MEASURING POVERTY

Why should poverty be measured?

Poverty should be measured to keep the poor on the agenda, target interventions, monitor policies and projects, and assess institutions focused on poverty reduction.

What is the poverty line?

The poverty line is the minimum income needed to meet basic food and non-food requirements. It measures the incidence, depth (poverty gap), and severity of poverty.

How does the poverty line vary by country?

It depends on a country’s development and societal norms. The international poverty line is US$1.00 per day for low-income countries and US$2.00 per day for developing countries. In Grenada (2008), it was XCD $5,842 per year or XCD $16.01 per day.

What are the two stages of determining the poverty line?

1. Indigence (Food Poverty Line): Based on the lowest cost for food providing 2,400 kcal per day. In Grenada (2008), XCD $2,391 per year or XCD $6.56 per day. Those below this are critically poor.

2. Overall Poverty Line: Adjusted to include basic non-food needs. In Grenada (2008), XCD $5,842 per year or XCD $16.01 per day, with 37.7% of the population considered poor.

What is a key shortcoming of the poverty line?

It is subjective since different societies decide what should be included in the food basket.

What is the vulnerability line?

A threshold 1.25 times the poverty line (25% above) that indicates the risk of falling into poverty under adverse conditions.

How is the vulnerability line applied in Grenada?

In Grenada (2008), XCD $7,302 per year or XCD $20.01 per day. The average household needed XCD $1,271 per month to escape poverty.

What is the poverty map?

A tool showing the geographical distribution of poverty and inequality. It combines household survey data and census data to highlight poverty levels and income distribution.

Who introduced the poverty map?

Developed by Charles Booth.

What is the head count index?

The poverty rate, measuring the proportion of the population below the poverty line. It is calculated as Po = Np/N, where Np = number of poor people and N = total population.

What is another name for the headcount index?

Poverty Rate

How is the head count index calculated?

Divide the number of poor people by the total population. Example: If 60 out of 300 people are poor, Po = 60/300 = 0.2 (20%).

What are the shortcomings of the head count index?

It does not measure how poor people are, does not change if poverty worsens, and assumes equal well-being within households, ignoring individual differences.

What is the poverty gap ratio?

Measures how far the poor are from the poverty line. Helps policymakers estimate the minimum cost of eliminating poverty.

What is the poverty severity index?

Measures inequality among the poor by examining income distribution. Divides the population into quintiles (five equal groups) from poorest to wealthiest.