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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 illustrates on what basis a poverty index should be chosen. In particular, it discusses the desirable properties that a poverty index should respect. These desirable properties are called axioms. Four classes of axioms will be discussed: focus axioms  monotonicity axioms transfer axioms symmetry axioms As users will see, there is no single measure of poverty that respects all axioms at the same time. Choosing a poverty measure may therefore imply a trade-off between different aims. This paper is part of a FAO Policy series: EASYPol-Resources for policy making (in agriculture, rural development and food security). To find other EASYPol series' resources, go to [...]

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 [...]

This analytical tool illustrates how Crossing 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. It starts by illustrating two alternative income distributions resulting from policy changes that lead to income increases for some individuals and decreases for others. GL curves are then calculated for the alternative distributions to rank them on welfare grounds on the basis of Shorrocks’ Theorem. After observing that Shorrocks’ Theorem is not applicable, because GL curves cross once, necessary additional conditions, such as restrictions on the [...]

This analytical tool 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 [...]

This analytical tool illustrates how Lorenz 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. After highlighting some drawbacks of using specific functional forms of the Social Welfare Function (SWF) to infer welfare judgments, the rationale for using Lorenz Curves to rank income distributions is provided in a step-by-step procedure and is illustrated with some simple numerical examples. This module also points out the limitations of Lorenz dominance and highlights how, in some circumstances, it is necessary to use Generalised Lorenz (GL) Curves. Generalised [...]

This analytical tool explains how to build Lorenz Curves for income distributions and discusses their use for inequality measurement. A short conceptual background, a step-by-step procedure and a simple numerical example illustrate how to calculate and draw Lorenz Curves. A discussion on the use of Lorenz Curves to represent inequality is also provided. It highlights that the Lorenz Curve is one of the most used ways of representing income distributions in empirical works thanks to its immediate comparability with a “natural” benchmark, the Equidistribution line, representing the most egalitarian distribution. The concepts of Lorenz dominance and intersection of Lorenz Curves [...]