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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
    as

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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.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. 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.
    2. repec:spr:soinre:v:133:y:2017:i:1:d:10.1007_s11205-016-1354-x is not listed on IDEAS

    More about this item

    Keywords

    Poverty measures; poverty indexes; negative income; income and expenditure survey; Mexico;

    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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