developing world. We use two poverty indicators: the aggregate headcount and the headcount ratio, and consider two widely-used international poverty lines ($1/day and $2/day). We conclude that, because of uncertainties in relation to the extent and trend of poverty in China, India, and the rest of the developing world, global poverty may or may not have increased. The extent of the estimated increase or decrease in world poverty is critically dependent on the assumptions made. Our conclusions highlight the importance of improving the quality of global poverty statistics.     

IS POVERTY INCREASING IN THE DEVELOPING WORLD?

We assess the developing world's progress in reducing poverty during the late 1980s using new data on the distribution of household consumption or income per person for 44 countries. Local currencies are adjusted to purchasing power parity. To assess robustness, restricted dominance tests are applied to the poverty comparisons. An overall decrease in poverty incidence is indicated over a wide range of poverty lines and measures. However the change is small, and numbers of poor increased at roughly the rate of population growth. The experience was diverse across regions and countries; poverty fell in South and East Asia, while it rose in Latin America and Sub-Saharan Africa.     

THE IMPORTANCE OF CONSECUTIVE SPELLS OF POVERTY: A PATH‐DEPENDENT INDEX OF LONGITUDINAL POVERTY

In this paper we propose a new index of individual poverty in the longitudinal perspective, taking into account the way poverty and non‐poverty spells follow one another along individual life courses. The Poverty Persistence Index (PPI) is based on all the pairwise distances between the waves of poverty. The PPI is normalized and it assigns a higher degree of (longitudinal) poverty to people who experience poverty in consecutive, rather than separated, periods, for whom the distances from the poverty line are larger along time and moreover, when the worst years are consecutive and/or recent. We also propose an aggregate index of persistence in poverty (APPI) in order to measure the distribution of the persistence of poverty in a society, and evaluate at once the diffusion of poverty, its depth, duration, and recentness. The indices are tested in comparison with other measures from the literature both at the individual as well as at the societal level.     

Bivariate income distributions for assessing inequality and poverty under dependent samples

As indicators of social welfare, the incidence of inequality and poverty is of ongoing concern to policy makers and researchers alike. Of particular interest are the changes in inequality and poverty over time, which are typically assessed through the estimation of income distributions. From this, income inequality and poverty measures, along with their differences and standard errors, can be derived and compared. With panel data becoming more frequently used to make such comparisons, traditional methods which treat income distributions from different years independently and estimate them on a univariate basis, fail to capture the dependence inherent in a sample taken from a panel study. Consequently, parameter estimates are likely to be less efficient, and the standard errors for between-year differences in various inequality and poverty measures will be incorrect. This paper addresses the issue of sample dependence by suggesting a number of bivariate distributions, with Singh–Maddala or Dagum marginals, for a partially dependent sample of household income for two years. Specifically, the distributions considered are the bivariate Singh–Maddala distribution, proposed by Takahasi (1965), and bivariate distributions belonging to the copula class of multivariate distributions, which are an increasingly popular approach to modelling joint distributions. Each bivariate income distribution is estimated via full information maximum likelihood using data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey for 2001 and 2005. Parameter estimates for each bivariate income distribution are used to obtain values for mean income and modal income, the Gini inequality coefficient and the headcount ratio poverty measure, along with their differences, enabling the assessment of changes in such measures over time. In addition, the standard errors of each summary measure and their differences, which are of particular interest in this analysis, are calculated using the delta method.     

DOES SAMPLE DESIGN MATTER FOR POVERTY RATE COMPARISONS?

Poverty comparisons—an increasingly important starting-point for welfare policy analysis-are almost always based on household surveys. Therefore they require that one be able to distinguish underlying differences in the populations being compared from sampling variation: standard errors must be calculated. This has typically been done assuming that the household surveys are simple random samples. However, household surveys are more complex than this. We show that taking into account sampling design has a major effect on estimated standard errors for well-known poverty measures. In our samples they increase by around one-half. We also show that making only a partial correction for sample design (taking into account clustering, but not stratification, whether explicit or implicit) can be as misleading as not taking any account of sampling design at all.     

POVERTY IN POLAND DURING THE 1990s: ARE THE RESULTS ROBUST?

This study examines the robustness of poverty measures for Poland in the 1990s to employed methods. At least two definitions or techniques of estimation are applied to each of the following components of poverty measures: (1) household well-being; (2) poverty line; (3) equivalence scales; and (4) poverty index. Furthermore, groups at risk of poverty are selected by means of decomposition of the poverty incidence and by estimation of the probit model. Relatively robust conclusions can be reached for trends in absolute poverty incidence, which show an inverted U-shape with rapidly increasing poverty rates in 1993–1995 and declining rates since, but with continued increases in relative poverty. Some robust correlates of high poverty (low education, unemployment, rural residence, large number of children) are also found.     

FOOD NEEDS AND ABSOLUTE POVERTY IN URBAN SOUTH AMERICA

The minimum cost of an adequate diet, following food preferences, is estimated for families in ten South American cities in five countries, allowing for household composition by age and sex. The ratio of actual expenditure on food and beverages to this normative expenditure is then used to rank families in six classes, of which the bottom two correspond to absolute poverty, or to actual expenditure less than the estimated minimum. Three questions can then be explored: which families appear to be poor, on this measure? how do such families allocate their spending toward other items such as housing? and, does this indicator of poverty classify families in much the same way as other proposed measures? The results suggest some under-reporting of food spending in the poorest class, but otherwise the ratio of reported to normative spending gives good results, free from the errors in other parts of the budget and the arbitrariness of indicators which depend on socially-defined rather than physiological “needs.” Poor families tend to be large, with many children; to have many dependents per income recipient; to have male working members other than the head; to suffer unemployment of members other than the head; to have relatively low levels of schooling; and to show high density in housing. Even quite poor households spend appreciable amounts on housing and on education, while not satisfying all food needs; both kinds of spending increase rapidly as food requirements are met. There are no consistent relations between poverty and type of employment or the share of income attributed to the head. The data refer to 1966–69 and are highly comparable; all monetary estimates are in dollars of equal purchasing power.