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A Behaviouristic Approach for Measuring Poverty: The Decomposition Approach ; Empirical Illustrations for Germany 1995-2009

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  • Jürgen Faik

Abstract

In this paper an alternative approach with regard to poverty measurement is discussed: the so-called decomposition approach. This method differentiates between various social groups in the sense that for each group a separate poverty line is determined. E. g., household size might be a criterion for such a social differentiation. By doing this, the problem of traditional poverty measurement to refer to income-independent equivalence scales is principally avoided. Moreover, the further problem of the traditional method, namely to determinea (general) poverty line as a more or less arbitrary fraction of society's mean welfare level, does not exist, on principle, in the decomposition approach. Present author's own calculations reveal higher poverty levels indicated by this approach compared with the conventional method of measuring (income) poverty. Since it appears to be realistic that some people perform their poverty assessments through a "mixture" of their own group's and overall welfare levels, at a plausible degree of economies of scale (i. e., Buhmann et al.'s · > 0.65) the poverty levels of the decomposition approach can be interpreted as upper limits for the "true" level of poverty, and, conversely, the degree of poverty ascertained by the conventional approach can be seen as a lower limit for "true" poverty.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.373754.de/diw_sp0383.pdf
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Bibliographic Info

Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 383.

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Length: 22 p.
Date of creation: 2011
Date of revision:
Handle: RePEc:diw:diwsop:diw_sp383

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Keywords: Welfare; poverty measurement; decomposition approach; equivalence scales;

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Cited by:
  1. Jürgen Faik, 2011. "A New Framework of Measuring Inequality: Variable Equivalence Scales and Group-Specific Well-Being Limits ; Sensitivity Findings for German Personal Income Distribution 1995-2009," SOEPpapers on Multidisciplinary Panel Data Research 401, DIW Berlin, The German Socio-Economic Panel (SOEP).

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