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Do we know how much poverty there is?

Author

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  • Miguel Szekely
  • Nora Lustig
  • Martin Cumpa
  • Jose Antonio Mejia

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. 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 found that the proportion of poor could be said to be either 20% or 66%. Furthermore, the ranking of countries with respect to poverty is highly sensitive to the underlying choices for poverty measurement. We also perform sensitivity analysis to the use of different poverty lines and poverty indexes, which are issues that have been explored much more in the literature. Even after considering these elements, the most sensitive choice appears to be the method used to adjust for misreporting. These findings point, first, to the need to be explicit about the underlying assumptions behind poverty statistics, second, to the need to perform sensitivity analysis when estimating levels and trends in poverty, and third, to the importance of establishing a set of conventions that would be accepted as “best practices” in estimating poverty indexes.

Suggested Citation

  • Miguel Szekely & Nora Lustig & Martin Cumpa & Jose Antonio Mejia, 2004. "Do we know how much poverty there is?," Oxford Development Studies, Taylor & Francis Journals, vol. 32(4), pages 523-558.
  • Handle: RePEc:taf:oxdevs:v:32:y:2004:i:4:p:523-558
    DOI: 10.1080/1360081042000293335
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    References listed on IDEAS

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    18. Marianne Hilgert & Miguel Székely, 1999. "Whats Behind the Inequality We Measure? An Investigation Using Latin American Data," LIS Working papers 234, LIS Cross-National Data Center in Luxembourg.
    19. Miguel Székely & Marianne Hilgert, 1999. "What's Behind the Inequality We Measure: An Investigation Using Latin American Data," IDB Publications (Working Papers) 1309, Inter-American Development Bank.
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    21. 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, vol. 44(1), pages 99-109, March.
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    Citations

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    Cited by:

    1. Stephan Klasen & Tatyana Krivobokova & Friederike Greb & Rahul Lahoti & Syamsul Hidayat Pasaribu & Manuel Wiesenfarth, 2016. "International income poverty measurement: which way now?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(2), pages 199-225, June.
    2. Leonardo Gasparini & Federico Gutiérrez & Leopoldo Tornarolli, 2007. "Growth And Income Poverty In Latin America And The Caribbean: Evidence From Household Surveys," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(2), pages 209-245, June.
    3. Bane, Mary Jo & Zenteno, Rene, 2005. "Poverty and Place in North America," Working Paper Series rwp05-035, Harvard University, John F. Kennedy School of Government.
    4. 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 129, Ibero-America Institute for Economic Research.
    5. Bronfman, Javier, 2007. "Poverty Lines, What are they telling us?," MPRA Paper 63263, University Library of Munich, Germany, revised 15 Apr 2009.
    6. Charlotte Guénard & Sandrine Mesplé-Somps, 2004. "Mesurer les inégalités : que captent réellement les enquêtes ? Analyse de deux enquêtes ivoirienne et malgache," Working Papers DT/2004/13, DIAL (Développement, Institutions et Mondialisation), revised Dec 2004.
    7. Dhongde, Shatakshee & Minoiu, Camelia, 2013. "Global Poverty Estimates: A Sensitivity Analysis," World Development, Elsevier, vol. 44(C), pages 1-13.
    8. François Bourguignon, 2015. "Appraising income inequality databases in Latin America," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 13(4), pages 557-578, December.
    9. Isidro Soloaga, 2004. "Growth and Poverty. The case of México," Econometric Society 2004 Latin American Meetings 93, Econometric Society.
    10. 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., vol. 38(114), pages 127-153.
    11. Sebastian Levine, 2012. "Exploring Differences in National and International Poverty Estimates: Is Uganda on Track to Halve Poverty by 2015?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 107(2), pages 331-349, June.
    12. 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, vol. 34(6), pages 810-833, December.
    13. Christian Dudel & Jan Marvin Garbuszus & Notburga Ott & Martin Werding, 2015. "Income Dependent Equivalence Scales, Inequality, and Poverty," CESifo Working Paper Series 5568, CESifo Group Munich.
    14. repec:dau:papers:123456789/4459 is not listed on IDEAS
    15. 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 18, ECINEQ, Society for the Study of Economic Inequality.
    16. Caterina Ruggeri Laderchi & Ruhi Saith & Frances Stewart, 2003. "Does it Matter that we do not Agree on the Definition of Poverty? A Comparison of Four Approaches," Oxford Development Studies, Taylor & Francis Journals, vol. 31(3), pages 243-274.
    17. Julia Johannsen & Manfred Zeller & Stephan Klasen, 2007. "The capability dilemma in operational poverty assessment," Ibero America Institute for Econ. Research (IAI) Discussion Papers 159, Ibero-America Institute for Economic Research.

    More about this item

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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