A Study on the Measurement of Relative Poverty in Developing Countries with Large Populations

Abstract

Under the goal of global poverty eradication, it has become a forward-looking research aim to establish relative poverty criteria and identify people experiencing relative poverty in countries with different demographic characteristics. This paper introduces a new method to measure the relative poverty standard, which is to use the fuzzy decision tree algorithm to objectively estimate the relative poverty standard. The advantage of this algorithm lies in (1) it not only maintaining the regression idea of measuring absolute poverty, but also emphasizing the nonlinearity when the demand is increasing, which can reflect the change in human needs. (2) It overcomes the division of the traditional method which clearly distinguishes between those experiencing poverty and those who are not by means of a subjective threshold, and it also avoids the subjectivity of the selection of multidimensional indicators. (3) It overcomes the problems of data skewness and extreme value issues that traditional methods have, and can exhibit multi-dimensional characteristics. (4) Most importantly, this method can overcome the gap problem caused by the complex population structure in developing countries with huge populations, and is more adaptable under big data conditions than traditional methods. Taking China as an example, using data from the China Household Finance Survey for validation, the validation results show that the relative poverty standard in China in 2019 can be approximately delineated as 5288.5 RMB; this result is higher than the absolute poverty standard line delineated in China in that year, lower than the relative poverty standard line measured using the proportion method, and it can satisfy the average per capita food, tobacco, and alcohol consumption expenditure of Chinese residents in that year. Thus, compared with other methods, the fuzzy decision tree algorithm can better match the identification of relative poverty in developing countries with large populations.