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An Illustration of the Average Time Measure of Poverty

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John Gibson () (University of Canterbury)
Susan Olivia

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Abstract

The goal of the World Bank is 'a world free of poverty' but the most widely used poverty measures do not show when poverty might be eliminated. The 'head-count index' simply counts the poor, while the 'poverty gap index' shows their average shortfall from the poverty line. Neither measure reflects changes in the distribution of incomes amongst the poor, but squaring the poverty gap brings sensitivity to inequality, albeit at the cost of intuitive interpretation. This paper illustrates a new measure of poverty [Morduch, J., 1998, Poverty, Economic Growth and Average Exit Time, Economics Letters, 59: 385-390]. This new poverty measure is distributionally-sensitive and has a ready interpretation as the average time taken to exit poverty with a constant and uniform growth rate. The illustration uses data from Papua New Guinea, which is the country with the highest degree of inequality in the Asia-Pacific region.

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File URL: ftp://mngt.waikato.ac.nz/RePEc/wai/econwp/0204.pdf
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Paper provided by University of Waikato, Department of Economics in its series Working Papers in Economics with number 02/04.

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Length: 24 pages
Date of creation: 06 Sep 2002
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Handle: RePEc:wai:econwp:02/04

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Keywords: growth inequality poverty

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Find related papers by JEL classification:
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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  1. Foster, James E, 1994. "Normative Measurement: Is Theory Relevant?," American Economic Review, American Economic Association, vol. 84(2), pages 365-70, May. [Downloadable!] (restricted)
  2. Deaton, A., 2000. "Counting the World's Poor: Problems and Possible Solutions," Papers 197, Princeton, Woodrow Wilson School - Development Studies.
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  3. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-31, March. [Downloadable!] (restricted)
  4. Morduch, Jonathan, 1998. "Poverty, economic growth, and average exit time," Economics Letters, Elsevier, vol. 59(3), pages 385-390, June. [Downloadable!] (restricted)
  5. Ravallion, Martin & Bidani, Benu, 1994. "How Robust Is a Poverty Profile?," World Bank Economic Review, Oxford University Press, vol. 8(1), pages 75-102, January.
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  6. Kakwani, Nanak, 1980. "On a Class of Poverty Measures," Econometrica, Econometric Society, vol. 48(2), pages 437-46, March. [Downloadable!] (restricted)
  7. 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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