CHAPTER 5: Poverty Indexes: Checking for Robustness
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Figure 5.1 Distribution of Log of Expenditure per Capita with and without Measurement Error, for Vietnam in 2006
Source: Authors’ compilation based on VHLSS06. Note: Light line shows actual distribution; heavy line shows distribution with perturbations, including measurement errors with zero mean distributed uniformly (top left) and normally (top right), and with a fixed positive shock (bottom left) and proportionate shock (bottom right).
higher-order Foster-Greer-Thorbecke poverty measures, such as the poverty gap index, the elasticities are usually even higher. In the context of measurement, it is worth noting that in practice, inflation— defined as a substantial, sustained increase in the general level of prices—raises the nominal value both of expenditure and of the poverty line, so has no net effect on the measures of poverty. However, when relative prices change, for instance, if the price of food rises more than other prices, then there will generally be an effect on the level of poverty, as well as on the pattern of who is poor.
Equivalence Scales Poverty studies usually measure living standards using expenditure (or income) per capita. As discussed in chapter 2, because needs vary among household members, and because there are economies of scale in consumption, poverty measures based
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