Incidence of Poverty in Pakistan: Methods and Measurement

Fowad Murtaza
Department of Economics University of Essex

IDEAs Workshop/Conference at Tsinghua University, Beijing, China, June 3-9, 2007

Incidence of Poverty in Pakistan: Methods and Measurement

Presentation Contents
1. Motivation 2. Methodology 3. Results and Future work

Incidence of Poverty in Pakistan: Methods and Measurement

1.

Motivation

In the absence of an official and widely acceptable poverty line in Pakistan, the motivation is to review different poverty measurement approaches and indicators; and respectively develop the indices of poverty and conduct poverty analyses in Pakistan.

Incidence of Poverty in Pakistan: Methods and Measurement

2. Methodology
The methodology for the poverty analysis is divided into 6 steps:

1. 2. 3. 4. 5. 6.

data source indicator of well being unit of analysis selection and calculation of poverty line poverty indexes checking the robustness
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2.1

Data Source

Household Integrated Economic Survey (HIES) data conducted by the Federal Bureau of Statistics, Government of Pakistan for year (2000-01)

2.2

Indicator of Wellbeing
Monetary indicator; i.e. consumption expenditure of households

5 sub consumption aggregates: 1. food items 2. fuel and utilities 3. housing 4. frequent non food expenses 5. other non food expenses

Incidence of Poverty in Pakistan: Methods and Measurement

2.3 Unit of Analysis

Individuals not households i.e consumption per capita

2.4 Selection and calculation of Poverty Line

Absolute Poverty Line Food Energy Intake (FEI)/Caloric Approach
(a monetary expenditure necessary to reach the minimum calorie intake, and it also includes a minimum expenditure of non-food items)
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2.4 (cont..)
At least three steps required in adopting the calorie approach: minimum calorie intake per day
per day set by Government of Pakistan); (2350 calories per adult

transformation of the calorie intake in monetary terms (regression); inclusion of other non food minimum expenditure in relation to the minimum food expenditure.
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2.5

Poverty Index

Most common and preferred measure: Headcount Ratio (Incidence of Poverty)

Head-count:
1 P0i = p 0 ( wi ) = 0 if wi < z if wi z

1 HC = N

p (w )
i =1 0 i

Where z is the poverty line, wi is the per adult equivalent consumption expenditure of the individual i, and N is the total population
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Poverty Line = Rs728.51 per capita per month

POVERTY INDICES FOR PAKISTAN (2000-01)
Head Count (%) Poverty Gap (%) Severity of Poverty (%)

PAKISTAN Urban Rural

35.09 23.13 39.97

7.21 4.62 8.27

2.19 1.38 2.53

Incidence of Poverty in Pakistan: Methods and Measurement

Relative Poverty Incidence: Incidence of Relative Poverty (2000-01)

Head Count Index (%) poverty line=50% of per capita monthly consumption 57.80

poverty line=60% of per capita monthly consumption

67.76

poverty line=66% of per capita monthly consumption

73.61
10

Incidence of Poverty in Pakistan: Methods and Measurement

2.6

Checking the Robustness of Poverty Indices

For robustness analysis for different poverty lines, I sketch cumulative distribution functions.

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Robustness Check of Estimated Poverty Line

1.0

Rural
0.8

0.6

Urban

0.4

y r n p f o % e v i t a l m u c

0.2

0.0 0 300 600 900 1200 1500

real per capita ae monthly consumption

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 Food Deficient Population = 69.69%

(i.e. population using less than 2350 calories daily)

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3. Further work...
1. 2. 3. 4. 5. 6. 7. Inclusion of more data sets Develop poverty profiles and correlates Analyze the determinants of poverty Inequality and income distribution Sectoral poverty decomposition Growth and poverty reduction etc Government policies and poverty alleviation (MDGs)
Incidence of Poverty in Pakistan: Methods and Measurement 14

Thank YOU!

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