An Illustration of the Average Time Measure of Poverty

John Gibson and Susan Olivia

Working Papers in Economics from University of Waikato

Abstract: The goal of the World Bank is 'a world free of poverty' but the most widely used poverty measures do not show when poverty might be eliminated. The 'head-count index' simply counts the poor, while the 'poverty gap index' shows their average shortfall from the poverty line. Neither measure reflects changes in the distribution of incomes amongst the poor, but squaring the poverty gap brings sensitivity to inequality, albeit at the cost of intuitive interpretation. This paper illustrates a new measure of poverty [Morduch, J., 1998, Poverty, Economic Growth and Average Exit Time, Economics Letters, 59: 385-390]. This new poverty measure is distributionally-sensitive and has a ready interpretation as the average time taken to exit poverty with a constant and uniform growth rate. The illustration uses data from Papua New Guinea, which is the country with the highest degree of inequality in the Asia-Pacific region.

Keywords: growth; inequality; poverty (search for similar items in EconPapers)
JEL-codes: O15 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2002-09-06
New Economics Papers: this item is included in nep-dev
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