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Poverty Measurement and Analysis. Suresh Babu International Food Policy Research Institute. Conceptual Framework of Linking Poverty & Nutrition. Nutrition Security. Adult development and Labor productivity. Dietary Intake Macro-nutrients Micro-nutrients. Immediate - PowerPoint PPT Presentation

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  • Poverty Measurement and Analysis

    Suresh BabuInternational Food Policy Research Institute

  • 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 productionincome generationtransfer 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 andLabor productivity Immediate Causes Underlying CausesBasic Causes Nutrition SecurityConceptual Framework of Linking Poverty & Nutrition

  • 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 CausesLabor productivityAdult development

  • Policies that encourage

    -food productionincome generationtransfer 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

  • 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

  • Introduction to Poverty AnalysisWhy poverty analysis?Who wants poverty information?Role of policymakers & policy analystsPoverty estimates for policy analysisPoverty estimates for policy evaluationCost-effectiveness of poverty analysis

  • What is Poverty?Poverty is welfare level below a reasonable minimum.Poverty has various dimensionsIncome povertySecurity povertyEducation povertyHealth Nutrition PovertyMultiple deprivation Poor peoples perception of poverty level

  • What do we mean by Poverty?The primary focus is on individuals or groups suffering from multiple deprivations

    Core PoorEducation poorHealth PoorSecurity PoorIncome Poor

  • Poverty Lines and Poverty MeasurementTwo Issues in Generating Poverty EstimatesFixing a poverty line: Identification

    Measuring poverty: Aggregation

  • Methods of Fixing Poverty Lines

    Cost-of-basic-needs method (Food-share method)Cost of basic food needsCost of basic non-food needsFood-energy methodExpenditure level that meets the food energy requirementBased on calorie-income relationshipsFitting and tracing calorie-expenditure graph

  • Cost-of-Basic-Needs MethodTotal Poverty Line = Z

    Z=ZF + ZN

    ZF = Food Poverty LineZN=Non-food Poverty Line

  • How to calculate the Food Poverty LineCalculate average household (HH) sizeFind minimum requirement of daily per-capita calories for WHOFind the typical food bundle of the relative poor HHCalculate the calories of this food bundleDetermine the cost of this food bundle

    WHOs average minimumZF = calorie requirement calories in average food bundle for relatively poor HHCost of the average food bundle*

  • How to Calculate the Non-food Poverty LineFind typical Household (HH) on the food poverty line.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

  • Minimum daily caloric requirements by sector and gender Urban Rural Age categoriesMaleFemaleMaleFemale0 to 1 year820820820820>1 to 2 years 1,1501,1501,1501,150>2 to 3 years1,3501,3501,3501,350>3 to 5 years1,5501,5501,5501,550>5 to 7 years1,8501,7501,8501,750>7 to 10 years2,1001,8002,1001,800>10 to 12 years2,2001,9502,2001,950>12 to 14 years2,4002,1002,4002,100>14 to 16 years2,6002,1502,6002,150>16 to 18 years2,8502,1502,8502,150>18 to 30 years3,1502,5003,5002,750>30 to 60 years3,0502,4503,4002,750>60 years2,6002,2002,8502,450Source: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. Urbanindividuals are assumed to need 1.8 times the basal metabolic rate (BMR), while rural individuals are assumedto need 2.0 times the average BMR. Children under one year of age are assigned the average caloric need ofchildren either 36, 69, or 912 months old.

  • Poverty lines and spatial price indexes by regionRegionFood poverty lineReference poverty lineUltra poverty lineRelative priceindexMetropolitan50.18129.1975.361.000Lower urban45.94101.7267.520.787Lower rural44.2985.3864.710.661Upper urban45.1967.510.785Upper rural40.3653.370.641101.3682.81Notes: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.

  • Issues in the Poverty LineDoes 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?

  • Measures of PovertyIncidence of Poverty: poverty rateUse the headcount rate to calculate the poverty rate of the % of population below the poverty lineDepth of Poverty how far a person is below the poverty linePoverty Gap aggregation of depth of povertyPoverty Severity aggregation with weights

  • Head-count Index of Poverty Proportion of population whose consumption (y) is less than the poverty line ZY1, Y2,..Z, ..Yn qH =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

  • 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%

  • Head-count of Absolute Poverty for Bangladesh

    YearSectorBBS Graph* Fitting Method +Ahmed et al. (1991)+Ravallion & Sen (1994)Rahman & Haque (1988)Hossain & Sen (1992)Sen & Islam (1993)Muqtada (1986)1973/1974Rural

    Urban82.9

    81.4 (5.6)--65.3

    62.571.3

    n.a.n.a.

    63.255.9

    37.81981/1982Rural

    Urban73.8

    66.071.8

    65.3-79.1

    50.765.3

    n.an.a.

    48.4-

    1983/1984Rural

    Urban57.0

    66.0n.a.

    n.a.53.8

    40.949.8

    39.550.0

    n.a.n.a.

    42.6-1985/1986Rural

    Urban51.0

    56.051.6

    66.845.9

    30.847.1

    29.141.3

    n.a.n.a.

    30.6-1988/1989Rural

    Urban48.0

    44.0-49.7

    35.9-43.8

    n.a.n.a.

    33.4-1991/1992Rural

    Urban50.0

    46.8-52.9

    33.6----

    * BSS 1991 and BSS 1995

  • Poverty Gap Index (PGI)Aggregate short-fall of the poor relative to the poverty line Z

    Y1, Y2,, Yq; Yq ZPoorest Least poor qPG = 1/n [(Z-Yi)/Z] = mean proportionate i=1 poverty gap across the whole population (zero gap for the non=poor)

  • 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] = or 0.25

    Poverty gap index does not capture differences in severity of poverty.

  • Why?Region A = (1,2,3,4)

    Region B = (2,2,2,4)

    Poverty line = Z = 3HA = 0.75 HB = 0.75PGA = 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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