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Revisiting the Normalization Axiom in Poverty Measurement

  • S. Subramanian

    ()

    (Madras Institute of Development Studies)

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    The ‘normalization’ axiom associated with Sen’s poverty index – and this, indeed, holds for most extant measures of poverty – entails an uncomfortable implication when we adopt a strong, or inclusive, definition of the poor. This paper suggests that we may not always be at liberty to adopt a weak definition. The available alternative then is to change the form of the poverty measure. Accordingly, a modification of his normalization axiom which leads to a variant of Sen’s index, together with a variant also of the Foster-Greer-Thorbecke poverty measures, is advanced and discussed. The derivation of the new normalization axiom benefits from Basu’s decomposition of the Sen axiom.

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    Article provided by Finnish Economic Association in its journal Finnish Economic Papers.

    Volume (Year): 22 (2009)
    Issue (Month): 2 (Autumn)
    Pages: 89-98

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    Handle: RePEc:fep:journl:v:22:y:2009:i:2:p:89-98
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    1. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
    2. Andreas Peichl & Thilo Schaefer & Christoph Scheicher, 2010. "Measuring Richness And Poverty: A Micro Data Application To Europe And Germany," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(3), pages 597-619, 09.
    3. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-31, March.
    4. Donaldson, David & Weymark, John A, 1986. "Properties of Fixed-Population Poverty Indices," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(3), pages 667-88, October.
    5. Sen, Amartya, 1979. " Issues in the Measurement of Poverty," Scandinavian Journal of Economics, Wiley Blackwell, vol. 81(2), pages 285-307.
    6. Takayama, Noriyuki, 1979. "Poverty, Income Inequality, and Their Measures: Professor Sen's Axiomatic Approach Reconsidered," Econometrica, Econometric Society, vol. 47(3), pages 747-59, May.
    7. Sen, Amartya, 1983. "Poor, Relatively Speaking," Oxford Economic Papers, Oxford University Press, vol. 35(2), pages 153-69, July.
    8. Basu, Kaushik, 1985. "Poverty Measurement: A Decomposition of the Normalization Axion [Cardinal Utility, Utilitarianism and a Class of Invariance Axioms in Welfare Analysis] [Poverty: An Ordinal Approach to Measurement]," Econometrica, Econometric Society, vol. 53(6), pages 1439-43, November.
    9. Atkinson, A B, 1987. "On the Measurement of Poverty," Econometrica, Econometric Society, vol. 55(4), pages 749-64, July.
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