Day 6: 7 November international guidelines and recommendations Presenter: Ms. Sharlene Jaggernauth, Statistician II, CSO

Transcription

1 Day 6: 7 November 2011 Topic: Discussion i of the CPI/HIES in T&T in the context t of international guidelines and recommendations Presenter: Ms. Sharlene Jaggernauth, Statistician II, CSO

2 Concept of poverty European Union (Council Decision, December, 1984) The poor shall be taken to mean persons, families and groups whose resources (material, cultural and social) are so limited as to exclude them from the minimum acceptable way of life in the member state in which they live.

3 In measurement of poverty, basic assumption is that there is exactly defined level of the living standard assigned as "poverty line", that should be reached if we don't want some persons to be regarded as poor

4 Absolute poverty line Relative poverty line Subjective poverty line

5 Rowentree: considered a family to be living in poverty, if its earnings were insufficient to buy the minimum necessaries for the maintenance of physical efficiency (basic needs approach)

6 - Absolute poverty line is based on defining absolute standard of existence for minimal expenditures.

7 the determination of minimum necessaries or essential needs the quantitative assessment of these needs No generally accepted standard for essentials of living, except food.

8 The proportion of income (or expenditures) spent on food decreases when income increases. Establishes a relationship between consumption of food and total income Cost of food multiplied by the inverse of the average Engel coefficient i gives a poverty line in terms of income

9 Household A B C D E F G mean Household income Household composition 2A+1C 2A 3A 1A 1A+2C 2A+3C 2A+2C Food expenditure Engel coefficient Minimum food outlays =5500 Average Engel coefficient=0.28 Inverse Engel Coefficient=1/0.28=3.57 Poverty line 3.57 * 5500 = Poor households: B, E

10 A certain food-income ratio is taken to be poverty threshold Expenditure patterns determine the poverty line, and not a certain prescribed diet

11 Mean Engel coefficient - poverty threshold Poor households: Household A Engel coefficient of 0.33 Household B Engel coefficient of 0.40 Household G Engel coefficient of 0.32

12 Relative poverty line is based on establishing of relative standard for existence defined as indispensable level of income (expenditures). - Depends on the income distribution in the society - Depends to a great extend on the historical i development

13 Example 3 Arithmetic ti mean = ( )/7=24500 Geometric mean = (21000*15000*30000*27500*18000*35000*25000) =23913 Median=25000 (15000,18000,21000,25000, 27500, 30000, 35000) Choice of cut-off point Arbitrary (50% of mean, 80% of mean, 50% of median) Dual poverty lines (lower and upper poverty line)

14 Subjective poverty line is based on defining subjective standard for existence which is indispensable for avoiding the poverty according to the opinion of the population.

15 head count ratio income gap ratio poverty gap ratio poverty severity index

16 indicator of the incidence of poverty proportion of the population living i below the poverty line (households or individuals, depending on the measurement unit chosen) H = q n - insensitive to differences between households or individuals in the depth or severity of their poverty. q-number of poor / number of persons / households h below the poverty line n- Total number of persons / households

17 poverty gap per poor person in relation to the poverty line - measures the difference between the poverty line and the mean income of the poor, expressed as a ratio of the poverty line (mean proportionate income shortfall per poor household) I = z y z y = 1 q * i q = 1 y i

18 - mean proportionate income shortfall for the total population q z y = 1 i P n i = 1 z - insensitive to the severity of poverty

19 minimum amount of income transfer that is necessary to alleviate poverty g = q i = 1 ( z y i )

20 attaches greater weight to the income gap of poorer households FGT (Foster-Greer-Thorbecke index) P2 = 1 n i q z yi = 1 z 2

21 Censuses Institutional evidence Household surveys

22 Most comprehensive data source on: - demographic and socio-economic characteristics of the households - income and expenditures

23 - the sample is rather small - undercoverage of some population groups - a high likelihood of measurement errors because of the nature of the information collected - lacks information on some variables - the utilisation of public services such as education and health facilities

24 For operationalisation of the poverty concept it is necessary to decide how living standard will be measured. Income expenditures

25 mod. OECD LIS OECD first adult second adult child

26 a) no information on household size Household A B C D E F G Mean H-h income Ranking order Household F - the richest Household B - the poorest

27 H-hd A B C D E F G Mean H-hd income H composition 2A+1C 2A 3A 1A 1A+2C 2A+3C 2A+2C Equiv. income Ranking order Household F - no longer the richest Household B - no longer the poorest

28 OECD Equivalence scale (1.0; 0.7; 0.5) H-hd A B C D E F G Mean H income H-hd comp. 2A+1C 2A 3A 1A 1A+2C 2A+3C 2A+2C H-hd equiv Equiv.incomeincome Rank. order Household D - the richest Household F - third Household B - the poorest

29 Modified OECD equivalence scale (1.0; 0.5; 0.3) Household A B C D E F G Mean H-hd income H-hd comp. 2A+1C 2A 3A 1A 1A+2C 2A+3C 2A+2C H-hd equiv Equiv. Inc Ranking order Households A and F change places D Household F - third Household B - the poorest