Module Two MDG Indicators

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Module Two- MDG Indicators
United Nations Statistical Institute for Asia
the Pacific
United Nations Statistical Institute for Asia
the Pacific
Millennium Development Goals Initiative in Asia
and the Pacific
Millennium Development Goals Initiative in Asia
and the Pacific
(UNDP Project RAS/04/060)
(UNDP Project RAS/04/060)
Sub
-
regional Course on Statistics for MDG Indicators
Sub
-
regional Course on Statistics for MDG Indicators
Developing data and institutions for MDG
monitoring
Developing data and institutions for MDG
monitoring

• GOAL One
• Eradicate extreme poverty hunger
• (Target 1)

Prepared by Margarita F Guerrero (UNSIAP)
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Concepts and MethodsUnderstanding the Indicators

• Poverty
• Poverty Lines
• Poverty Measures

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Poverty Measurement One Approach

• Working definition of poverty
• Lack of command over commodities
• Monetary (not non-monetary) indicators
• Consumption/expenditure
• Income
• Objective (not subjective) measures
• Absolute poverty line
• Poverty incidence
• Poverty gap
• Inequality
• Based on household survey data

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Steps in Measuring Poverty

• Step 1. Define an indicator of welfare or
  well-being
• e.g., income consumption/expenditure
• Step 2. Establish a minimum standard
• Poverty line
• Step 3. Generate a summary statistic for the
  population.
• e.g., poverty incidence

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Poverty Line Basic Idea

• Question Given value of poverty indicator for a
  household, is the household (and its members)
  poor?
• Answer Determine a threshold value of the
  indicator (poverty line) below which individuals
  and households are considered poor and above
  which they are considered non-poor.

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Poverty Line Visual Representation
x
Non-poor
Value of Indicator
x
x
x
PL
x
Poor
x
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Types of Poverty Lines

• Subjective poverty line
• Based on persons perception of poverty
• Relative poverty line
• Where households are in relation to some
  increasing function of the average standard of
  living in the country
• Absolute poverty line
• Whether or not HHs or individuals command a fixed
  standard of living

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World Bank Absolute Poverty Lines

• Purpose to compare poverty rates across
  countries and over time and to assess progress in
  poverty reduction
• US 1 per person per day (1993 PPP )
• Individual is poor if income is less than 1 per
  day
• Current global estimate 1,200 million people are
  poor
• US 2 per person per day (1993 PPP )
• Individual is poor if income is less than 2 per
  day
• Current global estimate over 2 billion people
  are poor

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1 a day at 1993 PPP

• Refers to the purchasing power of a dollar in
  1993 (equivalent to 1.31 in 2004 prices)
• Procedure for constructing poverty line for a
  specific country
• Convert a 1993 dollar to local currency
• Update to the year of interest using the local
  CPI
• Example Thailand
• One 1993 dollar was worth 25 baht in 1993
• Between 1993 to 2004 consumer prices rose by 47
  then the poverty line in mid-2004 would be 36.7
  baht per person per day
• Note Foreign exchange rate in mid-2004 was 41.5
  baht

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Absolute vs Relative Poverty
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Poverty Lines Pacific Countries (ADB 2004)
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Poverty Lines fromCost-of-Basic Needs Method

• Used by Bangladesh, Indonesia, Philippines,
  Thailand, Viet Nam
• Recommended for Developing Countries

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Constructing CBN Poverty Line

• Step 1. Pick a nutritional requirement or minimum
  energy intake for good health.
• Step 2. Choose the food basket or set of food
  items that will allow to attain this requirement.
  
• Step 3. Estimate the food component (F) or cost
  of meeting this food basket.
• Step 4. Estimate the cost of the non-food
  component (NF).
• Step 5. CBN poverty line is computed as F NF

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CBN Simple Illustration

• Step 1. Minimum daily energy intake 2,100
  calories
• Step 2. Food basket./ Step 3. Estimate food
  component.
• Step 4. Assume non-food 20 of food
  2010521.
• Step 5. CBN poverty line food non-food 105
  21 126.

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Poverty Measures

• Headcount index
• Poverty gap and poverty gap index
• Squared poverty gap index

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Headcount Index (P0)

• Definition
• Proportion/percentage of the population for whom
  consumption (or other indicator of welfare) is
  less than the poverty line
• Computed as

Where q number of people below poverty
line N total population
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Poverty Incidence/Rates

• Assume poverty line is z125. What is the
  headcount index for the two countries?

• But Which country is poorer?

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Poverty Gap (PG) and PG Ratio (P1)

• Poverty gap
• Average, over all people, of the gaps between
  poor peoples living standards and the poverty
  line
• Indicates the average extent to which individuals
  fall below the poverty line (if they do)
• Poverty gap ratio
• Expresses the poverty gap as a percentage of the
  poverty line

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PG Ratio Mathematics

• Poverty gap ratio (P1) is
• Ratio of the Poverty Gap (PG) to the poverty line
  (z)
• PG expressed as a percentage of the line.
• Incidence x Poverty Gap

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PG Ratio Example

• Assume poverty line z125. What is the poverty
  gap index for the two countries?

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Expenditure/Income-iles

• Divide population into groups ranked from
  poorest to richest based on expenditure (or
  income)
• Divide into 5 groups income or expenditure
  quintiles
• Divide into 10 groups income or expenditure
  deciles
• First quintile/decile- poorest fifth/tenth of the
  population
• Last quintile/decile- richest fifth/tenth of the
  population

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Expenditure per capita by Quintile Example
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Income Deciles Example
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Share of Poorest Quintile (MDGi3)

• Definition Total consumption/income of the
  poorest quintile, as a share of total
  consumption/income of the population.
• Where yi is per capita consumption/income
• N is the total population
• m is the number of individuals in the lowest x
  .

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Module Two- MDG Indicators
United Nations Statistical Institute for Asia
the Pacific
United Nations Statistical Institute for Asia
the Pacific
Millennium Development Goals Initiative in Asia
and the Pacific
Millennium Development Goals Initiative in Asia
and the Pacific
(UNDP Project RAS/04/060)
(UNDP Project RAS/04/060)
Sub
-
regional Course on Statistics for MDG Indicators
Sub
-
regional Course on Statistics for MDG Indicators
Developing data and institutions for MDG
monitoring
Developing data and institutions for MDG
monitoring

• GOAL One
• Eradicate extreme poverty hunger
• (Target 2)

Prepared by Margarita F Guerrero (UNSIAP)
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(No Transcript)
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• Percentage of children under five whose weight
  for age is less than minus two standard
  deviations from the median for the international
  reference population aged 0 to 59 months
• The reference population adopted by the WHO in
  1983 is based on children from the United States,
  who are assumed to be well nourished (the
  NCHS/WHO reference population).

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• Key Concepts
• Child malnutrition, as reflected in body weight,
  is selected as an indicator for several reasons.
  
• May be taken as an indicator of malnutrition in
  the population
• Can affect health in later life
• Monitored more closely than adult malnutrition

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• Method of Computation
• For each age group in the NCHS/WHO table of child
  weights, the weights of national child population
  are compared with the weights given in the table.
• The percentages of children whose weights are
  more than two standard deviations less than the
  median are then aggregated to form the total
  percentage of the children under 5 who are
  underweight.

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• Percentage of population whose food intake falls
  below the minimum level of dietary energy
  requirements
• Prevalence of undernourishment
• Percentage of population that is undernourished

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• Key Concepts
• Distribution of the dietary energy consumption
  among the population
• Considering total food availability and
  inequality in access to food
• Application of an estimated minimum for energy
  requirements.
• Measure of food insecurity
• Undernourishment affects labour productivity and
  earning capacity

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• Method of Computation
• Prepared by FAO at national level and aggregated
  to get regional and global estimates
• Distribution of dietary energy consumption is
  modeled as lognormal function (unimodal and
  skewed)
• Minimum energy requirement level or cut-off point
  is estimated as a population per capita average
  value