Some conceptual and statistical issues on measurement of poverty

Abstract

One of the major topics that attracted the attention of econometricians in recent years is measurement of poverty. This paper reviews critically the conceptual and statistical issues that have been examined by the econometricians. The paper provides a comprehensive review of major recent approaches and results on measurement of poverty. It devotes one section to outline a new approach to the measurement of poverty that is based on the actual consumption behaviour of the people instead of on arbitrary choice of either a poverty line or a deprivation function. It devotes two sections for suggesting fruitful areas of research, one addressed to economists on synthesizing poverty measurement with applied welfare economics, and another to statisticians on problems of statistical inference associated with functional estimation. The paper also highlights the importance of reliability theory and risk assessment in translating consumption deprivation into a poverty measure. A new index of poverty that depends on risk of consumption deprivation is also proposed.