POVERTY REDUCTION STRATEGY TN

A number of poverty “indexes” have been constructed in this kind of framework. Much of
the initial work was done by Sen (1976, 1981), followed by Kakwani (1979), Thon
(1979), and Takayama (1979). A recent measure which has gained considerable
acceptance was proposed by Foster, Greer and Thorbecke (1984), known as the FGT
index. Given the proliferation of poverty measures proposed in the literature, a number of
survey papers have also appeared in the literature like Foster (1984), Seidl (1988),
Chakravarty (1990), Sen (1979, 1983 and 1992), Kundu (1981) and Borooah (1991). A
recent survey on poverty measurement (Zheng, 1997) provides a comprehensive analysis
of the axiomatic framework behind different poverty measures explaining the properties
of each poverty measure and the relationships among axioms and the poverty measures.
While quite a number of poverty measures have been proposed in the literature,
only a few have been used in actual practice. Most official estimates still use the head
count ratio. Some of the important measures proposed in the poverty literature are
considered below.
The following symbols are used
n = total population
z = poverty line
m = number of poor (below poverty line)
y i = income (or other relevant indicator) of individual i
µ = mean income of the whole population
µ P = mean income of the poor
Gp= Gini coefficient among the poor
H = Head count ratio
P = Poverty gap ratio
Incomes are arranged in non-descending order:
y 1 ≤ y 2 ≤ … ≤ y m < Z ≤ ym+1 ≤ … ≤ y n
Most poverty measures can be seen as normalised weighted sums of poverty
gaps, viz.,
m
P = A Σ w
t=
1
i
(z − y ) + B
i
Some of the important poverty measures are defined below:
(1)
i. Head Count Ratio
The head count ratio is defined as
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