Measurements of

Poverty
 Poverty

Absolute Poverty Relative Poverty

Human Poverty Poverty Line Lorenz Curve ( Gini index)

Index

Food Poverty Non food National Poverty

Line Poverty Line Line
• Absolute poverty is a level of poverty as defined in terms
of the minimal requirements necessary to afford minimal
standards of food, clothing, health care and shelter.

• Relative poverty defines people are relatively

impoverished if the customary (average) standard of
living in their society requires more spending than the
income they have available.
( Source:http://www.unc.edu/depts/econ/byrns_web/Economicae/Essays/
Poverty_RelAbs.html)
Absolute Poverty Measurements

1. Poverty Line

2. Human Poverty Index

1. Poverty Line ( Poverty Threshold)

“Possible sources of additional family income”
Source: B.seebohm rowntree,Poverty: a study of townlife,100th edition,british
Library,2000

 Food poverty line

 Non food poverty line
 National poverty Line

Absolute Poverty Measurements

  Food poverty line

Minimum amount of food an individual must consume to stay

healthy
Source: Moazzem Hossain, Iyanatul Islam, Reza Kibria, South Asian Economic
Development:
Transformation, Opportunities and Challenges,

 Non food poverty line

Average per capita non-food expenditure of households whose per

capita total expenditure is close to the food poverty line.

Source: The Department of Census and Statistics Announces the Official Poverty Line for Sri
Lanka, 2004

 National poverty Line

This is the percentage of people living below the national poverty line.

Absolute Poverty Measurements

Food poverty line measuring method in Sri Lanka
In Sri Lanka, the method outlined below is
implemented to derive the food poverty line in
the following way:
(i)the households in the 2nd to 4th deciles
ranked by real per-capita total consumption
expenditure are chosen as the reference
group;
(ii)all food items for which information on
expenditure, quantity and
estimated calorie value are available are
selected;
(iii)the aggregates of food expenditures and
calorie intakes in the reference group are
calculated;
(iv) the cost per calorie is derived by
dividing the
former with the latter;
Source: The Department of Census and Statistics Announces the Official Poverty Line for Sri
Absolute Poverty Measurements
 Non Food Poverty Line

The lower bound of the non-food poverty line means average per capita
non-food expenditure of households whose per capita total
expenditure is close to the food poverty line.

The upper bound is defined means average per-capita non-food

expenditure of households whose per-capita food expenditure is
close to the food poverty line.

Absolute Poverty Measurements

 The National Poverty Line

The national poverty line is Rs.3178 of October 2010

- Policy Research and Information Unit ,Sri Lanka-

Absolute Poverty Measurements

 Criticisms on Poverty Line
 Poverty Line is a measure based solely on the cost of food.
It is needed to measure poverty through multiple factors such as
housing, transportation, and regional economic differences.

 The thresholds are low

Current poverty thresholds were established in the 1960s.

Thresholds should vary geographically to reflect variations in
the costs of meeting the needs in the thresholds.

 The analytical data is low to find the solution to reduce the

poverty

It is essential to have the categories (sex,age etc) what affect from

poverty more. Then the solutions can be used to that affected
group.

Absolute Poverty Measurements

2. Human poverty index

The Human Poverty Index (HPI) was an indication of the standard

of living in a country, developed by the United Nations.

Not only poor countries but also but also industrial countries also are
suffering from the human poverty . So economists introduced separate
two indexes to measure the poverty.

1 . Human poverty index for developing countries. (HPI 1)

• Percentage of people who are living more than 40 years.(Longevity)

• Adults percentage with illiteracy .(Knowledge)
• Percentage of people who are impossible to access for pure water.
• Percentage of low weight infants below 5 year old.( Decent
standards of Poverty)

Absolute Poverty Measurements

2. Human poverty index for developing countries.(HPI 2 )

 Percentage of people who are not living more than 60 years from
the total population.
 Percentage of people who are inability to read and write in day
today activities from the total population.
 Segment of people who suffer from income poverty.
 Group of population suffer from the unemployment more than
12 months.

Absolute Poverty Measurements

Summary of poverty lines at 2002 national prices

Poverty line Rs./month

1. Food poverty line 973
2. Lower poverty line 1267
3. Upper poverty line 1579
Poverty headcount ratio National and by sector (%).

Sector 1990-91 1995-96 2002

(%) (%) (%)

26.1 28.8 22.7

National
Urban 16.3 14.0 7.9
Rural 23.4 30.9 24.7
Estate 20.5 38.4 30.0
 Relative Poverty measurements
 Lorenz curve and Gini coefficient
Lorenz curve is the line which shows the distribution of income among
the households.

Relative Poverty Measurements

 It was developed by Max O. Lorenz in 1905 for representing inequality
of the wealth distribution

The Lorenz Curve is a graphical representation of the proportionality

of distribution.

To map the Lorenz curve, the cumulative income share is plotted on

the vertical axis and distribution of the population on the horizontal
axis.

 The more curved a Lorenz curve is, and the further it lies below the
line of equality,

 A linear Lorenz curve is evidence of “perfect” equality.

Relative Poverty Measurements

 Gini Index

This index shows the inequality among the household

income

Source: Household Income and Expenditure Survey -2005, Department of Census and
Statistics, Sri Lanka

Relative Poverty Measurements

 Other Poverty Indexes used by the World Bank
• The Human Suffering Index (HSI)
• The Physical Quality of Life Index (PQLI)
• The Human Development Index (HDI)
• Incidence of poverty: The percentage of a country's population that
cannot afford basic necessities (a "basket of goods and services").

This is also known as living below the poverty line (an income level
below
which a person is unable to meet basic needs)

• Depth of poverty: How far below the poverty line the poor population
lives; also called the poverty gap.

• Poverty severity (squared poverty gap): Measures how poor the poor
are.
In other words, poverty severity measures how far below the poverty line
individuals and households are, with more consequence given to those at
the very bottom.
Group members
H.H.K.R.N.Elizabeth 102308T
P.M.S.Jayamali 102313E
T.E.T.P.Gunapal 102309X
a D.S.N.Jayakodi 102312B

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