I am going to measure the poverty at different regions in Pakistan. I am going to use panel data and take per capita income as one of independent variable. Any one guide me how i take per capita income or which proxy variable will best suit.
Naveed,
There are many definitions of poverty. If you want to go the income way, be aware that poverty is defined for family, i.e., family income should be considered. For instance, if a family of 4 persons makes about 50 percent of the median income in the region, then you can call that family low income. From that you can measure poverty for 1, 2, and 3 persons say by taking 70%, 80%, and 90% of the family of four persons. This is one way it is done in the U. S.
There is an alternative measure call the poverty line, which takes into account other socioeconomic variables. The U.S. Census Bureau gives this estimate.
Goodluck in your research.
Hello, there are two major recognize measures of poverty in the literature: absolute and relative measures. For absolute measure, you can use the poverty gap and the poverty headcount ratio, both measured at $1.90 per day or more. For relative measure, you can also adopt the proportion of income that accrues to the poorest 20% of the population, i.e. lowest quintile. all these data are available on World Development Index (WDI). I hope this helps.
Dear Segun Thompson Bolarinwa & Lall B. Ramrattan thanks for response. Basically i'm going to measure absolute poverty but the problems is not how to measure poverty i.e. absolute or relative. The problem is that i am going to analyze poverty through panel data with some other variables on independent side i.e. terrorism, natural disasters, public spending, per capita income and kept poverty on dependent side. So the basic question is can i use per capita income or proxy variable instead of per capita income?
I f you mean you're are including per capita income or another variable that could serve as a proxy for it among the independent variables. I think this is fine. In fact, following the argument of the pro-poor theories, you must include per capita income among these variables to capture economic growth. It is good and fine. Go ahead!
Segun Thompson Bolarinwa thanks to rep but i've a question that per capita income is a static variable and poverty is an index so how index and static variable can be associated? So if what do you think if i take GDP per capita instead of income per capita????
I agree with Prof. Segun. World Bank provides head count data on poverty but again that's not a continuous data. Measured $ 1.5 to more say $2. When we try to build a model on poverty, its good if we consider a lag variable of income (Per capita), lag of year 1 and lag year 2 or may be 3 as well. Poverty is a head count and Per capita variable is also a count.
Hi Naveed, also I have the same question..do you have an answer or you are still wondering