This document defines and discusses various aspects of poverty. It begins by defining poverty and listing its types, including absolute and relative poverty. It then provides some key poverty statistics globally and by region. It discusses tools for measuring poverty distribution and inequality, such as the Lorenz curve and Gini coefficient. It also defines the poverty line and lists some characteristics and measures of poverty, including head count, poverty gap, and squared poverty gap indices. Finally, it discusses some approaches to reducing poverty.

1. POVERTY
Rajbardhan Singh
B.A.LL.B.(H)
sikarwarrajthakur@gmail.com

2. Table Of Content :
1. Definition Of Poverty
2. Types Of Poverty
3. Facts And Figures
4. Lorenz Curve
5. Gini Coefficient
6. Poverty Line
7. Characteristics' Of Poverty
8. Measures
9. Head Count Index
10. Poverty Gap Index
11. Poverty reduction

3. 1. Definition Of Poverty
Poverty is the deprivation of food, shelter, money and
clothing when people can’t satisfy their basic needs.
Poverty can be understood simply as a lack of money or
more broadly in terms of barriers to everyday human life.
•According to Mobile Orshansky who developed the
poverty measurements used by the U.S. government, “
Poor is to be deprived of those goods, services and
pleasures which others around us take for granted.”
• According to David Kurten , Poverty also involve social
disintegration and environmental degradation which he
describe as forming the threefold human crisis in the
world today

4. 2. Types Of Poverty
(1)Absolute Poverty : (Destitution) It refers to the
state of severe deprivation of basic human
needs.
(2) Relative Poverty : It is defined contextually as
Economic inequality in location or society in
which people live.

5. 3. Facts & Figures
1)Around 1.29 billion people were in absolute poverty in
2008.
2) About 400 million people in absolute poverty in India
and 173 million people in china.
3) Sub-saharan Africa at 47% had the highest incidence
rate of absolute poverty in 2008.
4) Between 1990 and 2010, about 663 million people
moved above the absolute poverty level.
5) Every year 11 million children living in poverty die
before their 5th birthday.
6) 1.02 billion people go to bed hungry every night

6. The World bank’s “Voice of the poor” , based on
research with over 20,000 poor people in 23 countries,
identifies a range of factors which poor people identify
as part of poverty are :
(1) Precious livelihoods
(2) Excluded location
(3) Physical limitation
(4) Gender relationship
(5) Lack of security
(6) Problems in social relationship
(7) Weak community organization
(8) Limited capabilities

7. 4. Lorenz Curve
•In economics ,the Lorenz curve is a graphical representation of
the cumulative distribution function of the empirical
probability distribution of wealth; it is a graph showing the
proportion of the distribution assumed by the bottom y% of
the values.
•It is often used to represent income distribution, where it
shows for the bottom x% of households, what percentage y% of
the total income they have. The percentage of households is
plotted on the xaxis, the percentage of income on the y-axis.
•It can also be used to show distribution of assets. In such use,
many economists consider it to be a measure of social
inequality. It was developed by Max O. Lorenz in 1905 for
representing inequality of the wealth distribution.

9. 5. Gini Coefficient
The Gini coefficient is usually defined
mathematically based on the Lorenz curve , which
plots the proportion of the total income of the
population (y axis) that is cumulatively earned by the
bottom x% of the population. The line at 45 degrees
thus represents perfect equality of incomes.

11. •The Gini coefficient can then be thought of as the
ratio of the area that lies between the line of equality
and the Lorenz curve over the total area under the line
of equality .
•The Gini coefficient can theoretically range from 0 to
1; it is sometimes expressed as a percentage ranging
between 0 and 100. In practice, both extreme values are
not quite reached.
• A low Gini coefficient indicates a more equal
distribution, with 0 corresponding to complete
equality, while higher Gini coefficients indicate more
unequal distribution, with 1 corresponding to
complete inequality.

12. 6. Poverty Line
•The poverty threshold or poverty line is the minimum level
of income deemed adequate in a given country.
• In practice, like the definition of poverty, the official or
common understanding of the poverty line is
significantly higher in developed countries than in
developing countries.
• The common international poverty line has in the past been
roughly $1 a day. In 2008, the World Bank came out
with a revised figure of $1.25 at 2005 purchasing-
power parity (PPP).

13. •Determining the poverty line is usually done by finding the
total cost of all the essential resources that an average
human adult consumes in one year.
• The largest of these expenses is typically the rent required to
live in an apartment, so historically, economists have
paid particular attention to the real estate market and
housing prices as a strong poverty line affector.

14. 7. Characteristics' Of Poverty
Effects of poverty also be causes and creating a
“Poverty cycle” operating across multiple levels,
individual, national, global.
1. Health
2. Hunger
3. Education
4. Housing
5. Violence

15. 8. Measures
There are Various measures of the extent of poverty .
• The head count index.
•The poverty gap index.
• The squared poverty gap (poverty severity) index.

16. 9. Head Count Index
The most widely used measure is the headcount
index.
• It simply measures the proportion of the population
that is counted as poor.
Head count index = No. of poor /Total no. of
population

17. 10. Poverty Gap Index
•Poverty gap index is a measure of the intensity of
poverty. It is defined as the average poverty gap in the
population as a proportion of the poverty line.
• The poverty gap index is an improvement over the
poverty measure headcount ratio which simply counts
all the people below a poverty line, in a given
population, and considers them equally poor.
•Poverty gap index estimates the depth of poverty by
considering how far, on the average, the poor are from
that poverty line.

18. Calculation
Poverty gap index (PGI) is calculated as,
where is the total population of poor who are living at or
below the poverty line and is the income of the poor
household .
• In this calculation, all households whose income is
above the poverty line are not considered, because PGI is
a measure of depth of poverty below the poverty line .

19. •By definition, poverty gap index is a percentage
between 0 and 100%.
• Sometimes it is reported as a fraction, between 0
and 1. A theoretical value of zero implies that all the
extremely poor people are exactly at the poverty line.
• A theoretical value of 100% implies all the
extremely poor people have zero income. In some
literature, poverty gap index is reported as while
headcount ratio is reported as .

20. Squared poverty gap index
•Squared poverty gap index, also known poverty
severity index or , is related to poverty gap index.
• It is calculated by averaging the square the poverty gap
ratio. By squaring each poverty gap data, the measure
puts more weight the further a poor person's observed
income falls below the poverty line.
• The squared poverty gap index is one form of a
weighted sum of poverty gaps, with the weight
proportionate to the poverty gap.

21. • Sen index, sometimes referred to , is related to
poverty gap index (PGI).It is calculated as follows:
• Where H is the headcount ratio and Gz is the
income Gini coefficient of only the people below the
poverty line.

22. 11. Poverty reduction
• Increasing supply of basic needs.
• Increasing supply of food and other goods.
• Increasing supply of healthcare and education,
water and energy utilities.
• Removing constraints on govt. services
• Reversing brain drains.
• Controlling overpopulation.
• Increasing personal income.

23. Thank
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