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Relative or absolute poverty in the US and EU? The battle of the rates

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Author Info
Notten, Geranda
Neubourg, Chris de

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Abstract

US poverty is much higher than poverty in Europe when a relative poverty measure is used. Using an absolute poverty measurement method, the picture looks different: poverty in some European countries is higher. This paper estimates poverty rates for all the countries of the (old) EU and the USA applying the official measurement methods of the United States (absolute) and the European Union (relative) to all the countries. The differences in poverty levels, both in time and between the 16 countries are analysed, identifying the various sources for the variance in the figures. Using annual data of the EU and the US from 1994 to 2001, we illustrate how some differences in poverty levels are inherent to the choice for an absolute or a relative approach, while other differences are related to aspects common to both absolute and relative poverty measurement but working out differently depending on the estimation method used. The results of our analysis point out that using a single figure is often misleading.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 4671.

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Date of creation: Jan 2007
Date of revision: 15 May 2007
Handle: RePEc:pra:mprapa:4671

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Keywords: poverty absolute relative United States European Union

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Find related papers by JEL classification:
I32 - Health, Education, and Welfare - - Welfare and Poverty - - - Measurement and Analysis of Poverty

References listed on IDEAS
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  1. Hulme, David & Shepherd, Andrew, 2003. "Conceptualizing Chronic Poverty," World Development, Elsevier, vol. 31(3), pages 403-423, March. [Downloadable!] (restricted)
  2. Ravallion, Martin & Chen, Shaohua, 2003. "Measuring pro-poor growth," Economics Letters, Elsevier, vol. 78(1), pages 93-99, January. [Downloadable!] (restricted)
    Other versions:
  3. O'Boyle, Edward J, 1999. "Toward an Improved Definition of Poverty," Review of Social Economy, Taylor and Francis Journals, vol. 57(3), pages 281-301, September.
  4. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Notten, Geranda & Neubourg, Chris de, 2007. "Poverty in Europe and the USA: Exchanging official measurement methods," MPRA Paper 4669, University Library of Munich, Germany. [Downloadable!]
  2. Notten, Geranda & de Neubourg, Chris, 2007. "The policy relevance of absolute and relative poverty headcounts: What's in a number?," MPRA Paper 4668, University Library of Munich, Germany. [Downloadable!]
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