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Incidence of Poverty in Pakistan: Methods and Measurement Fowad Murtaza Department of Economics University of Essex IDEAs Workshop/Conference at Tsinghua University, Beijing, China, June 3-9, 2007. Presentation Contents. 1.Motivation Methodology 3.Results and Future work. 1.Motivation.

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Incidence of Poverty in Pakistan: Methods and MeasurementFowad MurtazaDepartment of EconomicsUniversity of EssexIDEAs Workshop/Conference at Tsinghua University, Beijing, China, June 3-9, 2007

Incidence of Poverty in Pakistan: Methods and Measurement


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Presentation Contents

1.Motivation

  • Methodology

    3.Results and Future work

Incidence of Poverty in Pakistan: Methods and Measurement


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1.Motivation

  • In the absence of an official and widely acceptable poverty line in Pakistan, the motivation is to review different poverty measurement approaches and indicators; and respectively develop the indices of poverty and conduct poverty analyses in Pakistan.

Incidence of Poverty in Pakistan: Methods and Measurement


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2.Methodology

The methodology for the poverty analysis is divided into 6 steps:

  • data source

  • indicator of well being

  • unit of analysis

  • selection and calculation of poverty line

  • poverty indexes

  • checking the robustness

Incidence of Poverty in Pakistan: Methods and Measurement


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2.1Data Source

Household Integrated Economic Survey (HIES) data conducted by the Federal

Bureau of Statistics, Government of Pakistan for year (2000-01)

2.2Indicator of Wellbeing

Monetary indicator; i.e. consumption expenditure of households

5 sub consumption aggregates:

  • food items

  • fuel and utilities

  • housing

  • frequent non food expenses

  • other non food expenses

Incidence of Poverty in Pakistan: Methods and Measurement


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2.3Unit of Analysis

Individuals not households i.e consumption per capita

2.4Selection and calculation of Poverty Line

  • Absolute Poverty Line

  • Food Energy Intake (FEI)/Caloric Approach

    (a monetary expenditure necessary to reach the minimum calorie intake, and it also includes a minimum expenditure of non-food items)

Incidence of Poverty in Pakistan: Methods and Measurement


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2.4 (cont..)

At least three steps required in adopting the calorie approach:

  • minimum calorie intake per day(2350 calories per adult per day set by Government of Pakistan);

  • transformation of the calorie intake in monetary terms (regression);

  • inclusion of other non food minimum expenditure in relation to the minimum food expenditure.

Incidence of Poverty in Pakistan: Methods and Measurement


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2.5Poverty Index

Most common and preferred measure: Headcount Ratio (Incidence of Poverty)

  • Head-count:

    Where z is the poverty line, wi is the per adult equivalent consumption expenditure of the individual i, and N is the total population

Incidence of Poverty in Pakistan: Methods and Measurement


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Poverty Line = Rs728.51 per capita per month

Incidence of Poverty in Pakistan: Methods and Measurement


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Relative Poverty Incidence:

Incidence of Poverty in Pakistan: Methods and Measurement


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2.6Checking the Robustness of Poverty Indices

  • For robustness analysis for different poverty lines, I sketch cumulative distribution functions.

Incidence of Poverty in Pakistan: Methods and Measurement


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Robustness Check of Estimated Poverty Line

Incidence of Poverty in Pakistan: Methods and Measurement


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  • Food Deficient Population = 69.69%

    (i.e. population using less than 2350 calories daily)

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  • Further work...

  • Inclusion of more data sets

  • Develop poverty profiles and correlates

  • Analyze the determinants of poverty

  • Inequality and income distribution

  • Sectoral poverty decomposition

  • Growth and poverty reduction etc

  • Government policies and poverty alleviation (MDGs)

Incidence of Poverty in Pakistan: Methods and Measurement


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Thank YOU!

Incidence of Poverty in Pakistan: Methods and Measurement


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