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How Should We Measure Poverty in a Changing World? Methodological Issues and Chinese Case Study

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  • Lars Osberg
  • Kuan Xu

Abstract

This study asks whether, in a rapidly changing world, the estimated proportion of the world's population with income below US$1 (adjusted according to purchasing power parity) per day is still a good measure of trends in poverty. It argues that strong economic growth in nations such as China implies that the commonly accepted international poverty line definition of one half median national equivalent income is increasingly relevant and that poverty intensity (the normalized deficit or Foster–Greer–Thorbecke (FGT) index of order one) is a better summary index. This index has a convenient graphical representation—the “poverty box”. Using the proposed poverty line and the example of ranking the level of rural poverty in Chinese provinces, the study demonstrates how poverty intensity replicates the poverty rankings of the Sen family of poverty indices and captures most of the information content of higher‐order FGT indices.

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  • Lars Osberg & Kuan Xu, 2008. "How Should We Measure Poverty in a Changing World? Methodological Issues and Chinese Case Study," Review of Development Economics, Wiley Blackwell, vol. 12(2), pages 419-441, May.
  • Handle: RePEc:bla:rdevec:v:12:y:2008:i:2:p:419-441
    DOI: 10.1111/j.1467-9361.2008.00449.x
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    Cited by:

    1. Matshe, Innocent & Moyo-Maposa, Sibonginkosi & Zikhali, Precious, 2013. "Water Poverty and Rural Development: Evidence from South Africa," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 8(2), pages 1-21, August.
    2. Lars Osberg & Jiaping Shao & Kuan Xu, 2009. "The growth of poor children in China 1991–2000: why food subsidies may matter," Health Economics, John Wiley & Sons, Ltd., vol. 18(S1), pages 89-108, April.
    3. Duangkamon Chotikapanich & William Griffiths & Wasana Karunarathne & D.S. Prasada Rao, 2013. "Calculating Poverty Measures from the Generalised Beta Income Distribution," The Economic Record, The Economic Society of Australia, vol. 89, pages 48-66, June.
    4. Martin Ravallion & Shaohua Chen, 2011. "Weakly Relative Poverty," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1251-1261, November.
    5. Lars Osberg, 2015. "The Hunger of Old Women in Rural Tanzania: Can Subjective Data Improve Poverty Measurement?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(4), pages 723-738, December.
    6. Björn Gustafsson & Ding Sai, 2020. "Growing into Relative Income Poverty: Urban China, 1988–2013," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 147(1), pages 73-94, January.
    7. Chunyun Wang & Xiaoxi Yu & Jiang Zhao, 2022. "Identifying the Real Income Disparity in Prefecture-Level Cities in China: Measurement of Subnational Purchasing Power Parity Based on the Stochastic Approach," Sustainability, MDPI, vol. 14(16), pages 1-24, August.
    8. Achyut Wagle, 2008. "Human Capital Flight: The Cause of Underdevelopment," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 20, pages 32-43, April.
    9. Lars Osberg, 2010. "Measuring Economic Insecurity and Vulnerability as Part of Economic Well-Being: Concepts and Context," Working Papers daleconwp2010-04, Dalhousie University, Department of Economics.
    10. Mussa, Richard, 2015. "A joint analysis of correlates of poverty intensity, incidence, and gap with application to Malawi," MPRA Paper 65205, University Library of Munich, Germany.
    11. Lars Osberg & Andrew Sharpe, 2014. "Measuring Economic Insecurity in Rich and Poor Nations," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(S1), pages 53-76, May.
    12. Plante, Charles, 2018. "Policy or Window Dressing? Exploring the Impact of Poverty Reduction Strategies on Poverty Rates among the Canadian Provinces," SocArXiv xtnfg, Center for Open Science.
    13. Shuo Ding, 2022. "A Comparative Analysis of Vulnerability to Poverty between Urban and Rural Households in China," Economies, MDPI, vol. 10(10), pages 1-28, October.
    14. John Paolo Rosales Rivera, 2022. "A nonparametric approach to understanding poverty in the Philippines: Evidence from the Family Income and Expenditure Survey," Poverty & Public Policy, John Wiley & Sons, vol. 14(3), pages 242-267, September.
    15. Gustafsson, Björn Anders & Sai, Ding, 2019. "Growing into Relative Income Poverty: Urban China 1988 to 2013," IZA Discussion Papers 12422, Institute of Labor Economics (IZA).
    16. Rudy Badrudin, 2012. "Poverty Measurement and Choice of Poverty Reduction Strategy: The Importance of Poverty Measurement in Determining the Right Strategy," Journal of Economics and Behavioral Studies, AMH International, vol. 4(10), pages 595-602.
    17. Peng Peng & Hui Mao, 2023. "The Effect of Digital Financial Inclusion on Relative Poverty Among Urban Households: A Case Study on China," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 165(2), pages 377-407, January.
    18. Tomson Ogwang, 2022. "The Foster–Greer–Thorbecke Poverty Measures Reveal More," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 164(3), pages 1481-1503, December.

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