Measuring Poverty

2.1.2 The Concepts of Measuring Poverty

Poverty is measured by constructing a poverty line (income based) and computing poverty indices by used multidimensional index ( measuring the achievement of a certain dimension of human development). However, the definition of poverty line depends on how one understands the concept of poverty. Hence, it varies across individuals, households, societies, etc due to a number of factors such as difference in taste, preference, price etc. All definitions of poverty line however, belong to the three main categories of poverty definitions; These are Absolute poverty line, Relative poverty line and Subjective poverty lines. In other hand to categorize the people, either poor or not multidimensional measurement

First, it says nothing about how far below the poverty line that the income of the average poor person is, i.e. the poverty gap. Hence, the head count ratio and the poverty gap can easily move in opposite directions.

2.1.2.2. The Poverty Gap Index

Poverty gap index is moderately popular measure of poverty. It captures the mean aggregate income or consumption shortfall relative to the poverty line across the whole population. It is obtained by adding up all the shortfalls of the poor (assuming that the non-poor have a shortfall of zero) and dividing the total by the population. In other words, it estimates the total resources needed to bring all the poor to the level of the poverty line (divided by the number of individuals in the population) (Aline Coudouel, Jesko S. Hentschel, and Quentin T. Wodon Aklilu, B , 2007). Mathematically, the poverty gap index can be calculated as follows:

P1 =∑_(i=1)^P▒〖(z-y〗 i )

The MPI assesses poverty at individual level. It uses different factors to determine poverty beyond income-based lists by capturing the severe deprivation that each person faces at the same time with respect to education, health and living standards in Global MPI (UNDP M. p., 2016). Those have in concert ten indicators. Health dimension have two indicators child mortality and Nutrition, Education dimension and also have two indicators: year of schooling and school attendance, and Living standards have six indicators: cooking fuel, Toilet, Water, Electricity, Floor, and Assets. Each Dimension have 1/3 Weight and each indicator within a dimension is equally weighted. To calculate the poverty level of a certain country by using the formula as