An Illustration of the Average Time Measure of Poverty
The goal of the World Bank is 'a world free of poverty' but the most widely used poverty measures do not show when poverty might be eliminated. The 'head-count index' simply counts the poor, while the 'poverty gap index' shows their average shortfall from the poverty line. Neither measure reflects changes in the distribution of incomes amongst the poor, but squaring the poverty gap brings sensitivity to inequality, albeit at the cost of intuitive interpretation. This paper illustrates a new measure of poverty [Morduch, J., 1998, Poverty, Economic Growth and Average Exit Time, Economics Letters, 59: 385-390]. This new poverty measure is distributionally-sensitive and has a ready interpretation as the average time taken to exit poverty with a constant and uniform growth rate. The illustration uses data from Papua New Guinea, which is the country with the highest degree of inequality in the Asia-Pacific region.
|Date of creation:||06 Sep 2002|
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- Morduch, Jonathan, 1998. "Poverty, economic growth, and average exit time," Economics Letters, Elsevier, vol. 59(3), pages 385-390, June.
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- John Gibson, 2000. "The Papua New Guinea Household Survey," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 33(4), pages 377-380.
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