A Unified Approach to Measuring Poverty and Inequality
Figure 3.3: Poverty Incidence Curves in Urban Georgia, 2003 and 2006 Urban
Cumulative distribution
1.0
0.8
0.6
0.4
0.2
0 0
160
320 480 Welfare indicator 2003
640
800
2006
Source: Based on ADePT Poverty and Inequality modules using Integrated Household Survey of Georgia 2003 and 2006. Note: The red vertical line is the poverty line.
Figure 3.3 graphs the poverty incidence curves for urban Georgia in 2003 and 2006. The vertical axis reports the headcount ratio. The solid line denotes the poverty incidence curve for 2003, while the dashed line denotes the poverty incidence curve for 2006. We saw earlier that the urban headcount ratio is higher in 2006 for both poverty lines: GEL 75.4 and GEL 45.2. What about other poverty lines? Can we say that poverty has unambiguously fallen for any poverty line? Figure 3.3 suggests that we may not be able to. If we set the hypothetical poverty line somewhere between GEL 320 and GEL 480, then the headcount ratio would have been lower in 2006 than that in 2003. Lessons for Policy Makers Although such a poverty line seems very high and unlikely to be set at that value, the main point of the exercise is clear. When two poverty incidence curves cross, then an unambiguous judgment cannot be made. The crossing
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