A Unified Approach to Measuring Poverty and Inequality
Columns D and E report the SST index, which is also based on the headcount ratio, the income gap ratio, and the Gini coefficient across the censored distribution of consumption expenditure. The last is obtained by replacing consumption expenditure of all nonpoor people by the poverty line. We see that when the poverty line is GEL 75.4, the SST index for the urban region in 2003 is 15.7 [1,D], and it increases by 1.1 to 16.8 in 2006 [1,E]. Likewise, the rural region’s SST index increased by 0.4, from 19.2 in 2003 [2,D] to 19.6 in 2006 [2,E], for the same poverty line. The total increase in SST index is 0.7, from 17.5 in 2003 [3,D] to 18.3 in 2006 [3,E]. The final three columns report the CHUC index and its changes across time. Unlike the SST index, the CHUC index does not reflect an increase in poverty across all regions. In fact, urban poverty falls marginally between 2003 [1,G] and 2006 [1,H] when the poverty line is GEL 75.4. Furthermore, when the poverty line is set at GEL 45.2, the CHUC index shows a fall in Georgia’s overall poverty [6,I]. Lessons for Policy Makers If these three measures, capturing different aspects of poverty and inequality among the poor, agree with the results from the measures in the FGT class, then the poverty analysis is robust. In contrast, if these measures do not agree with each other, the policy conclusion should be drawn with more care. Comparing table 3.2 with table 3.26, we see that the three measures reported in table 3.2 do not always agree with the results based on the poverty gap measure and squared gap measure. Thus, any conclusion about whether poverty has increased or decreased should be made cautiously. Other Inequality Measures Table 3.27 reports the Atkinson inequality measures and generalized entropy measures for 2003, then decomposes them across different regions. This is a type of sensitivity analysis for inequality measurement methodology. We report the Gini coefficient only in the last two sections of this chapter. However, the Gini coefficient may not be subgroup consistent (subgroup consistency is defined in chapter 2). Rows denote results for urban and rural population subgroups and for different geographic regions, such as Kakheti, Tbilisi, and Shida Kartli.
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