A Unified Approach to Measuring Poverty and Inequality
Tables and graphs in this chapter were generated by ADePT’s Poverty and Inequality modules using the Integrated Household Survey of Georgia dataset for 2003 and 2006. Calculations assumed the equivalence scale parameter is 1, which implies that every household member is assumed to be adult equivalent. Hence, per capita expenditure was calculated by dividing the total expenditure by the number of household members regardless of their age and gender. Calculations assumed the economy-of-scale parameter is 1. This implies that no economies of scale exist when two or more individuals share a household. (Other scale choices are, of course, possible, and these parameters can be changed in ADePT.) Consumption expenditures are in lari (or GEL, the Georgian national currency) per month. Many tables use one or two poverty lines of GEL 75.4 and GEL 45.2 per month. In the first case, if a household fails to meet a monthly consumption expenditure of GEL 75.4 for each member in that household, then the household (and each member in the household) is identified as poor. In the second case, a household is identified as poor if the household fails to meet a per capita expenditure of GEL 45.2 per month. Tables may have an occasional small numerical inconsistency. To improve readability, ADePT displays data with a limited number of decimal places by rounding the underlying raw data. This process can result in values that appear incorrect, such as 29.9 + 1.0 = 31.0 (as opposed to 29.9 + 1.0 = 30.9, or 29.9 + 1.1 = 31.0). Spreadsheets generated by ADePT (the sources for tables in this chapter) include raw data, which are visible in the formula bar when a cell is selected. Rounding numbers also affects how we present some of the results. Certain poverty and inequality measures are traditionally reported in decimals. However, this presentation does not provide us enough power to differentiate between numbers. For example, the Gini coefficient of 0.26 and the Gini coefficient of 0.34 both may read as 0.3. Similarly, the FGT2 poverty index, or the squared poverty gap index, may take reasonable low values in decimals such as 0.019 or 0.024. Again, these numbers may be significantly different. Therefore, to improve readability, we normalize all poverty and inequality figures in a 0–100 scale. The text in this chapter has numerous references to table cells. To help you quickly find data in tables, numbers and letters in brackets reference table cells by row and column. For example, [3,E] refers to the cell in row 3, column E.
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