A Unified Approach to Measuring Poverty and Inequality
items, nonfood items, utilities, services, and other expenditures for two years. Column A reports the mean consumption expenditure and the mean expenditure in each category. Georgia’s mean per capita expenditure in 2003 is GEL 126.1 [6,A], which changes marginally to GEL 126.0 in 2006 [12,A]. The mean per capita expenditure on food in 2003 is GEL 76.9 [1,A], which decreases to GEL 72.8 in 2006 [7,A]. Mean expenditure on nonfood also decreases over three years. However, mean expenditures for the other three categories increase. Column B reports the mean expenditure of each category as a percentage of overall per capita expenditure. The food category accounts for 61.0 percent of per capita expenditure in 2003 [1,B], which falls to 57.8 percent in 2006 [7,B]. Per capita expenditure on foods is highly correlated with the overall per capita expenditure—the correlation in 2003 is 80.8 [1,C] (the upper bound and the lower bound of correlation is 0), which falls to 72.3 in 2006 [7,C], while the correlation between per capita expenditure on utilities and the overall expenditure increases. Inequality of GE(2) for Georgia increases from 24.2 [6,D] to 27.8 [12,D]. Inequality in per capita food consumption expenditure does not change much, but inequalities in utilities and expenditures on services drastically increase. Finally, we look at the contribution of each component to overall inequality. As expected, the food category contributes the most to overall inequality. This category’s contribution is more than half of the overall inequality. Its proportionate contribution, however, falls to 40.5 percent in 2006. The proportionate contribution of expenditure on services increases from 19.6 percent in 2003 [4,F] to 30.2 percent in 2006 [10,F]. Lessons for Policy Makers Table A.8 is helpful for understanding the source of inequality. This table can identify components responsible for changes in inequality across two time periods and the contributory factor to the overall inequality in a single period of time.
Quantile Function Figure A.1 graphs the quantile function of per capita expenditure for urban Georgia. The vertical axis reports per capita expenditure, and the horizontal
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