Chapter 3: How to Interpret ADePT Results
considered robust. However, if these six measures provide different rankings than the Gini coefficient, then a more cautious policy conclusion should be drawn based only on Gini.
Dominance Analyses In the previous section, we conducted some dominance analysis with respect to the choice of poverty lines and measurement methodologies. In this section, we perform additional dominance analyses. Note that when we analyze sensitivity with respect to the poverty line, we do not compare the results for all poverty lines. Similarly, when we check the sensitivity of inequality using different Atkinson and generalized entropy measures, we do not conduct the analysis for all parameter values. The dominance tests in this part of the chapter go beyond the sensitivity analyses. For example, according to the dominance analyses in this section, we can say that poverty has unambiguously risen for all poverty lines, or inequality has risen, no matter which inequality measure is used to assess it. Poverty Incidence Curve A poverty incidence curve is the distribution function of the welfare indicator across the population. The poverty incidence curve is useful while performing a dominance analysis of the headcount ratio with respect to the poverty line. In this dominance exercise, the welfare indicator is per capita consumption expenditure, assessed by lari. The horizontal axis of figure 3.3 denotes per capita consumption expenditure. The height of the poverty incidence curve at any per capita consumption expenditure denotes the proportion of people having less than that per capita expenditure. Therefore, the link between the poverty incidence curve and the headcount ratio is clear. The height of the poverty incidence curve is the headcount ratio when the poverty line is set at a particular per capita consumption expenditure. For a poverty line, a larger height denotes a larger headcount ratio or a larger share of the population having per capita expenditure below the poverty line. If the poverty incidence curve of a distribution lies to the right of the poverty incidence curve of another distribution, then the former distribution is understood to have an unambiguously lower headcount ratio or the former distribution has lower headcount ratios for all poverty lines.
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