Chronic and Transient Poverty in Rural Ethiopia: A New Decomposition - PowerPoint PPT Presentation

Preliminaries Characterisation of General Form Chronic Poverty Ordering of Trajectories Application: Poverty in Rural Ethiopia Chronic and Transient Poverty in Rural Ethiopia: A New Decomposition Natalie Na¨ ıri Quinn University of Oxford 21 September 2013

Preliminaries Characterisation of General Form Chronic Poverty Ordering of Trajectories Application: Poverty in Rural Ethiopia Outline Preliminaries Motivation and Literature Objective and Overview Characterisation of General Form Analytical Framework Ethical Framework General Form Social Aggregation Chronic Poverty Ordering of Trajectories Decomposition Properties For Chronic-Poverty Trajectory Ordering Proposed Trajectory-Ordering Function Application: Poverty in Rural Ethiopia Data and Results Concluding Remarks

Preliminaries Characterisation of General Form Motivation and Literature Chronic Poverty Ordering of Trajectories Objective and Overview Application: Poverty in Rural Ethiopia Outline Preliminaries Motivation and Literature Objective and Overview Characterisation of General Form Analytical Framework Ethical Framework General Form Social Aggregation Chronic Poverty Ordering of Trajectories Decomposition Properties For Chronic-Poverty Trajectory Ordering Proposed Trajectory-Ordering Function Application: Poverty in Rural Ethiopia Data and Results Concluding Remarks

Preliminaries Characterisation of General Form Motivation and Literature Chronic Poverty Ordering of Trajectories Objective and Overview Application: Poverty in Rural Ethiopia Motivation Why measure poverty? ▶ Identify targets for poverty alleviation policies ▶ Evaluate poverty alleviation policies

Preliminaries Characterisation of General Form Motivation and Literature Chronic Poverty Ordering of Trajectories Objective and Overview Application: Poverty in Rural Ethiopia Motivation Why measure poverty? ▶ Identify targets for poverty alleviation policies ▶ Evaluate poverty alleviation policies Why distinguish between chronic and transient? ▶ Transient: intervene with insurance against shocks ▶ Chronic: insurance not sufficient; constraints to accumulation of human or physical capital.

Preliminaries Characterisation of General Form Motivation and Literature Chronic Poverty Ordering of Trajectories Objective and Overview Application: Poverty in Rural Ethiopia Motivation Why measure poverty? ▶ Identify targets for poverty alleviation policies ▶ Evaluate poverty alleviation policies Why distinguish between chronic and transient? ▶ Transient: intervene with insurance against shocks ▶ Chronic: insurance not sufficient; constraints to accumulation of human or physical capital. Always helps to understand the nature of the problem.

Preliminaries Characterisation of General Form Motivation and Literature Chronic Poverty Ordering of Trajectories Objective and Overview Application: Poverty in Rural Ethiopia Literature ‘Spells’ Approach: ▶ ‘Still poor after x years’; compare headcount. ▶ Chronic Poverty Reports (CPRC, 2005 and 2009)

Preliminaries Characterisation of General Form Motivation and Literature Chronic Poverty Ordering of Trajectories Objective and Overview Application: Poverty in Rural Ethiopia Literature ‘Spells’ Approach: ▶ ‘Still poor after x years’; compare headcount. ▶ Chronic Poverty Reports (CPRC, 2005 and 2009) ‘Components’ Approach: ▶ Poverty of permanent component of (or average) income; transient fluctuations. ▶ Rodgers and Rodgers (1993; US); Jalan and Ravallion (2000). Both based on poverty-gap-squared (Foster, Greer and Thorbecke, 1984).

Preliminaries Characterisation of General Form Motivation and Literature Chronic Poverty Ordering of Trajectories Objective and Overview Application: Poverty in Rural Ethiopia Literature More recent proposals (all indices aggregating over individuals and time): ▶ Calvo and Dercon (2009), Foster (2009), Gradin, Del Rio and Canto (2011), Hoy and Zheng (2011), Bossert, Chakravarty and D’Ambrosio (2012), Foster and Santos (2013).

Preliminaries Characterisation of General Form Motivation and Literature Chronic Poverty Ordering of Trajectories Objective and Overview Application: Poverty in Rural Ethiopia Literature More recent proposals (all indices aggregating over individuals and time): ▶ Calvo and Dercon (2009), Foster (2009), Gradin, Del Rio and Canto (2011), Hoy and Zheng (2011), Bossert, Chakravarty and D’Ambrosio (2012), Foster and Santos (2013). None combine all of the properties that we might want a chronic poverty measure to embody: ▶ Either : Not sensitive to chronicity/persistence (so more appropriate to measure ‘total’ intertemporal poverty) ▶ Or : Discontinuities lead to counter-intuitive ordering of trajectories

Preliminaries Characterisation of General Form Motivation and Literature Chronic Poverty Ordering of Trajectories Objective and Overview Application: Poverty in Rural Ethiopia Objective and Overview Objective: ▶ Construct a chronic poverty measure that combines attractive properties (in particular sensitivity to chronicity, and continuity)

Preliminaries Characterisation of General Form Motivation and Literature Chronic Poverty Ordering of Trajectories Objective and Overview Application: Poverty in Rural Ethiopia Objective and Overview Objective: ▶ Construct a chronic poverty measure that combines attractive properties (in particular sensitivity to chronicity, and continuity) Overview: ▶ Characterise a general class

Preliminaries Characterisation of General Form Motivation and Literature Chronic Poverty Ordering of Trajectories Objective and Overview Application: Poverty in Rural Ethiopia Objective and Overview Objective: ▶ Construct a chronic poverty measure that combines attractive properties (in particular sensitivity to chronicity, and continuity) Overview: ▶ Characterise a general class ▶ Choose function that captures required properties

Preliminaries Characterisation of General Form Motivation and Literature Chronic Poverty Ordering of Trajectories Objective and Overview Application: Poverty in Rural Ethiopia Objective and Overview Objective: ▶ Construct a chronic poverty measure that combines attractive properties (in particular sensitivity to chronicity, and continuity) Overview: ▶ Characterise a general class ▶ Choose function that captures required properties ▶ Apply to analyse chronic poverty in rural Ethiopia (No proofs; informal presentation.)

Preliminaries Analytical Framework Characterisation of General Form Ethical Framework Chronic Poverty Ordering of Trajectories General Form Application: Poverty in Rural Ethiopia Social Aggregation Outline Preliminaries Motivation and Literature Objective and Overview Characterisation of General Form Analytical Framework Ethical Framework General Form Social Aggregation Chronic Poverty Ordering of Trajectories Decomposition Properties For Chronic-Poverty Trajectory Ordering Proposed Trajectory-Ordering Function Application: Poverty in Rural Ethiopia Data and Results Concluding Remarks

Preliminaries Analytical Framework Characterisation of General Form Ethical Framework Chronic Poverty Ordering of Trajectories General Form Application: Poverty in Rural Ethiopia Social Aggregation Analytical Framework Instantaneous individual indicator of wellbeing x it ∈ 핏 : ▶ For each individual i = 1 , 2 , . . . , n in each time period t = 1 , 2 , . . . , T . ▶ x it = r it u where r it ∈ ℝ and u is the unit of measurement ( of the indicator ).

Preliminaries Analytical Framework Characterisation of General Form Ethical Framework Chronic Poverty Ordering of Trajectories General Form Application: Poverty in Rural Ethiopia Social Aggregation Analytical Framework Instantaneous individual indicator of wellbeing x it ∈ 핏 : ▶ For each individual i = 1 , 2 , . . . , n in each time period t = 1 , 2 , . . . , T . ▶ x it = r it u where r it ∈ ℝ and u is the unit of measurement ( of the indicator ). ▶ Population size n ∈ ℕ , n ≥ 3. ▶ Fixed number T of discrete time periods.

Preliminaries Analytical Framework Characterisation of General Form Ethical Framework Chronic Poverty Ordering of Trajectories General Form Application: Poverty in Rural Ethiopia Social Aggregation Analytical Framework Instantaneous individual indicator of wellbeing x it ∈ 핏 : ▶ For each individual i = 1 , 2 , . . . , n in each time period t = 1 , 2 , . . . , T . ▶ x it = r it u where r it ∈ ℝ and u is the unit of measurement ( of the indicator ). ▶ Population size n ∈ ℕ , n ≥ 3. ▶ Fixed number T of discrete time periods. ▶ x it comparable across individuals (per-adult-equivalent) ▶ x it comparable across time (deflated)

Preliminaries Analytical Framework Characterisation of General Form Ethical Framework Chronic Poverty Ordering of Trajectories General Form Application: Poverty in Rural Ethiopia Social Aggregation Analytical Framework Instantaneous individual indicator of wellbeing x it ∈ 핏 : ▶ For each individual i = 1 , 2 , . . . , n in each time period t = 1 , 2 , . . . , T . ▶ x it = r it u where r it ∈ ℝ and u is the unit of measurement ( of the indicator ). ▶ Population size n ∈ ℕ , n ≥ 3. ▶ Fixed number T of discrete time periods. ▶ x it comparable across individuals (per-adult-equivalent) ▶ x it comparable across time (deflated) Thus domain of analysis is ∞ ∪ 핏 nT . 풳 T = n =3