1. REGIONAL POVERTY ANALYSIS TECHNICAL WORKSHOP
Calculation/Interpretation of Poverty Indicators for Depth and Severity of Poverty and Inequality
David Abbott
(Regional Macroeconomic and Poverty Reduction Advisor UNDP Pacific Centre)
REF: Working Paper 3.5

2. Issue
HCI does not take account of “depth” or “severity” of poverty, nor does it have anything to say about distributional or “inequality” aspects
Other indicators are required to provide broader perspective

3. Main Approaches Poverty Gap Index: Depth of poverty
How far on average are poor households below the BNPL
How much would it cost to “buy” all poor households out of poverty
Squared Poverty Gap Index: Severity of poverty
Weights the PGI to give greater emphasis to those furthest from the poverty line
Measures of inequality
Gini coefficient
Distribution of income/consumption by decile; high/low distribution ratio
Lorenz Curve

4. Recommended method
all the analytical tools outlined be endorsed for continued application in the poverty analyses for PICs.
The indicators on HCI, PGI and High/Low Distribution Ratio provide the bases for estimating three MDG indicators under MDG Goal 1 and are therefore useful tools for monitoring progress towards MDG achievement.