Aggregate Poverty Measures

Abstract

The way poverty is measured is important for an understanding of what has happened to poverty as well as for anti‐poverty policy evaluation. Sen's (1976) pathfinding work has motivated many researchers to focus on the way poverty should be measured. A poverty measure, argued by Sen, should satisfy certain properties or axioms and the desirability of a poverty measure should be evaluated by these axioms. During the last two decades, many researchers have adopted the axiomatic approach pioneered by Sen to propose additional axioms and develop alternative poverty measures. The objective of this survey is to provide a clarification on the extensive literature of aggregate poverty measures. In this survey, we first examine the desirability of each axiom, the properties of each poverty measure, and the interrelationships among axioms. The desirability of an axiom cannot be evaluated in isolation, and some combination of axioms may make it impossible to devise a satisfactory poverty measure; some axioms can be implied by other axioms combined and so are not independent; some others are ad hoc and are disqualified as axioms for poverty measurement. Based on the interactions among axioms, we identify the ‘core’ axioms which together have a strong implication on the functional form of a poverty measure. We then review poverty measures that have appeared in the literature, evaluating the interrelationships among different measures, and examining the properties of each measure. The axioms each measure satisfies/violates are also summarized in a tabular form. Several ‘good’ poverty measures, which have not been documented by previous surveys, are also included.