Clarifying Poverty Decomposition

Adrian Muller ()

No 30, Proceedings of the German Development Economics Conference, Zurich 2008 from Verein für Socialpolitik, Research Committee Development Economics

Abstract: I discuss how poverty decomposition methods relate to integral approximation, which ultimately is the foundation of every decomposition of the temporal change of a quantity into key drivers. This offers a common framework for the different decomposition methods used in the literature, clarifies their often somewhat unclear theoretical underpinning and identifies the methods' shortcomings. In light of integral approximation, many methods actually lack a sound theoretical basis and they usually have an ad-hoc character in assigning the residual terms to the different key effects. I illustrate these claims for the Shapley-value decomposition and methods related to the Datt-Ravaillon approach and point out difficulties in axiomatic approaches to poverty decomposition. Recent developments in energy and pollutant decomposition offer some improved methods, but ultimately, a further development of poverty decomposition should account for the basis in integral approximation.

Keywords: poverty analysis; poverty measures; decomposition; Shapley-value; inequality (search for similar items in EconPapers)
JEL-codes: C43 I32 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (3)

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Working Paper: Clarifying Poverty Decomposition (2008)
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