Chapter 3: How to Interpret ADePT Results
However, that analysis does not give us the entire picture, so we perform this dominance analysis through a growth incidence curve that graphs the growth rate of per capita consumption expenditure for each percentile of the population. The height of a growth incidence curve for a particular percentile of population is the per capita consumption expenditure growth of that percentile. In fact, a growth incidence curve assesses how the quantile incomes change over time. If the growth rates of the lower quintiles are larger than the growth rates of the upper quintiles, then the growth is said to be pro-poor. The dotted-dashed straight line denotes the growth in mean per capita expenditure, which is negative in this case. It is not necessary that the entire population received an equal share of this growth. It is evident from the figure that the per capita expenditure growth rate for the population’s higher percentiles between 2003 and 2006 is much larger and more positive than that for their lower percentile counterparts. Even though growth has been mixed throughout the quantile incomes, the lowest quantile income has a large negative growth. Given that the growth rate was negative, this means that the population’s poorer section had a proportionally larger decrease in its per capita expenditure. What we can state by looking at the figure is that the quantile ratios— such as 90/10, 80/20, or 90/50—increased between 2003 and 2006. The shaded area around the growth incidence curve reports the 95 percent confidence bounds. Can we say something about poverty? Yes, we can. For an absolute poverty line, the headcount ratio between 2003 and 2006 should not fall because the per capita expenditures of the population’s lower percentile decreased. Thus, growth in Georgia between 2003 and 2006 was not pro-poor. Lorenz Curve Figure 3.7 graphs the Lorenz curve of urban Georgia’s per capita expenditure for 2003 and 2006. The vertical axis reports the share of total consumption expenditure, and the horizontal axis reports the percentile of per capita expenditure. A Lorenz curve graphs the share of total consumption expenditure spent by each percentile of the population. Thus, the height of a Lorenz curve for a particular percentile is the share of total consumption expenditure spent by that percentile out of the region’s total consumption expenditure. The Lorenz curve’s height is 1 when the percentile is 1. In other words, the share of the total consumption expenditure spent by the entire population is
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