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Do We Know How Much Poverty There Is?

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  • Székely, Miguel
  • Lustig, Nora
  • Cumpa, Martin
  • Mejía-Guerra, José Antonio

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. We also perform sensitivity analysis to the use of different poverty lines and poverty indexes, which are issues that have been much more explored in the literature. 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 find that the proportion of poor could be said to be either 12.7 percent or 65.8 percent of the total population. Additionally, the ranking of countries with respect to poverty is also highly sensitive. This points to the need of justifying and being explicit about the underlying choices and definitions behind poverty statistics, and to the need of performing sensitivity analysis illustrating the menu of options that can answer the question of how much poverty there is.

Suggested Citation

  • Székely, Miguel & Lustig, Nora & Cumpa, Martin & Mejía-Guerra, José Antonio, 2011. "Do We Know How Much Poverty There Is?," IDB Publications (Working Papers) 1334, Inter-American Development Bank.
  • Handle: RePEc:idb:brikps:1334
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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. 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.
    3. Jose De Gregorio & Manuel Taboada, 2022. "Median Labor Income in Chile Revised: Insights from Distributional National Accounts," Working Papers wp532, University of Chile, Department of Economics.
    4. David Bravo & Dante Contreras & Sergio Urzúa, 2002. "Poverty and Inequality in Chile 1990-1998: Learning from Microeconomic Simulations," Working Papers wp198, University of Chile, Department of Economics.
    5. 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.
    6. 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.
    7. Dhongde, Shatakshee & Minoiu, Camelia, 2013. "Global Poverty Estimates: A Sensitivity Analysis," World Development, Elsevier, vol. 44(C), pages 1-13.
    8. Charlotte Guénard & Sandrine Mesplé-Somps, 2004. "Measuring inequalities: Do the surveys give the real picture? Study of two surveys in Cote d’Ivoire and Madagascar," Working Papers DT/2004/13, DIAL (Développement, Institutions et Mondialisation), revised Dec 2004.
    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. 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.
    12. Christian Dudel & Jan Marvin Garbuszus & Notburga Ott & Martin Werding, 2015. "Income Dependent Equivalence Scales, Inequality, and Poverty," CESifo Working Paper Series 5568, CESifo.
    13. repec:dau:papers:123456789/4459 is not listed on IDEAS
    14. 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.
    15. Helwege, Ann & Birch, Melissa B.L., 2007. "Declining Poverty in Latin America? A Critical Analysis of New Estimates by International Institutions," Working Papers 37279, Tufts University, Global Development and Environment Institute.
    16. 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.
    17. Bronfman, Javier, 2007. "Poverty Lines, What are they telling us?," MPRA Paper 63263, University Library of Munich, Germany, revised 15 Apr 2009.
    18. Christian Dudel & Jan Marvin Garbuszus & Julian Schmied, 2021. "Assessing differences in household needs: a comparison of approaches for the estimation of equivalence scales using German expenditure data," Empirical Economics, Springer, vol. 60(4), pages 1629-1659, April.
    19. 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.
    20. Mary Jo Bane & Rene Zenteno, 2005. "Poverty and Place in North America," LIS Working papers 418, LIS Cross-National Data Center in Luxembourg.
    21. 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.

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    More about this item

    Keywords

    WP-437;

    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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