POVERTY ESTIMATION Aparajita (2008), provided a useful insight on how income is use to measure poverty, household income comprising

both farm income and non farm income were use as a basis for assessment of income poverty, however it is practical that some limitations were apparent when use for assessment which include understatement of the actual income due to fear of tax, security reasons and other government related tax policy. For this method the major disadvantage with it, was it has not taking into consideration bitterness, division, exclusion, wealth, chance, and location of individuals.

But Paxson (1992) and Deaton (1992) in their effort uses living standard as an index, they measured it using current consumer spending or current income. Though spending is intuitively preferred since it is a measure of living standard, because current spending is a better indicator of current Income because current satisfaction is directly dependent on consumption but not Income. However, Gerhardt et’al, in their work criticized the use of Income as being crude measure of poverty. To them Income comprised of tax and family size were also another impediment is the size of Income. Although their argument were significant but can give a good measure, since it can be objectively measured if tax and family size, depreciation and other forms of payment by the individual were taking into consideration.

Poverty had been measured on absolute sense. In this a minimum sets of resource persons need to survive acute hunger, deprivation are said to constitute basic need which are converted into the ingredients which enter in the minimum basket of essential goods and services regardless of their definition into common denominator usually a monetary value. The absolute implies total or cumulative consumption or expenditure. Serrano and Raco (2009) uses absolute or total expenditure level to classify household poverty, the method disregard geographic characteristic of household under study. In their method the absolute or total expenditure of all household were summed and proceeded to set minimum standard as poverty line, in the method the society was divided into two categories, “the poor category and non poor category” so any individual,

education. The number of population whose incomes is less than predetermine percentage of mean income of 50% or less of the mean . relative implies compares to other people level. and transportation to place of work or farm. geographical characteristics which are vital are not put into view other variation are gender. opportunity are all ignored. housing. regional and cultural differences in consumption pattern. food imbalances. in this version ratio of total expenditure level and house hold size were used to provide a head count measure. age. This is a measure for segment of population that is poor relative to the set income or expenditure of the general population. margin or line is said to be consider to suffer from poverty. clothing. Another weakness is measurement of social equality. difference between two household with different sizes cannot be possible and even within household of the same size the composition of the household members vary hence their exist a variation on expenditure ascribed from such difference. association. clothing. the definition of this minimum is not clear what are criteria of setting the minimum? no measure to capture shelter. health and other basic requirements. climate. season.community or household falling below the poverty line. Such a household will invariably have different absolute expenditure. Moreover. The weakness of this method implies that it does not take care of seasonal. Even with the updated version of the method which incorporates the household size. others are variation based on satisfaction or utility by individual household member are neglected. Line is set at half (½) of the mean income or fortieths (40th) percentile of the distribution or average income of forty percent (40%) of Population. difference in location and living condition. The weakness of the head count measure is the disregard to composition of household members since differences occur when a household has many children below the 18 or when a household has more elderly people above 65 years. Relative poverty is another approach to poverty measurement which was a measurement of the resources and living conditions of parts of the population in relation to others was used to assess differences in poverty level. The absolute method is sometimes called the general poverty line which is usually defined by the total cost of the required basket of goods needed to satisfy the basic consumer needs such as food.

compares with estimated actual calorie intake by individual as well as converting quantities of goods and services consumed by individual to calories. body weight. The total poverty line is to subtract the total poverty line from food poverty to produce non food poverty line. This method seems inappropriate because it measures inequalities which exist in any society but not poverty. and activity performed. It is also applicable to only small sample if sample is large capturing each respondent body weight are not feasible so also activity perform by individual cannot be valued in monetary terms Browning.75 while children less than second adult count 0. gender.75.5. age.5 and 0. The major weakness to this method is its inability to use in survey.25. and regress log of dependent variables and food poverty line and divided by average precipitated food expenditure). 0. then calculate unit calories cost by dividing total expenditure food by individual. Relative methods uses resource and living condition of part of population compared to others and classify some as poor and some as not poor. while calculate non food expenditure. In the method individual are considered poor when their income or expenditure is less than the basic needs or poverty line set for the group or class within the population usually (Calculated on consumption per adult equivalent per 28days). In this method the first adult count 1 additional adult count 0. 0. (2004) uses the equivalent scale method which is an extension of relative and absolute method but incorporates some modification to capture weakness observed on the two methods. The estimate daily calorie requirements of individual based on gender. daily physical activity by unit cost. and established food poverty line per household by multiplying calorie requirements per individual by body weight. while all poverty analysis uses survey as a basis for data collection hence the method were consider weak or non practical. In the method the weight drops down from 1. inequality in consumption cannot be assumed to be the only an indicator of poverty. weighting each household according to number of household size and composition base on age. The approach was to constructs an equivalent scale. Therefore data cannot obtained from it.income are class to be poor. in spite of its objective nature. Another effort was made by Poverty and Human Development Report (2009) which estimated poverty using household expenditure. Although the method is good since it takes care of the difference in household size and household composition but require a lot of .

they considers functional relationship exist and was use to examine household expenditure as a proxy to poverty measure. house hold size. this idea seems to be week since household collectively has no distinctive utility. inflation and variety of food items available to the respondent. location. others include social and economics context of the respondents matters greatly. seasonality. expenditure on food. 2010. Serrano and Raco (2009) uses econometric approach. (UBOS. In the method total household monthly expenditure depend age of house head. Durgesh and Pathak. pregnant women. The preference can only be associated to individual member but not to the collective household members. The disadvantage of the method include the data has to be entirely continuous variable with few qualitative ones another data problem include interdependence between the variables as determinant of poverty especially if many parameters were taken at a time. lactating mothers. distance to market. 2011). However. They uses the econometric method to compute for strength. Consequently the theoretical background of the method is. also expenses on wedding and other ceremonies create similar impression with medical expenses. Therefore the use of equivalent scales to set a poverty line to be impact on the result obtained from such research. education. Onu and Omokoro (2008). . others are price of commodities. might have potential of causing problems and hence require extra expenditure. farm size. food habit and Income and education background and resource base of the respondent. The problem with the use of equivalent scales include that what is considered minimum cost to achieved a given level of wellbeing or minimum set of resource a person needs to survive were affected by culture. also in the method medical expenses may create an impression of the household enjoying a better well being while it is the opposite case. income. medication. and prevalence of illness. rent expenses. clothing. household expenditures are translated into adult equivalent. another weakness of the method is choice of parameter is subjective. utility service. magnitude and direction of the relationship. what adult member household would require for obtaining the same utility. transport cost.transformation the strength of the method is ability to handle questions of household size and age composition but has not taken care of gender differences since nursing.

z Poverty line. Gp ds/dh>0 ds/di >0 ds/dgp>0. 1990) Believe that poverty line are believe to be the level of welfare enjoyed it is measured in two major dimensions. the poverty line represents criterion by which it can be decided which citizen needs special benefits from government to supplements their Income. Income Shortfall. Rising prices could not fully reflect rising living standard. is an Increasing function of the head count index. The method is equally a relative approach. poverty assessment rely on setting of poverty line below which are consider poor this involve some political decision for from the perspective of social policy. As a result poverty standard is below the average standard of living today than it was originally designed. Augmented physical quantities of life Index(PAQLI). and Human development index (HDI). H =q/n headcount ration.(United Nation Development Programme. Another one is the composite method or Sen Index which uses this relation S= H[I+(1-I)Gp). qz Number of household with income below z. and change below the poverty line. . The first approach to setting of poverty line is the Absolute approach. Incidence. Where =I = Average Income Shortfall as percentage of the poverty line. Gp .Gini co-efficient among poor =0=Gp>1 S. As such the real value of the poverty line adjusted for rising prices only may not increase at all. While the poverty Gap method means Income gap which is the difference between line and mean Income of the poor. Composite (Physical quantities of life index (PQLI). The major criticisms on the methodology use of poverty line are many. Headcount means ratio of poor to total population. The major weakness of the method it rely on the inequality function which were estimated from Gini which does not take the account differences between poor and rich but only takes an inequality in the society. The major weakness to the approach is that it is insensitive to severity of poverty. which account for real value over time and space. Gap. This can be measured in different ways either Head count ration. N total number of household. This gives the proportion of population below poverty line. Giovanni and Paolo (2005). yi Income of ith poor household. Conclusively generally. Poverty line are constructed on the basis of standard of living which such rely on prices and which are updated each year as a result of rising prices but average living standard may rise with development and economic growth.

most poverty measurements only address one side of the poverty.The argument that poverty measurements are not fitted to addressing poverty problem. This is because the use of poverty line is subjective usually using either head count ration which has multiple disadvantages. . Hence many scholars believe the use of poverty line is not tackling the real assessment. leaving the rest unattended. Economic poverty was the commonest approach. or calorie intake which certain indicators such as weight of individual. activities perform by individual cannot be assess using survey and most poverty studies uses survey research this create an impression of doubt over the result so obtained hence result in varied opinion over the methodology.