When measuring poverty avoid including any particular normative position, concerning the weighing of various poor groups interest and instead it reports on changes in poverty as a result of linking various normative position and ordinal conclusion when measuring poverty. This means that for any particular method to be considered good in measuring poverty, it should involve the inspection and analysing of various aspects of the poverty in order to come up with a genuine report on the poverty. The measure of the economic status of any individual is usually based on what is consumed, and what one earns in terms of income.
An analysis of various individual in a society, and including each of the individual’s shares in a given household, gives the economic welfare of the people. (Lister 2004). Although it is possible to measure the welfare of a household, challenges are encountered in trying to determine the household income because of the individual do not like giving details on what they earn. This is usually as a result of the possible illegal earnings, which when known can be taxed and because many of the small earnings are hard to measure.
The assets value keep changing thus making it hard to measure the income. This these challenges have made the consumption based measures of living standard to be preferred instead of the income based measures, since the poor people have varying income. The consumption based measurements require a total calculation of all goods in a household which are considered durable, including the interest which the goods have generated and the depreciation of the item in question within the year of estimating the poverty. (Michael, 1999).
This is because an individual can be in a state when he or she cannot provide for all needs, but it happens that some needs are catered for, and this shows that various households may have a varying order of preference, thus what one considers to be a basic need, might not be a basic need to the other household. However with this kind of measuring, all assets are thus included in the poverty measure. A calculation of value and depreciation of every good that is considered to be durable in a household. Housing services are also included in this method of measuring poverty.
This is determined by considering the amount paid as rent. This method of determining the poverty level is considered the amount paid as rent. This method of determining the poverty level is considered to be more accurate since a minimum expenditure that an individual requires to reach the level of utility is shown. (Renata,2000). This method accesses both the worth of the consumed goods in terms of their prices and the household characteristics, thus making it easy to determine the amount required by a certain household to meet a certain utility level.
The method is measuring poverty is considered to be more detailed since by just determining the income of a household without checking the household characteristics and expenditure cannot give the real living standards of a household, since some household are large in size than other, having incorporating various individuals. To explain this better, let’s take two different household, one, being small in size, and the other one large in size. The two households may be having a similar income, but the smaller household will have less consumption compared to the larger household.
If one household contains individuals who are all working, then the consumption will be shared and thus lower compared to household with many dependants and few working individual. At the same time, the individuals in a certain households have varying needs, with some needs requiring more capital than others. This means that when measuring poverty each individual in a household should be considered and this is got by dividing the household expenditure with the total number of individuals contained in the household. The household consumption determines the household place in the poverty.
A poverty line is the minimum standard at which an individual attains his or her basic needs. The poverty line can vary from household to household depending on pricing and the geographic composition of the household. (Ravallion 1998). The relative poverty line is used in identifying poor individuals but they their effect vary depending on the country’s development level. This is because a $1 per day poverty line will have meaning in countries with poor living standards but not applicable in countries with higher living standards.
The absolute poverty line is usually fixed over time unlike the relative one and in order to have poverty rate comparisons using absolute poverty line similar absolute line need to be used in both. Thus the monetary method of determining the poverty level becomes ineffective in many ways. (Baulch 1996). The method neglects the multidimensional poverty nature, and neglects different characteristics of household, whereby it considers only income based poverty line to identify the poor.
The method does not consider the various needs of different people, whereby the healthy should be considered better off in terms of resources as compared to the sick and disabled. According to monetary method of determining poverty level, there is absolute poverty and anybody whose income is below US$1 a day is poor and relative poverty which relies on the poverty line, and is involved with the proportion of average income in a given country. The head count index of determine poverty is easy but cannot determine the depth of poverty line. Ulme & McKay 2005).
The poverty Gap index shows the location of an individual in terms of distance from poverty line. It involves the average measure of all people of the gap between those of poor standard and poverty line thus unable to capture the inequality which exists among the poor. The squared poverty gap weighs the total poverty gaps and considers the weight is considered proportional to the poverty gaps. Poverty profiles examine the poverty patterns in a society showing major poverty and inequality facts.