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Do We Know How Much Poverty There Is?

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  • Miguel Székely
  • Nora Lustig
  • Martin Cumpa
  • José Antonio Mejía-Guerra

Abstract

This paper tests the sensitivity of poverty indexes to the choice of adult equivalence scales, assumptions about the existence of economies of scale in consumption, methods for treating missing and zero incomes, and different adjustments to handle income misreporting. We also perform sensitivity analysis to the use of different poverty lines and poverty indexes, which are issues that have been much more explored in the literature. The sensitivity analysis is applied to household survey data from 17 Latin American countries, which include 92% of the population in the region. By varying these parameters within reasonable boundaries, we find that the proportion of poor could be said to be either 12.7 percent or 65.8 percent of the total population. Additionally, the ranking of countries with respect to poverty is also highly sensitive. This points to the need of justifying and being explicit about the underlying choices and definitions behind poverty statistics, and to the need of performing sensitivity analysis illustrating the menu of options that can answer the question of how much poverty there is.

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Bibliographic Info

Paper provided by Inter-American Development Bank in its series IDB Publications with number 6477.

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Date of creation: Dec 2000
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Handle: RePEc:idb:brikps:6477

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Keywords: Poverty; Economics; WP-437;

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References

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  1. Atkinson, A B, 1987. "On the Measurement of Poverty," Econometrica, Econometric Society, Econometric Society, vol. 55(4), pages 749-64, July.
  2. Lancaster, Geoffrey & Ray, Ranjan & Valenzuela, Maria Rebecca, 1999. "A Cross-Country Study of Equivalence Scales and Expenditure Inequality on Unit Record Household Budget Data," Review of Income and Wealth, International Association for Research in Income and Wealth, International Association for Research in Income and Wealth, vol. 45(4), pages 455-82, December.
  3. Howes, Stephen & Lanjouw, Jean Olson, 1998. "Does Sample Design Matter for Poverty Rate Comparisons?," Review of Income and Wealth, International Association for Research in Income and Wealth, International Association for Research in Income and Wealth, vol. 44(1), pages 99-109, March.
  4. Woden, Q.T. & Ayres, W. & Barenstein, M. & Hicks, N. & Lee, K. & Maloney, W. & Peeters, P. & Siaens, C. & Yitzjaki, S., 2000. "Poverty and Policy in Latin America and Caribeean," Papers, World Bank - Technical Papers 467, World Bank - Technical Papers.
  5. Atkinson, A B, 1992. "Measuring Poverty and Differences in Family Composition," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 59(233), pages 1-16, February.
  6. Duclos, Jean-Yves & Mercader-Prats, Magda, 1999. "Household Needs and Poverty: With Application to Spain and the U.K," Review of Income and Wealth, International Association for Research in Income and Wealth, International Association for Research in Income and Wealth, vol. 45(1), pages 77-98, March.
  7. Lanjouw, Peter & Ravallion, Martin & DEC, 1994. "Poverty and household size," Policy Research Working Paper Series, The World Bank 1332, The World Bank.
  8. Foster, James E & Shorrocks, Anthony F, 1988. "Poverty Orderings," Econometrica, Econometric Society, Econometric Society, vol. 56(1), pages 173-77, January.
  9. José Antonio Mejía-Guerra & Rob Vos, 1997. "Poverty in Latin America and the Caribbean: An Inventory: 1980-95," IDB Publications, Inter-American Development Bank 10878, Inter-American Development Bank.
  10. Chaudhuri, Shubham & Ravallion, Martin, 1994. "How well do static indicators identify the chronically poor?," Journal of Public Economics, Elsevier, Elsevier, vol. 53(3), pages 367-394, March.
  11. Coulter, Fiona A E & Cowell, Frank A & Jenkins, Stephen P, 1992. "Equivalence Scale Relativities and the Extent of Inequality and Poverty," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 102(414), pages 1067-82, September.
  12. Sen, Amartya, 1997. "On Economic Inequality," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780198292975, October.
  13. Blackburn, McKinley L, 1998. "The Sensitivity of International Poverty Comparisons," Review of Income and Wealth, International Association for Research in Income and Wealth, International Association for Research in Income and Wealth, vol. 44(4), pages 449-72, December.
  14. Foster, James E. & Shorrocks, Anthony F., 1988. "Inequality and poverty orderings," European Economic Review, Elsevier, Elsevier, vol. 32(2-3), pages 654-661, March.
  15. Little, Roderick J A, 1988. "Missing-Data Adjustments in Large Surveys," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 6(3), pages 287-96, July.
  16. Juan Luis Londoño & Miguel Székely, 2000. "Persistent Poverty and Excess Inequality: Latin America, 1970-1995," Journal of Applied Economics, Universidad del CEMA, Universidad del CEMA, vol. 0, pages 93-134, May.
  17. Psacharopoulos, G. & Morley, S. & Fiszbein, A. & Lee, H. & Wood, B., 1997. "Poverty and Income Distribution in Latin America: The Story of the 1980s," Papers, World Bank - Technical Papers 351, World Bank - Technical Papers.
  18. Shorrocks, Anthony F, 1995. "Revisiting the Sen Poverty Index," Econometrica, Econometric Society, Econometric Society, vol. 63(5), pages 1225-30, September.
  19. Szekely, Miguel, 1995. "Poverty in Mexico during Adjustment," Review of Income and Wealth, International Association for Research in Income and Wealth, International Association for Research in Income and Wealth, vol. 41(3), pages 331-48, September.
  20. Michael Hurd & F. Thomas Juster & James P. Smith, 2004. "Enhancing the Quality of Data on Income: Recent Developments in Survey Methodology," Labor and Demography, EconWPA 0412001, EconWPA.
  21. Ravallion, Martin, 1994. "Poverty rankings using noisy data on living standards," Economics Letters, Elsevier, Elsevier, vol. 45(4), pages 481-485, August.
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Citations

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Cited by:
  1. Quentin Wodon & Rodrigo Castro & Kihoon Lee, 2001. "Poverty in Latin America: Trends (1986-1998) and Determinants," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 38(114), pages 127-153.
  2. Caterina Ruggeri Laderchi, Ruhi Saith and Frances Stewart, . "Does it matter that we don't agree on the definition of poverty? A comparison of four approaches," QEH Working Papers, Queen Elizabeth House, University of Oxford qehwps107, Queen Elizabeth House, University of Oxford.
  3. Panizza, Ugo & Qiang, Christine Zhen-Wei, 2005. "Public-private wage differential and gender gap in Latin America: Spoiled bureaucrats and exploited women?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 34(6), pages 810-833, December.
  4. Bane, Mary Jo & Zenteno, Rene, 2005. "Poverty and Place in North America," Working Paper Series, Harvard University, John F. Kennedy School of Government rwp05-035, Harvard University, John F. Kennedy School of Government.
  5. Sandrine Mesplé-Somps & Charlotte Guénard, 2006. "Measuring Inequalities: Do The Surveys Give The Real Picture? Study Of Two Surveys In Cote D’Ivoire And Madagascar," Working Papers, ECINEQ, Society for the Study of Economic Inequality 18, ECINEQ, Society for the Study of Economic Inequality.
  6. Leonardo Gasparini & Federico Gutiérrez & Leopoldo Tornarolli, 2005. "Growth and Income Poverty in Latin America and the Caribbean: Evidence from Household Surveys," CEDLAS, Working Papers, CEDLAS, Universidad Nacional de La Plata 0030, CEDLAS, Universidad Nacional de La Plata.
  7. Charlotte Guénard & Sandrine Mesplé-Somps, 2004. "Mesurer les inégalités : que captent réellement les enquêtes ? Analyse de deux enquêtes ivoirienne et malgache," Working Papers, DIAL (Développement, Institutions et Mondialisation) DT/2004/13, DIAL (Développement, Institutions et Mondialisation), revised Dec 2004.
  8. Melanie Grosse & Stephan Klasen & Julius Spatz, 2005. "Creating National Poverty Profiles and Growth Incidence Curves with Incomplete Income or Consumption Expenditure Data: An Application to Bolivia," Ibero America Institute for Econ. Research (IAI) Discussion Papers, Ibero-America Institute for Economic Research 129, Ibero-America Institute for Economic Research.
  9. Isidro Soloaga, 2004. "Growth and Poverty. The case of México," Econometric Society 2004 Latin American Meetings, Econometric Society 93, Econometric Society.
  10. Julia Johannsen & Manfred Zeller & Stephan Klasen, 2007. "The capability dilemma in operational poverty assessment," Ibero America Institute for Econ. Research (IAI) Discussion Papers, Ibero-America Institute for Economic Research 159, Ibero-America Institute for Economic Research.
  11. Sebastian Levine, 2012. "Exploring Differences in National and International Poverty Estimates: Is Uganda on Track to Halve Poverty by 2015?," Social Indicators Research, Springer, Springer, vol. 107(2), pages 331-349, June.
  12. Camelia Minoiu & Shatakshee Dhongde, 2011. "Global Poverty Estimates," IMF Working Papers, International Monetary Fund 11/234, International Monetary Fund.

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