Inquiry in to the Robustness of Poverty Indices
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Date
1997-06
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A.A.U
Abstract
The objective of the thesis is to inquire into the robustness of poverty lines and poverty
indices. This research was undertaken to contribute to the work on poverty analysis by using
the household survey data, to investigate to an area not researched before. The conclusion
of the paper leads to policy recommendations.
The data used is drawn from the Ethiopian Household Survey conducted for 15 rural sites and
seven urban sites in 1994. The methodologies used include the calculation of four types of
poverty indices by using two types of poverty lines constructed by the following methods i. e
Cost of Basic Needs (CBN) and the Food Energy Intake (FEI), the FGT measures (i.e the
Head-count index, the Poverty-gap Index and P2), SEN's index, Thons' index and CHU's
index. The results obtained for both the rural and urban sites were further analyzed to see
their robustness by cross tabulation method; by Persons rank correlation; regression method
and by calculation of correlation coefficients.
It was found that generally the CBN and FEI do not identify exactly the same households as
poor. In the case of the head-count index, CBN and FEI are not robust for urban sites, they
do not give the same number of poor, but for rural sites they are robust. The results of the
various indices tested by different methods lead to the conclusion that poverty indices are
sensitive to the type of poverty line used, especially SEN's index. Even using the same
poverty line, all the indices do not give the same ranking in the majority of the sites. In the
analysis of the correlates of poverty, both poverty lines give very close results thus they are
robust in this case.
The policy recommendations from this thesis are that the choice of a particular poverty line
is important for targeting the poor
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Keywords
Robustness of Poverty Indices