IDEAS home Printed from https://ideas.repec.org/p/hhs/gunwpe/0217.html
   My bibliography  Save this paper

Clarifying Poverty Decomposition

Author

Listed:
  • Muller, Adrian

    () (Department of Economics, School of Business, Economics and Law, Göteborg University)

Abstract

I discuss how poverty decomposition methods relate to integral approximation, which is the foundation of decomposition of the temporal change of a quantity into key drivers. This offers a common framework for the different decomposition methods used in the literature, clarifies their often somewhat unclear theoretical underpinning and identifies the methods' shortcomings. In light of integral approximation, many methods actually lack a sound theoretical basis and they usually have an ad-hoc character in assigning the residual terms to the different key effects. I illustrate these claims for the Shapley-value decomposition and methods related to the Datt-Ravallion approach and point out difficulties in axiomatic approaches to poverty decomposition. Recent developments in energy and pollutant decomposition offer some promising methods, but ultimately, further development of poverty decomposition should account for the basis in integral approximation.

Suggested Citation

  • Muller, Adrian, 2006. "Clarifying Poverty Decomposition," Working Papers in Economics 217, University of Gothenburg, Department of Economics, revised 17 Nov 2008.
  • Handle: RePEc:hhs:gunwpe:0217
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/2077/2698
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ang, B. W., 2004. "Decomposition analysis for policymaking in energy:: which is the preferred method?," Energy Policy, Elsevier, vol. 32(9), pages 1131-1139, June.
    2. Paul, Satya, 2004. "Income sources effects on inequality," Journal of Development Economics, Elsevier, vol. 73(1), pages 435-451, February.
    3. Fiorio, Carlo V., 2006. "Understanding inequality trends: microsimulation decomposition for Italy," LSE Research Online Documents on Economics 6544, London School of Economics and Political Science, LSE Library.
    4. Vani K. Borooah, 2005. "Caste, Inequality, and Poverty in India," Review of Development Economics, Wiley Blackwell, vol. 9(3), pages 399-414, August.
    5. Trivedi, P K, 1981. "Some Discrete Approximations to Divisia Integral Indices," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(1), pages 71-77, February.
    6. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
    7. Stanislav Kolenikov & Anthony Shorrocks, 2005. "A Decomposition Analysis of Regional Poverty in Russia," Review of Development Economics, Wiley Blackwell, vol. 9(1), pages 25-46, February.
    8. Muller, Adrian, 2006. "Putting decomposition of energy use and pollution on a firm footing - clarifications on the residual, zero and negative values and strategies to assess the performance of decomposition methods," Working Papers in Economics 213, University of Gothenburg, Department of Economics, revised 10 Aug 2007.
    9. Ang, B.W., 1995. "Decomposition methodology in industrial energy demand analysis," Energy, Elsevier, vol. 20(11), pages 1081-1095.
    10. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-442, June.
    11. Dercon, Stefan, 2006. "Economic reform, growth and the poor: Evidence from rural Ethiopia," Journal of Development Economics, Elsevier, vol. 81(1), pages 1-24, October.
    12. Ang, B. W. & Liu, F. L. & Chew, E. P., 2003. "Perfect decomposition techniques in energy and environmental analysis," Energy Policy, Elsevier, vol. 31(14), pages 1561-1566, November.
    13. Sun, J. W., 1998. "Changes in energy consumption and energy intensity: A complete decomposition model," Energy Economics, Elsevier, vol. 20(1), pages 85-100, February.
    14. Guanghua Wan & Zhangyue Zhou, 2005. "Income Inequality in Rural China: Regression-based Decomposition Using Household Data," Review of Development Economics, Wiley Blackwell, vol. 9(1), pages 107-120, February.
    15. Kai-yuen Tsui, 1996. "Growth-equity decomposition of a change in poverty: An axiomatic approach," Economics Letters, Elsevier, vol. 50(3), pages 417-423, March.
    16. Bruvoll, Annegrete & Larsen, Bodil Merethe, 2004. "Greenhouse gas emissions in Norway: do carbon taxes work?," Energy Policy, Elsevier, vol. 32(4), pages 493-505, March.
    17. Thorbecke, Erik & Jung, Hong-Sang, 1996. "A multiplier decomposition method to analyze poverty alleviation," Journal of Development Economics, Elsevier, vol. 48(2), pages 279-300, March.
    18. Kraay, Aart, 2006. "When is growth pro-poor? Evidence from a panel of countries," Journal of Development Economics, Elsevier, vol. 80(1), pages 198-227, June.
    19. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Masato Okamoto, 2011. "Source decomposition of changes in income inequality: the integral-based approach and its approximation by the chained Shapley-value approach," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 9(2), pages 145-181, June.
    2. Muller, Adrian & Åsa, Löfgren & Thomas, Sterner, 2011. "Decoupling: Is there a Separate Contribution from Environmental Taxation," Working Papers in Economics 486, University of Gothenburg, Department of Economics.
    3. Gutierrez, Catalina & Orecchia, Carlo & Paci, Pierella & Serneels, Pieter, 2007. "Does employment generation really matter for poverty reduction ?," Policy Research Working Paper Series 4432, The World Bank.
    4. Florent Bresson, 2008. "The estimation of the growth and redistribution components of changes in poverty: a reassessment," Economics Bulletin, AccessEcon, vol. 9(14), pages 1-7.
    5. Åsa Löfgren & Adrian Muller, 2010. "Swedish CO 2 Emissions 1993–2006: An Application of Decomposition Analysis and Some Methodological Insights," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 47(2), pages 221-239, October.
    6. Negre, Mario, 2010. "Concepts and Operationalization of Pro-Poor Growth," WIDER Working Paper Series 047, World Institute for Development Economic Research (UNU-WIDER).
    7. Gianni Toniolo & Giovanni Vecchi, 2007. "Italian Children at Work, 1881-1961," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 66(3), pages 401-427, November.

    More about this item

    Keywords

    poverty analysis; poverty measures; decomposition; Shapley-value; inequality;

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:gunwpe:0217. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marie Andersson). General contact details of provider: http://edirc.repec.org/data/naiguse.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.