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Compendium of Best Practices in Poverty Measurement Expert Group on Poverty Statistics

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Compendium of Best Practices in Poverty Measurement Expert Group on Poverty Statistics Expert Group on Poverty Statistics Rio Group Compendium of best practices in poverty measurement Expert Group on Poverty Statistics Rio Group Compendium of best practices in poverty measurement Rio de Janeiro, September 2006 ISBN 85-240-3908-6 Index 3 Index Acknowledgments ............................................................7 Preface................................................................................9 Chapter 1 Introduction....................................................15 1.1 Poverty - An historical perspective .........................16 1.2 Poverty and policy ....................................................24 1.3 Bibliography ..............................................................28 Chapter 2 The poverty line approach ............................35 2.1 Common Issues.........................................................36 2.1.1 The unit of analysis, equivalences and economies of scale………….................................................................................36 2.1.2 Resources........................................................................41 2.1.3 Sources of information for the measurement of resources…….................................................................................48 2.2 Absolute poverty lines..............................................53 2.2.1 Standards: the poverty line ..............................................53 2.2.2 Sources of information.....................................................62 2.2.3 Resources........................................................................64 2.2.4 Challenges, options and shortcomings............................65 2.2.5 Special topic: health status and poverty measurement ...67 2.3 Relative poverty lines ...............................................73 2.3.1 Standards.........................................................................74 2.3.2 Resources and sources of information ............................78 2.4 Subjective poverty lines ...........................................80 Expert Group on Poverty Statics 4 Compendium of best practices in poverty measurement 2.4.1 Standards.........................................................................80 2.4.2 Sources of information.....................................................85 2.4.3 Challenges, options and shortcomings............................88 2.5 Bibliography ..............................................................89 2.6 Annex: Aggregation..................................................95 2.6.1 Axioms for the poverty indices.........................................95 2.6.2 Poverty indices.................................................................96 Chapter 3 Measuring poverty by aggregating deprivation indicators ...................................................101 3.1 Standards.................................................................103 3.1.1 Selecting the basic needs and indicators ......................103 3.1.2 Thresholds for each need ..............................................106 3.1.3 Aggregation of individual standards...............................109 3.2 Unit of reference......................................................113 3.3 Geographic disaggregation....................................113 3.4 Updating the standards ..........................................114 3.5 Sources of information...........................................115 3.6 Special topic: child poverty....................................116 3.7 Bibliography ............................................................119 Chapter 4 Combining poverty line and deprivation indices………..................................................................121 4.1 Standards.................................................................122 4.2 Unit of analysis........................................................131 4.3 Typology of combined poverty results .................131 4.4 Sources of information...........................................133 4.5 Bibliography ............................................................134 Rio Group Index 5 Chapter 5 Operational challenges ...............................139 5.1 Measurement and policy ........................................140 5.1.1 Poverty data for different needs.....................................140 5.1.2 Policies related to the poverty line approach.................142 5.1.3 Policies related to the deprivation approach..................144 5.2 International comparisons .....................................145 5.3 Information strategies.............................................152 5.4 Bibliography ............................................................156 Boxes Box 2.1 Equivalence scales ..........................................................38 Box 2.2 Constructing poverty lines with consumption equivalence and economies of scale..................................................................40 Box 2.3 The use of survey and census data to estimate poverty at the microeconomic level.................................................................50 Box 2.4 Eclac’s practice in the use of national accounts to adjust household incomes ........................................................................53 Box 2.5 International comparisons of absolute poverty and the “one dollar a day” poverty line ................................................................66 Box 2.6 The Laeken indicators......................................................75 Box 2.7 International comparisons of relative poverty ..................77 Box 2.8 Some results on the comparison of subjective and objective poverty results.................................................................86 Box 4.1 Income definition in the Republic of Ireland and the United Kingdom ………………………………………………………….……124 Box 4.2 A proposal for identifying the combined poverty line .....130 Expert Group on Poverty Statics 6 Compendium of best practices in poverty measurement Graphs Graph 2.1 Health expenses subtracted from income.....................70 Graph 2.2 Health expenses added to poverty line.........................70 Graph 2.3 Subjective poverty Line .................................................82 Graph 2.4 Leyden poverty line .......................................................84 Graph 4.1 Groups in combined resources and deprivation surveys……..................................................................................132 Tables Table 3.1 Indicators and thresholds in some Latin American studies……...................................................................................107 Table 3.2 Forms of deprivation and deprivation indicators ..........118 Table 4.1 Selected indices ...........................................................129 Table 5.1 Proposal for operational definitions of deprivation (for children) ……………………………………………………………….151 Rio Group Preface 7 Acknowledgments This Compendium sums up the results of a long-term effort. Two former Presidents of the Brazilian Geographical and Statistical Institute (IBGE), Simon Schwartzman and Sergio Besserman, chaired the Rio Group from 1996 to 2002. Eduardo Pereira Nunes has served as its chair since 2003 and directed the preparation of the Compendium. IBGE staff actively collaborated in the Group’s activities and in the organization of its meetings. Through its Statistics and Economic Projections Division, ECLAC has served as secretariat of the Group under Executive Secretaries Gert Rosenthal, José Antonio Ocampo and José Luis Machinea. The Division’s Social Statistics Unit has served as technical secretariat under the supervision of Juan Carlos Feres, its Chief, and Simone Cecchini, Xavier Mancero and Fernando Medina. Together with Pedro Sáinz, IBGE consultant, these staff members drafted the meeting reports and played an active role in writing up the Compendium. Wasmália Bivar and Zélia Bianchini of IBGE collaborated in the final drafting. The text of the Compendium was prepared as a shared effort by IBGE, ECLAC through its Social Statistics Unit and some of the Group members. Professor Peter Townsend generously agreed to write the introduction, which draws upon articles authored by him that appear in The Social Science Encyclopedia (edited by Adam Kuper and Jessica Kuper) and World Poverty: New policies to defeat an Old Enemy (edited by Peter Townsend and David Gordon). The second chapter was prepared by IBGE, ECLAC through its Social Statistics Unit and Luis Beccaria, with inputs from Ian Dennis (EUROSTAT), Philip Giles (Statistics Canada), Charles Nelson (United States Census Bureau), Javier Herrera, and Rubén Suárez (Pan American Health Organization). The third and fourth chapters were written mainly by Luis Beccaria and Dave Gordon, respectively. IBGE and ECLAC staff members mentioned earlier wrote the fifth chapter, with inputs from Justin Griffin (Australian Institute of Health and Welfare) and Madior Fall (Institut National de la Statistique et des Études Économiques of France). In addition, valuable comments were received from the following Group participants: John Forsey (Australian Bureau of Statistics), Justin Griffin (Australian Institute of Health and Welfare), Elaine Squires (Department for Work and Pensions of the United Kingdom) and Carmen Ureña (Instituto Nacional de Estadística of Spain). Expert Group on Poverty Statics 8 Compendium of best practices in poverty measurement Luis Beccaria, with the collaboration of the ECLAC Social Statistics Unit, was in charge of the substantive editing of the Compendium. Pedro
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