Handbook on Poverty and Inequality

Contents......Page 7
Preface......Page 17
Foreword......Page 19
About the Authors......Page 21
Abbreviations......Page 23
Summary......Page 25
Introduction: The Concepts of Well-Being and Poverty......Page 26
Why Measure Poverty?......Page 27
Thinking Systematically: Poverty Reduction Strategy Papers......Page 30
References......Page 31
Summary......Page 33
Introduction: Steps in Measuring Poverty......Page 34
Household Surveys......Page 35
Measuring Poverty: Choosing an Indicator of Welfare......Page 44
References......Page 59
Summary......Page 63
Introduction: Defining a Poverty Line......Page 64
3.1 The \"$1/Day\" Standard......Page 70
3.3 Absolute and Relative Poverty Rates......Page 73
3.6 The Determination of Poverty Lines for Vietnam, 1993 and 1998......Page 84
References......Page 88
Summary......Page 91
Headcount Index......Page 92
Poverty Gap Index......Page 94
Squared Poverty Gap (Poverty Severity) Index......Page 95
The Sen-Shorrocks-Thon Index......Page 98
The Watts Index......Page 101
4.3 Measures of Poverty (with a $2/day Poverty Line) and Inequality for Selected Countries and Regions......Page 102
Other Measures......Page 104
References......Page 105
Summary......Page 107
Introduction......Page 108
Sampling Error......Page 109
Measurement Error......Page 111
5.1 Distribution of Log of Expenditure per Capita with and without Measurement Error, for Vietnam in 2006......Page 113
5.4 Classifying the Poor Using Alternative Measures of Welfare, Vietnam, 2006......Page 116
5.5 Sensitivity of Poverty Rate in Vietnam to Changes in the Poverty Line, 2006......Page 117
References......Page 124
Summary......Page 125
Introduction: Definition of Inequality......Page 126
6.1 Breakdown of Expenditure per Capita by Quintile, Vietnam, 1993......Page 127
6.4 Expenditure Inequality in Selected Developing Countries......Page 132
Measuring Pro-Poor Growth......Page 134
6.3 Poverty Incidence Curve for Expenditure per Capita, Vietnam, 1993 and 1998......Page 135
6.7 Decomposition of Income Inequality in Rural Egypt, 1997......Page 139
References......Page 143
Summary......Page 145
Introduction: What Is a Country Poverty Profile?......Page 146
Profile Presentation......Page 150
Poverty Comparisons over Time......Page 151
Excerpts from Poverty Profiles for Indonesia and Cambodia......Page 154
7.3 Poverty by Education Level of Household Head, Cambodia, 1999......Page 160
7.10 Standard Errors of Estimates of Headcount Poverty Rates, for Survey Data and for Small-Area Estimation, Ecuador, 1994......Page 164
References......Page 167
Summary......Page 169
Introduction: What Causes Poverty?......Page 170
Household and Individual-Level Characteristics......Page 173
Analyzing the Determinants of Poverty: Regression Techniques......Page 176
References......Page 182
Summary......Page 185
Is Growth Good for the Poor?......Page 186
9.1 Growth Determinants and the Incomes of the Poor......Page 189
An Example: Tanzania......Page 199
References......Page 203
Summary......Page 205
Introduction......Page 206
Overview of Poverty Analysis......Page 207
International Poverty Comparisons......Page 208
Survey Data and National Accounts......Page 215
Debate 1: Is World Poverty Falling?......Page 218
Debate 2: Is World Poverty Really Falling?......Page 220
Conclusion......Page 224
References......Page 225
Summary......Page 227
Introduction: Sources of Information on Poverty over Time......Page 228
Advantages of Panel Surveys......Page 232
Drawbacks of Panel Surveys......Page 235
11.1 Defining the Household......Page 237
Chronic versus Transient Poverty......Page 238
11.4 Quintile Transition Matrix for Households, 1993–98......Page 242
Notes......Page 251
References......Page 252
Summary......Page 255
Introduction: Why Measure Vulnerability?......Page 256
Vulnerability to Poverty Defined......Page 258
Quantifying Vulnerability to Poverty......Page 260
Sources of Vulnerability......Page 267
Lessons from Studies of Vulnerability to Poverty......Page 270
References......Page 271
Summary......Page 273
Introduction......Page 274
Poverty Monitoring......Page 275
Impact Evaluation: Micro Projects......Page 280
Impact Evaluation: Macro Projects......Page 292
References......Page 295
Summary......Page 297
Introduction......Page 298
The Vocabulary of Regression Analysis......Page 300
Examining a Regression Example......Page 301
Problems in Regression Analysis......Page 303
14.4 Outliers Illustrated......Page 309
14.5 Logistic Regression Compared with OLS......Page 311
References......Page 315
Summary......Page 317
Introduction......Page 318
Presenting Incidence Results......Page 319
Tax Incidence......Page 324
Benefit Incidence......Page 329
15.4 State Spending on Education, Peru, 2000......Page 331
Conclusion......Page 338
Annex A. Case Study: Health Spending in Ghana......Page 339
15A.4 Affordability Ratios for Publicly Provided Health Care, Ghana, 1992......Page 341
Summary......Page 343
Introduction: Interpreting Survey Data......Page 344
16.1 Income, Poverty, and Inequality in Malawi, 1997/98 and 2004......Page 345
16.1 Cumulative Distribution Functions, Southwest China Poverty Monitoring Survey......Page 346
Caution 3. Use a Consistent Recall Period......Page 347
16.2 Headcount Poverty Rates in India, 1970…2000......Page 348
Caution 5. Use Consistent Questions......Page 352
16.5 Income, Headcount Poverty, and Inequality, Ethiopia, 1999–2000......Page 353
16.3 Correction Factors for U.S. Income......Page 355
16.9 Levels of Income, Inequality, and Poverty in Rural China, 1990......Page 357
16.10 Household Size by Expenditure per Capita and Expenditure per Household Deciles, Benin, 2003......Page 359
References......Page 361
Appendix 1 Data Introduction......Page 363
Appendix 2 Stata Preliminary......Page 367
Appendix 3 Exercises......Page 393
Answers to the Review Questions......Page 427
Index......Page 429
2.1 Calculating the Value of Durable Goods Consumption: An Illustration......Page 50
3.2 The U.S. Poverty Line......Page 74
5.1 First-Order Stochastic Dominance, Formally......Page 121
13.1 Case Study: Workfare and Water in Argentina......Page 285
13.2 Case Study: Microfinance and the Poor in Bangladesh......Page 288
16.1 Constructing Price Indexes......Page 350
2.1b Cluster Sampling......Page 39
2.2 Lifecycle Hypothesis: Income and Consumption Profile over Time......Page 48
2.3 Engel Curve: Food Spending Rises Less Quickly Than Income......Page 57
3.1 Poverty Lines across Countries......Page 68
3.2 Food Expenditure Function......Page 77
3.7 Typology of Poverty Lines in World Bank Poverty Assessments for Africa......Page 79
3.4 Calorie Income Functions for Urban and Rural Indonesia......Page 82
3.10 Poverty Lines in Indonesia Using Food Energy Intake Method, 1990......Page 83
3.8 Self-Rated Poverty: Households That Are \"Mahirap,\" April 1983 to Second Quarter 2008......Page 85
4.1 Comparison of Canada and the United States Using the SST Index, 1971–94......Page 99
4.2 Average Exit Time from Poverty......Page 103
5.2 Poverty Incidence Curves with First-Order Stochastic Dominance......Page 118
5.4 Poverty Incidence Curves Showing Ambiguous Ranking......Page 119
6.1 Lorenz Curve......Page 129
6.2 Pen\'s Parade (Quantile Function) for Expenditure per Capita, Vietnam, 1993 and 1998......Page 133
7.1 Headcount Poverty by Region, Cambodia, 1999......Page 147
7.2 Poverty by Household Size, Cambodia, 1999......Page 159
7.4 Distribution of Real Expenditure per Capita, Vietnam, 2006......Page 166
9.1 Relating the Income of the Poor to Average Incomes......Page 188
9.2 Real GDP Growth, Tanzania, 1993…2007 (in Constant Prices)......Page 201
12.1 Illustrating the Probability of Poverty for a Household......Page 261
12.2 Identifying Vulnerable Households......Page 262
14.1 Scatter Plot and Regression Lines for Food Consumption per Capita against Total Expenditure per Capita, Vietnam, 2006......Page 299
14.2 A Hypothetical Example of the Link between Schooling and Wages......Page 306
14.3 Heteroskedasticity Illustrated......Page 308
15.1 Histograms for Income Tax as a Percentage of Income, Three Cases......Page 321
15.2 Lorenz and Concentration Curves for PIT Example......Page 322
15.3 Incidence of Value Added Tax, Peru, 2000......Page 328
15.4 The Incidence of Government Spending on Education, Peru, 2000......Page 332
15.5 State Spending on Education by Level, Peru, 2000......Page 333
16.4 Cumulative Distribution of Income per Capita, Colombia, 2003......Page 358
16.5 Cumulative Distribution of Expenditure per Capita, Benin, 2003......Page 360
A2.1 Stata Main Window......Page 368
2.1 Illustration of Why Weights Are Needed to Compute Statistics Based on Stratified Samples......Page 38
2.2 Summary of per Capita Consumption from Cambodian Surveys......Page 45
2.3 Income and Expenditure by per Capita Expenditure Quintiles, Vietnam......Page 47
2.4 Which Indicator of Welfare: Income or Consumption?......Page 54
2.5 Poverty and Quality of Life Indicators......Page 58
3.1 Summary of Poverty Lines for Cambodia......Page 66
3.2 Average Poverty Line of Thailand......Page 67
3.5 Food Consumption by Expenditure Quintile, Vietnam, 1992–93......Page 75
3.6 Poverty Lines and Headcount Measures of Poverty, Vietnam......Page 76
3.8 Per Capita Daily Calorie Intake Used in Poverty Line Construction......Page 80
3.9 Headcount Measures of Poverty in Indonesia, 1990......Page 81
4.1 Poverty Indexes by Subgroups, Madagascar, 1994......Page 97
4.2 Decomposition of Poverty and Changes in Poverty in Newfoundland, 1984–96......Page 100
5.1 Sensitivity of Headcount Poverty Rate (P0) to Different Specifications of Adult Equivalence Scales, United States, 1999......Page 114
5.3 Correlation Coefficients, Expenditure per Capita with Expenditure per Adult Equivalent......Page 115
5.6 Comparison of Poverty Incidence and Poverty Deficit Curves Using Different Poverty Lines......Page 120
6.2 Inequality in Vietnam, as Measured by the Gini Coefficient for Expenditure per Capita, 1993 and 1998......Page 130
6.5 Decomposition of Inequality in Expenditure per Capita by Area, Vietnam, 1993 and 1998......Page 137
6.6 Expected Change in Income Inequality Resulting from a 1 Percent Change in Income (or Wealth) Source, 1997 (as Percentage of Change in Gini Coefficient), Peru......Page 138
6.8 Economic Indicators for Brazil, 1976 and 1996......Page 141
7.2 Poverty among Household Groups in Malawi, 1997–98......Page 148
7.3 Poverty Measures for Cambodia, 1993/94 and June 1997......Page 152
7.4 Poverty Risks for Selected Groups of Households, Peru......Page 153
7.5 Sectoral Poverty Profile for Indonesia, 1987......Page 155
7.6 Sectoral Decomposition of the Change in Poverty in Indonesia, 1984–87......Page 156
7.7 Comparisons of Poverty Estimates from Cambodian Surveys......Page 157
7.8 Distribution of Poverty by Age and Gender of Household Head in Cambodia, 1999......Page 158
7.9 Mean and Standard Error of Headcount Poverty Rate for Different Sample Sizes, Rural Costa Province, Ecuador, 1994......Page 163
7.11 Decomposition of Inequality (in Expenditure per Capita) by Urban and Rural Areas, in Vietnam, 2006......Page 165
8.1 Main Determinants of Poverty......Page 177
8.2 Determinants of Household Spending Levels in Côte d\'Ivoire, about 1993......Page 179
9.2 Growth and Distribution Effects of Poverty......Page 191
9.3 Summary of Tanzania\'s National Strategy for Growth and Reduction of Poverty (MKUKUTA)......Page 200
10.1 Headcount Indexes: Percentage of Population in Developing Countries Living below $1.25/Day......Page 209
10.2 Computing GDP per Capita in Purchasing Power Parity (PPP) Terms......Page 211
10.3 Illustrating the Effects of Response Bias and Underreporting......Page 217
10.4 Poverty Lines Using $1/Day and $2/Day and Basic Needs Measures......Page 222
11.1 Hypothetical Data on Consumption per Capita for 10 Individuals......Page 233
11.2 Chronic, Persistent, and Transient Poverty, China, 1985–90......Page 239
11.3 Cost of Poverty Elimination in China, 1985–90......Page 240
11.5 The Headcount Poverty Rate (P0), S&W and BPS Methods......Page 243
11.6 Poverty Transition Matrix, December 1998–August 1999......Page 245
11.7 Alternative Measures of Poverty in Indonesia......Page 246
11.8 Poverty Rates Computed Using Different Food Shares and Prices, February 1996 and February 1999......Page 247
11.9 Poverty Rates Using Different Assumptions about Deflation, 1997 and 1998......Page 249
11.10 Estimates of Poverty Rates in Indonesia, 1996–99......Page 250
12.2 Changes in Poverty from Panel Surveys in Selected Countries......Page 257
12.3 Poverty and Vulnerability in Indonesia, 1998–99......Page 264
12.4 A Framework for Analyzing Vulnerability to Poverty......Page 268
12.5 Mechanisms for Managing Risk......Page 269
13.1 Millennium Development Goals, Indicators, and Targets......Page 276
14.1 Logistic Model of Rural-Urban Migration, Vietnam, 1993......Page 313
15.1 Progressivity Illustrated......Page 320
15.2 Incidence Assumptions for Study of Tax Incidence in Lebanon, 2004......Page 325
15.3 Incidence of Value Added Tax, Peru, 2000......Page 327
15.5 Benefit Incidence of Public Spending on Education in Selected African Countries......Page 334
15.6 Government Transfers to Households, Vietnam, 1993 and 1998......Page 335
15A.3 Incidence of Health Subsidies, Ghana, 1992......Page 340
16.3 Headcount Poverty Rates for India, Official and Adjusted......Page 349
16.6 Example of Correction for Nonresponse Bias......Page 354
16.8 Rates of Headcount Poverty and Inequality, with and without Spending on Health, Durable Goods, and Rent, for Selected Eastern European and Former Soviet Union Countries, 2002–03......Page 356
A1.1 Data Description......Page 364
A2.1 Stata Operators......Page 375
A3.1 Bangladesh Nutritional Basket......Page 401