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How Should We Measure Poverty in a Changing World? Methodological Issues and Chinese Case Study

  • Lars Osberg
  • Kuan Xu

This study asks whether, in a rapidly changing world, the estimated proportion of the world's population with income below US$1 (adjusted according to purchasing power parity) per day is still a good measure of trends in poverty. It argues that strong economic growth in nations such as China implies that the commonly accepted international poverty line definition of one half median national equivalent income is increasingly relevant and that poverty intensity (the normalized deficit or Foster-Greer-Thorbecke (FGT) index of order one) is a better summary index. This index has a convenient graphical representation-the "poverty box". Using the proposed poverty line and the example of ranking the level of rural poverty in Chinese provinces, the study demonstrates how poverty intensity replicates the poverty rankings of the Sen family of poverty indices and captures most of the information content of higher-order FGT indices. Copyright � 2008 The Authors.

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Article provided by Wiley Blackwell in its journal Review of Development Economics.

Volume (Year): 12 (2008)
Issue (Month): 2 (05)
Pages: 419-441

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Handle: RePEc:bla:rdevec:v:12:y:2008:i:2:p:419-441
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  1. Lipton, Michael & Ravallion, Martin, 1993. "Poverty and policy," Policy Research Working Paper Series 1130, The World Bank.
  2. Kuan Xu & Lars Osberg, 2002. "On Sen's Approach to Poverty Measures and Recent Developments," Department of Economics at Dalhousie University working papers archive sensw, Dalhousie, Department of Economics.
  3. Bourguignon, F. & Chakravarty, S.R., 1998. "The Measurement of Multidimensional Poverty," DELTA Working Papers 98-12, DELTA (Ecole normale supérieure).
  4. Jenkins, Stephen P & Lambert, Peter J, 1997. "Three 'I's of Poverty Curves, with an Analysis of UK Poverty Trends," Oxford Economic Papers, Oxford University Press, vol. 49(3), pages 317-27, July.
  5. Hill, Robert J, 2000. " Constructing Bounds on Per Capita Income Differentials across Countries," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(2), pages 285-302, June.
  6. Lars Osberg & Kuan Xu, 1999. "Poverty Intensity: How Well Do Canadian Provinces Compare?," Canadian Public Policy, University of Toronto Press, vol. 25(2), pages 179-195, June.
  7. Schady, Norbert R., 2000. "Picking the poor : indicators for geographic targeting in Peru," Policy Research Working Paper Series 2477, The World Bank.
  8. Myles, John & Picot, Garnett, 2000. "Poverty Indices and Policy Analysis," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(2), pages 161-79, June.
  9. Lars Osberg, 2000. "Poverty in Canada and the United States: measurement, trends, and implications," Canadian Journal of Economics, Canadian Economics Association, vol. 33(4), pages 847-877, November.
  10. John L. Rodgers & Joan R. Rodgers, 1991. "Measuring the Intensity of Poverty among Subpopulations: Applications to the United States," Journal of Human Resources, University of Wisconsin Press, vol. 26(2), pages 338-361.
  11. Michael F. Förster & Marco Mira d'Ercole, 2005. "Income Distribution and Poverty in OECD Countries in the Second Half of the 1990s," OECD Social, Employment and Migration Working Papers 22, OECD Publishing.
  12. Shorrocks, Anthony F, 1995. "Revisiting the Sen Poverty Index," Econometrica, Econometric Society, vol. 63(5), pages 1225-30, September.
  13. Thon, Dominique, 1979. "On Measuring Poverty," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 25(4), pages 429-39, December.
  14. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-31, March.
  15. Subramanian, S., 2005. "Poverty Measurement and Theories of Beneficence," Working Paper Series RP2005/62, World Institute for Development Economic Research (UNU-WIDER).
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