Mention two methods to estimate poverty
(a) The two common methods to measure poverty lines are
(i) Consumption method Determining the poverty line in India is based on the desired calorie requirement.
The accepted average calorie requirement in India is 2400 calories per person per day in rural areas and 2100 calories per person per day in urban areas.
(ii) Income method For the year 2012, the poverty line for a person was fixed at 816 per month for the rural areas and 1000 for the urban areas.
(b) National Sample Survey Organisation (NSSO) conducts sample surveys to estimate poverty lines.
Mention two methods to estimate poverty
Two methods to estimate poverty are:
1. Income-based methods:
- In this method, poverty is estimated by determining the income of individuals or households and comparing it to a predetermined poverty line. The poverty line is usually set at a level of income that is considered necessary to meet basic needs, such as food, shelter, and clothing.
- The most common income-based method is the World Bank's international poverty line, which is currently set at $1.90 per day in 2011 purchasing power parity (PPP) terms. This means that individuals who earn less than $1.90 per day are considered to be living in extreme poverty.
- Other income-based methods include the relative poverty line, which is set as a percentage of the median income in a particular country or region, and the absolute poverty line, which is set as a fixed standard of living.
2. Multidimensional methods:
- In this method, poverty is estimated by considering a range of factors that contribute to poverty, such as health, education, and living standards, in addition to income. This method recognizes that poverty is a complex issue that cannot be reduced to just one factor.
- The most well-known multidimensional method is the United Nations Development Programme's (UNDP) Human Development Index (HDI), which measures human development based on three factors: life expectancy, education, and income.
- Other multidimensional methods include the Multidimensional Poverty Index (MPI), which measures poverty based on 10 indicators across three dimensions: health, education, and living standards, and the Alkire-Foster method, which also uses a range of indicators to measure poverty but allows for a customization of the indicators based on the local context.
In conclusion, both income-based and multidimensional methods are used to estimate poverty. Income-based methods rely solely on income, while multidimensional methods consider a range of factors that contribute to poverty. It is important to use a combination of these methods to get a more accurate picture of poverty and develop effective poverty reduction policies.