Measuring Poverty

Single Indicators

• Poverty can be measured using single indicators.
• Single indicators use only 1 factor to measure poverty.\

Examples of Single Indicators

International Poverty Line (Absolute poverty)

• Anyone earning below an internationally defined income is defined as living in absolute poverty.

Birth Rates

• A high birth rate suggests that a large portion of the population is too young to be employed and is financially dependent on adults.

Primary Sector Dependency

• The primary sector refers to sectors of an economy that extracts or use natural resources such as agriculture, mining, fishing.
• People working in these sectors tend to earn far less than those working in higher level sectors, such as the tertiary and quaternary sectors.

Large Informal Economy

• A large informal economy might be due to difficult access to necessities through legal means.
• It might also be an indicator of poor management by a government due to lack of resources.

Minimum Income Standards

• Each country typically has its own poverty line which can be used to determine the number of people in poverty.

Composite Indicators

• Composite indicators compute multiple single indicators to form an accurate measure of the multi-dimensional concepts.

Examples of Composite Indicators

Human Development Index (HDI)

• Used by the UN to determine the quality of life in an economy.
• 3 main factors include:
  • GNI per capita (economic well-being)
  • Life expectancy (healthcare)
  • Average and expected years of schooling (Education)

Multidimensional Poverty Index (MPI)

• Also used by the UN to measure poverty.
• Measures a wide variety of single indicators such as health, education, living standards, sanitation, clean drinking water and electricity.
• There are several dimensions each with multiple indicators that have different weightings.

Challenges in Measuring Poverty

Imperfect Data

• Surveying is difficult especially in countries where resources are stretched.
• Some elements of poverty are difficult to measure, feeling of uncertainty, vulnerability, fear.

Difficult to Define Poverty

• Absolute poverty, relative poverty, acute poverty, income poverty, multidimensional poverty.

Minimum Income Standards

• Each country typically has its own poverty line which can be used to determine the number of people in poverty.

Political Motives

• Countries can have political motives to make poverty statistics look better.

Intra-Household Poverty

• By measuring poverty on a h​ousehold basis, individual poverty is not included.
• For example, women in households may lack access to resources more than their male counterparts.