ECON-2220 Lecture Notes - Lecture 1: Headcount, World Bank, Informal Sector
15 May 2018
School
Department
Course
Professor
Poverty
● How to define the poor? The poor are individuals/households unable to meet basic
needs such as good, health care, education, and shelter. The definition of basic needs
might differ from place to place.
● Poverty measures
○ Poverty line: establishes a threshold so that we can compute the rest
○ Headcount index of poverty (H)
■ Easiest
○ Poverty gap (PG)
○ Square poverty gap (SPG)
○ Foster-Greer-Thorbecke (FGT)
● Considerations about data
○ Sources of poverty data
■ National: census
■ International agencies
● World bank: household surveys
● United Nations (ECLAC-CEPAL)
○ National governments and international agencies collect and analyze poverty
data
● Poverty line
○ Threshold of the minimum income needed to purchase socially-determined
essentials for living (i.e. basic food needs & other basic needs)
○ It is country-specific: considering own taste and preferences
● U.S. Poverty Line
○ U.S. Basic Poverty Stats 2015
■ 13.5% below poverty line
■ 31.7% below 2*pl (low-income)
■ 6.1% below .5pl
■ 24.1% African American below pl
■ 21.4% Hispanic below pl
■ 9.1% white non-hispanic below pl
○ Household size: income
■ 1: $11,770
■ 2: $15,930
■ 3: $20,090
■ 4: $24,250
● Poverty headcount
○ Headcount index of poverty: proportion of the population living below or at the
poverty line
○ It gives us a sense of the number living in poverty at any point in time
○ It does not measure the extent of desolation (a person could be making $45 a
month vs. another making $20 a month would each count as poor despite
tragically different realities)
○ Measures the incidence of poverty
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Document Summary
The poor are individuals/households unable to meet basic needs such as good, health care, education, and shelter. The definition of basic needs might differ from place to place. Poverty line: establishes a threshold so that we can compute the rest. National governments and international agencies collect and analyze poverty data. Threshold of the minimum income needed to purchase socially-determined essentials for living (i. e. basic food needs & other basic needs) It is country-specific: considering own taste and preferences. Headcount index of poverty: proportion of the population living below or at the poverty line. It gives us a sense of the number living in poverty at any point in time. It does not measure the extent of desolation (a person could be making a month vs. another making a month would each count as poor despite tragically different realities) Proportion of population whose consumption (y) is less than or equal to the poverty line z.
