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Negative Net Incomes and the Measurement of Poverty: A Note

Author

Listed:
  • Sandoval, Héctor H.

    (Consejo Nacional de Evaluación de la Política de Desarrollo Social)

  • Urzúa, Carlos M.

    (Tecnológico de Monterrey, Campus Ciudad de México)

Abstract

This note warns about the careless computation of poverty indexes when the welfare of each household is measured by its net income, since this can be negative. As is illustrated in the case of Mexico, even if only a handful of households report negative incomes, the resulting poverty aggregates, when they go beyond a mere headcount measure, can behave rather badly. The note ends with suggestions on how to deal with the problem.

Suggested Citation

  • Sandoval, Héctor H. & Urzúa, Carlos M., 2007. "Negative Net Incomes and the Measurement of Poverty: A Note," EGAP Working Papers 2007-07, Tecnológico de Monterrey, Campus Ciudad de México.
    • Handle: RePEc:ega:docume:200707
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    File URL: http://alejandria.ccm.itesm.mx/egap/documentos/EGAP-2007-07.pdf
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    References listed on IDEAS

    as
    1. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
    2. Kakwani, Nanak, 1993. "Statistical Inference in the Measurement of Poverty," The Review of Economics and Statistics, MIT Press, vol. 75(4), pages 632-639, November.
    3. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-231, March.
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    Cited by:

    1. Ceriani, Lidia & Hlasny, Vladimir & Verme, Paolo, 2021. "Bottom Incomes and the Measurement of Poverty: A Brief Assessment of the Literature," GLO Discussion Paper Series 914, Global Labor Organization (GLO).
    2. Olga Alonso-Villar & Coral del Río, 2024. "Poverty among same-sex couple families in the United States: Is there a premium for married couples?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 22(2), pages 495-517, June.
    3. Emanuela Raffinetti & Elena Siletti & Achille Vernizzi, 2015. "On the Gini coefficient normalization when attributes with negative values are considered," Statistical Methods & Applications, Springer;Società Italiana di Statistica, vol. 24(3), pages 507-521, September.
    4. Emanuela Raffinetti & Elena Siletti & Achille Vernizzi, 2017. "Analyzing the Effects of Negative and Non-negative Values on Income Inequality: Evidence from the Survey of Household Income and Wealth of the Bank of Italy (2012)," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 133(1), pages 185-207, August.
    5. Srinivasan, Jeena T. & Nuthalapati, Chandra Sekhara Rao, 2019. "Groundwater Extraction, Agriculture and Poverty in Godavari River Basin," Ecology, Economy and Society - the INSEE Journal, Indian Society of Ecological Economics (INSEE), vol. 2(02), July.

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    More about this item

    Keywords

    Poverty measures; poverty indexes; negative income; income and expenditure survey; Mexico;
    All these keywords.

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access

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