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This module illustrates how Generalised Lorenz (GL) Curves can be used to identify the best income distribution on social welfare grounds, within a set of alternative income distributions generated by different policy options, in many of the cases where ordinary Lorenz curves fail to work. After illustrating some pitfalls of ordinary Lorenz Curves, a cursory presentation of the step-by-step procedure to check for Generalised Lorenz dominance and to infer welfare judgements is provided and demonstrated with some simple numerical examples. This module also points out the limitations of the GL approach whenever GL curves cross each other. In addition, it illustrates [...]

This analytical tool illustrates how to use objective methods to derive Equivalence scales. The focus will be on the Engel method, on the Rothbarth method and on the Utility-based methods. The main difference between these methods is that the first two are based on proxy variables for the household well-being, while the last set of methods is based on the consideration of the overall preferences revealed by consumers. For further information, see also: Equivalence Scales: General Aspects. EASYPol Series 032 Equivalence Scales. Subjective Methods. EASYPol Series 033 This paper is part of a FAO Policy series: EASYPol-Resources for policy making (in agriculture, rural development [...]

This analytical tool illustrates how to use subjective methods to derive equivalence scales. Different methods exist, but the focus will be on parametric methods. These methods are based on the definition of two broad sets of parameters. The first defines the degree of economies of scale within any given household; the second defines how much any further member adds to the cost of running a family. As we will see, the two concepts are linked, giving rise to a variety of ways to parameterise equivalence scales. For further information, see also: Impacts of Policies on Poverty. The Definition of Poverty. EASYPol Series [...]

This analytical tool illustrates how inequality and poverty analysis may be carried out when the income distribution is defined over households (i.e. household incomes) and not over individuals (i.e. individual incomes). When household incomes are considered, a problem arises with regard to the possibility of comparing monetary incomes of different households with different numbers of inhabitants. In this case, and as described in this module, a correction should be made to meaningfully compare different situations. This correction is called an equivalence scale. An equivalence scale may be a simple per capita measure or a more sophisticated way to take into [...]

This analytical tool illustrates advanced ways to measure poverty. It belongs to a set of EASYPol modules that discuss how to measure poverty according to different perspectives. In particular, this module will deal with generalised poverty gap measures, i.e. those poverty measures based on the definition of the poverty gap. The Sen index, the Foster-Greer-Thorbecke index, the Kakwani index and the Thon index will be discussed. Many public policies may have an impact on poor people. In policy work it is therefore important to simulate the impact of alternative policies on poverty and to rank policy options according to a wide range of poverty measures. This paper will [...]

This analytical tool illustrates advanced ways to measure poverty. It belongs to a set of modules that discuss how to measure poverty according to different perspectives. In particular, this module will deal with distributional poverty measures, i.e. those poverty measures based on some inequality measures. The Sen-Kakwani index, the Blackorby-Donaldson index and the Takayama index will be discussed. Many public policies may have an impact on poor people. In policy work it is therefore important to simulate the impact of alternative policies on poverty and to rank policy options according to a wide range of poverty measures. This module will provide the framework for such an analysis.  For more [...]

This analytical tool describes two of the most commonly used poverty measures in applied policy works, i.e., the headcount ratio (HR) and the poverty gap (PG) ratio. These are basic poverty indicators used to investigate impacts of public policies on poverty. After providing a conceptual background to HR and PG, this module describes step-by-step procedures and provides numerical examples to calculate these measures. In addition, advantages and shortcomings of these measures are discussed, and their explanatory power is investigated. For more information, see also: Impacts of Policies on Poverty. The Definition of Poverty. EASYPol Series 004 Impacts of Policies on Poverty. Absolute Poverty [...]

This analytical tool illustrates how to define “relative” poverty lines, i.e. poverty lines based on approaches that consider the welfare position of each individual or household in relation to the welfare position of other individuals or households belonging to the same community. In particular, the module, after emphasizing the importance of the relative poverty concept in policy work, discusses two methods to define relative poverty lines: a) the “income levels” method; and b) the “income positions” method. It also shows in what these methods differ, and how they can be made operational, by means of step-by-step procedures and examples. In policy work, relativist concepts of poverty are widely [...]

This analytical tool illustrates how to define “absolute” poverty lines, i.e poverty lines based on approaches that consider the welfare position of each individual or household as if it were independent of the conditions of other individuals or households belonging to the same community. In particular, this module will discuss the following methods: the food energy intake (FEI) the cost of basic needs (CBN) the consumption insufficiency method (CI) the budget standard method (BS) The analogies and differences of the above methods will be highlighted and we shall also illustrate how they can be made operational and how they work, by means of stepby-step procedures and examples.  For more information, see [...]

This conceptual and technical paper illustrates how poverty can be defined in the context of policy impact analysis. After reporting and discussing the definition of poverty as “the lack of, or the inability to achieve, a socially acceptable standard of living”, it discusses the mono-dimensional and multi-dimensional approaches to the definition of poverty. Furthermore, the module focuses on the absolute and the relative concept of poverty, also drawing some analogies and differences with the concept of food security. A step-by-step procedure, illustrated by real case examples, is then provided to guide the reader through the process of poverty definition for [...]