Submitted by: Assignment-02

Name: Sneha Pokharel Submitted to:

Roll no: 207075
Prof. Narahari Dhakal
Group: C
Poverty: Faculty of Nepalese Economy
Not being able
to fulfill the basic needs like food, clothing and shelter can be defined as poverty. Poverty
headcount index, depth of poverty and severity of poverty, are some measures to analyze poverty
of a state.
Poverty
Line -
GNI/Family GNI per (Depth of
Size person Poverty)^2
Household Family Annual HH income In
Number size GNI per Depth of
GNI GNI (PPP Poverty
person Poverty Severity
(2020) 2020) =1
1 5 3800 15580 760 1 40 1600
2 6 5200 19760 866.6666667 0 0 0
3 7 5900 23600 842.8571429 0 0 0
4 6 3500 14350 583.3333333 1 216.6667 46944.44
5 8 7800 29640 975 0 0 0
6 5 3200 12800 640 1 160 25600
7 3 1900 7790 633.3333333 1 166.6667 27777.78
8 4 2500 9500 625 1 175 30625
9 2 1700 6800 850 0 0 0
10 3 2400 9840 800 0 0 0
11 6 4900 18620 816.6666667 0 0 0
12 7 5800 23200 828.5714286 0 0 0
13 5 3900 15990 780 1 20 400
14 9 9300 35340 1033.333333 0 0 0
15 3 4200 16800 1400 0 0 0
16 2 1800 7380 900 0 0 0
17 6 3100 11780 516.6666667 1 283.3333 80277.78
18 5 3900 15990 780 1 20 400
19 4 6300 23940 1575 0 0 0
20 7 7100 29110 1014.285714 0 0 0
Total 103 8 1081.667 213625
The given table shows that headcount index of households living in poverty is 40%, as 8 out of
every 20 households had a household income at the national poverty level, i.e. $800 per year.
Head Count Index of people living below the national poverty level is 37.86 percent, meaning 39
out of 103 people are poor in Mapuko Island.
Using the formula we found, Severity of poverty is 1.67%.
-Multi- Dimensional Poverty Index (MDI) indicates percentage of the population that is deprived
of more than 1 dimension of poverty amongst the 3-dimension: education, health and living
standard and is further divided in to 10 categories.
In the table below, 100% indicates deprivation while 0% indicates no deprivation and the cut off
weighted count for MDI is 33%. If the score is less than 33% the household is not deprived and
if it is more than 33% the household is deprived
-Calculation of MPI
Wei
ghta 0.17 0.17 0.17 0.17 0.06 0.06 0.06 0.06 0.06 0.06
ge
Indic
ator/ Nutriti Chil Years School Cooki Impro Improv Electri Hou Asset
Hous on d of attenda ng ve d ed city sing owner sco
ehold mort school nce fuel sanita drinkin ship re
ality ing tion g water %
1 0% 0% 100% 100% 0% 0% 0% 0% 100% 100% 44.44
2 100% 0% 100% 100% 0% 100% 0% 0% 100% 100% 66.67
3 100% 100% 0% 100% 0% 0% 0% 0% 0% 100% 55.56
4 0% 100% 100% 100% 100% 100% 0% 0% 100% 100% 72.22
5 100% 0% 100% 0% 100% 100% 0% 0% 100% 0% 50.00
6 0% 100% 0% 0% 0% 0% 0% 0% 100% 0% 22.22
7 0% 100% 100% 100% 100% 100% 0% 0% 100% 0% 66.67
8 0% 100% 0% 0% 100% 0% 0% 0% 100% 0% 27.78
9 100% 100% 100% 0% 0% 0% 0% 0% 100% 0% 55.56
10 0% 100% 100% 100% 0% 0% 0% 0% 100% 100% 61.11
11 100% 0% 100% 100% 0% 0% 0% 0% 100% 0% 55.56
12 100% 100% 100% 100% 0% 0% 0% 0% 100% 0% 72.22
13 0% 100% 100% 100% 0% 100% 0% 0% 100% 0% 61.11
14 100% 100% 100% 100% 0% 100% 0% 0% 0% 0% 72.22
15 0% 100% 0% 0% 0% 0% 0% 0% 0% 0% 16.67
16 100% 100% 0% 100% 0% 0% 0% 0% 100% 0% 55.56
17 0% 100% 0% 100% 100% 0% 0% 0% 100% 0% 44.44
18 0% 100% 0% 0% 0% 0% 0% 0% 0% 0% 16.67
19 0% 100% 100% 0% 0% 0% 0% 0% 0% 0% 33.33
 20 100% 100% 0% 100% 0% 0% 0% 0% 100% 100% 61.11

Factor Headcount by household =Number of households living in poverty /Total number of

Households (0.8 in Mapuko)
Factor Headcount=Number of people living in poverty / Total number of people (0.8349515 in
Mapuko)

Factor Intensity = Average of the weighted score of those living in poverty

(57.99% in Mapuko)
Multi-Dimensional Index (Household) = Factor Head Count by household * Factor
Intensity (0.4638889 in Mapuko)
Multi-Dimensional Index= Factor Count * Factor Intensity (0.4841559)
-Human Development Index measures the country’s average achievements in three basic
aspects: health, knowledge and standard of living.
Information:
Life expectancy: 70 years
Life Expectancy Index: (actual-min/ max-min) 0.769230769
Mean years of schooling: 5.115 years
Mean years of schooling Index: (MYS/15) 0.341
Expected years of schooling: 14 years
Expected years of schooling index: (EYS/18) 0.7778
Education index: 0.559388889
GNI per capita: 856.3106796 dollars
Income Index: (ln GNI pc - ln 100 /ln 75000 - ln100) 0.324386604
Now after calculations, HDI is found to be 0.5187338 i.e. the score is low which in turn means
poor education and income indices. The life expectancy is above the average but is not good
enough yet.
Inequality
Unequal distribution of income amongst the population. The more unequal the distribution, the
greater the income disparity.
- Lorentz curve
Graphical representation of the income or wealth distribution. IT plots population percentiles
against the cumulative income. A perfect equality is represented by diagonal line with
slope=1 and Lorentz curve lies below it showing the distribution.
- Gini coefficient
The area between the straight line and the curved line of the Lorentz curve is the Gini
coefficient. A Gini coefficient of zero expresses perfect equality and hundred represents
maximum inequality.

Lorentz curve can be shown below:

 Source: https://www.intelligenteconomist.com/lorenz-curve/

-Calculation of Gini coefficient:

Bin Predi Cumu Cumulati Frequen Predicte Cumulati Previous Area Cumula Lorent Line
cted lative ve cy d ve Pred. Cumulat tive z of
Value Frequ predicted Distribut Distribut Distributio ive Pred. Freque Curve Equa
ency Value ion ion n ncy lity
0 0 0 0 0 0 - - - 0.00 0.00
-
4 4 7,800 0.200 0.088 0.088 - 0.200 0.20
7,800 0.009 0.088
4 8 20,100 0.200 0.139 0.228 0.088 0.200 0.40
12,300 0.032 0.228
4 12 35,900 0.200 0.179 0.407 0.228 0.200 0.60
15,800 0.063 0.407
4 16 57,700 0.200 0.247 0.654 0.407 0.200 0.80
21,800 0.106 0.654
4 20 88,200 0.200 0.346 1.000 0.654 0.200 1.00
30,500 0.165 1.000
20
88,200 0.376

Area below the Lorentz Curve and above the X-Axis (B) = 0.376
Area between the two curves (A) = 0.5 - 0.376 = 0.124
Gini Coefficient = A / (A + B) = 0.249
Since Gini index between, 0.2–0.3 relative equality, the island has relative equality amongst
household.
Solutions:
1. Occupational and Vocational trainings.
2. Government should invest more and create job opportunities.
3. Lower restrictions to encourage investments.
4. Encourage small scale industries through higher subsidies.