This document discusses various methods used to measure poverty, including absolute and relative poverty. It defines absolute poverty as the minimal requirements for food, clothing, shelter, etc., while relative poverty compares standard of living to the average in a society. Absolute measures discussed include poverty lines for food and non-food costs, as well as the national poverty line. The document also examines the human poverty index and criticisms of poverty lines. Relative poverty is measured using Lorenz curves and the Gini coefficient, which indicate inequality in household income distribution. Other indexes used by the World Bank to measure poverty are also listed.

1. Measurements of
Poverty

2. Poverty
Absolute Poverty
Human Poverty
Index
Food Poverty
Line
Relative Poverty
Poverty Line
Non food
Poverty Line
Lorenz Curve ( Gini index)
National Poverty
Line

3. • Absolute poverty is a level of poverty as defined in terms
of the minimal requirements necessary to afford minimal
standards of food, clothing, health care and shelter.
• Relative poverty defines people are relatively
impoverished if the customary (average) standard of
living in their society requires more spending than the
income they have available.
( Source:http://www.unc.edu/depts/econ/byrns_web/Economicae/Essays/
Poverty_RelAbs.html)

4. Absolute Poverty Measurements
1. Poverty Line
2. Human Poverty Index
1. Poverty Line ( Poverty Threshold)
“Possible sources of additional family income”
Source: B.seebohm rowntree,Poverty: a study of townlife,100th edition,british Library,2000
 Food poverty line
 Non food poverty line
 National poverty Line
Absolute Poverty Measurements

5.  Food poverty line
Minimum amount of food an individual must consume to stay
healthy
Source: Moazzem Hossain, Iyanatul Islam, Reza Kibria, South Asian Economic Development:
Transformation, Opportunities and Challenges,
 Non food poverty line
Average per capita non-food expenditure of households whose per
capita total expenditure is close to the food poverty line.
Source: The Department of Census and Statistics Announces the Official Poverty Line for Sri
Lanka, 2004
 National poverty Line
This is the percentage of people living below the national poverty line.
Absolute Poverty Measurements

6. Food poverty line measuring method in Sri Lanka
In Sri Lanka, the method outlined below is
implemented to derive the food poverty line in
the following way:
(i) the households in the 2nd to 4th deciles
ranked by real per-capita total consumption
expenditure are chosen as the reference
group;
(ii) all food items for which information on
expenditure, quantity and
estimated calorie value are available are
selected;
(iii) the aggregates of food expenditures and
calorie intakes in the reference group are
calculated;
(iv) the cost per calorie is derived by dividing the
former with the latter;
Source: The Department of Census and Statistics Announces the Official Poverty Line for Sri
Lanka, 2004
Absolute Poverty Measurements

7. Non Food Poverty Line
The lower bound of the non-food poverty line means average per capita
non-food expenditure of households whose per capita total
expenditure is close to the food poverty line.
The upper bound is defined means average per-capita non-food
expenditure of households whose per-capita food expenditure is
close to the food poverty line.
Absolute Poverty Measurements

8. The National Poverty Line
The national poverty line is Rs.3178 of October 2010
- Policy Research and Information Unit ,Sri Lanka-
Absolute Poverty Measurements

9. Criticisms on Poverty Line
 Poverty Line is a measure based solely on the cost of food.
It is needed to measure poverty through multiple factors such as
housing, transportation, and regional economic differences.
 The thresholds are low
Current poverty thresholds were established in the 1960s.
Thresholds should vary geographically to reflect variations in
the costs of meeting the needs in the thresholds.
 The analytical data is low to find the solution to reduce the
poverty
It is essential to have the categories (sex,age etc) what affect from
poverty more. Then the solutions can be used to that affected
group.
Absolute Poverty Measurements

10. 2. Human poverty index
The Human Poverty Index (HPI) was an indication of the standard of
living in a country, developed by the United Nations.
Not only poor countries but also but also industrial countries also are
suffering from the human poverty . So economists introduced separate
two indexes to measure the poverty.
1 . Human poverty index for developing countries. (HPI 1)
•
•
•
•
Percentage of people who are living more than 40 years.(Longevity)
Adults percentage with illiteracy .(Knowledge)
Percentage of people who are impossible to access for pure water.
Percentage of low weight infants below 5 year old.( Decent
standards of Poverty)
Absolute Poverty Measurements

11. 2. Human poverty index for developing countries.(HPI 2 )
 Percentage of people who are not living more than 60 years from
the total population.
 Percentage of people who are inability to read and write in day
today activities from the total population.
 Segment of people who suffer from income poverty.
 Group of population suffer from the unemployment more than 12
months.
Absolute Poverty Measurements

12. Summary of poverty lines at 2002 national prices
Poverty line
Rs./month
1. Food poverty line
973
2. Lower poverty line
1267
3. Upper poverty line
1579

13. Poverty headcount ratio National and by sector (%).
Sector
1990-91
(%)
1995-96
(%)
2002
(%)
26.1
28.8
22.7
Urban
16.3
14.0
7.9
Rural
23.4
30.9
24.7
Estate
20.5
38.4
30.0
National

14. Relative Poverty measurements
 Lorenz curve and Gini coefficient
Lorenz curve is the line which shows the distribution of income among the
households.
Relative Poverty Measurements

15.  It was developed by Max O. Lorenz in 1905 for representing inequality
of the wealth distribution
The Lorenz Curve is a graphical representation of the proportionality
of distribution.
To map the Lorenz curve, the cumulative income share is plotted on
the vertical axis and distribution of the population on the horizontal
axis.
 The more curved a Lorenz curve is, and the further it lies below the
line of equality,
 A linear Lorenz curve is evidence of “perfect” equality.
Relative Poverty Measurements

16. Gini Index
This index shows the inequality among the household
income
Source: Household Income and Expenditure Survey -2005, Department of Census and
Statistics, Sri Lanka
Relative Poverty Measurements

17. Other Poverty Indexes used by the World Bank
• The Human Suffering Index (HSI)
• The Physical Quality of Life Index (PQLI)
• The Human Development Index (HDI)
• Incidence of poverty: The percentage of a country's population that
cannot afford basic necessities (a "basket of goods and services").
This is also known as living below the poverty line (an income level below
which a person is unable to meet basic needs)
• Depth of poverty: How far below the poverty line the poor population
lives; also called the poverty gap.
• Poverty severity (squared poverty gap): Measures how poor the poor
are.
In other words, poverty severity measures how far below the poverty line
individuals and households are, with more consequence given to those at
the very bottom.

18. Group members
H.H.K.R.N.Elizabeth
P.M.S.Jayamali
T.E.T.P.Gunapala
D.S.N.Jayakodi
102308T
102313E
102309X
102312B
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