Measurement
of Poverty:
Poverty is generally measured in terms of poverty line. Income is most commonly used indicator for measuring poverty. Therefore, objectively poverty can be measured in terms of the extent of currently agreed upon basic 'necessities' that income can fulfil. Generally there are two standard measures of poverty (i) Head Count, and (ii) Poverty gap.
(i) Head Count Ratio of Poverty:
The Head count ratio (Po) is the proportion of a population that exists, or lives, below the poverty line. Traditionally, this is done simply by just counting the number of poor, defined in a specific way and then expressing poverty as the ratio of the number of the poor to the total number of people in the society in question.
In other words, head-count measure gives the ratio
of the persons below the poverty line m to the total population 'n* the index
(m/n) being known as the head count-measure, H. This is the common measure of
overall poverty, and has been widely used by the economists to compare the
poverty between two period of times. The headcount index (P0) measures the
proportion of the population that is poor. It is popular because it is easy to
understand and measure. But it does not indicate how poor the poor are?
Po= Np/N Where: Np is the number of poor and N is the total population.
The head-count measure of poverty pays no attention
whatsoever to the extent of income shortfall of those who fall below the
’poverty line’: it matters not at all whether someone is just below the poverty
line, or very far from it in starvation, acute misery and hunger.
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