Poverty alienation has become critical in economic development of many nations hence assessment is essential to initiate reforms to curb it. There are two methods of measuring poverty when using monetary measures, which are the consumption and income. They are the indicators of the individual welfare. Arguably, consumption becomes the best measure of poverty when household information is detailed. This is because consumption relates closely to a person’s welfare, which means that people can meet fundamental needs. On the other hand, access, and the availability of goods are only determinants of consumption.
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In addition, consumption is a better means of measuring poverty since incomes often fluctuates. This means that households may have difficulty in remembering their income, especially in the rural area. Finally, it is difficult to monetize income and price the goods if the households consume their own production. Essentially, consumption reveals household standard of living and the capacity to meet the essential needs. The consumption reveals access to credit facility, household saving and the goods and services that a household command. Notably, one should be assertive about using consumption data as a measurement of poverty. On the other hand, using income as a measure of poverty is easy to distinguish the sources of income hence easy to compare with data from other sources. This provides prove to value of the statistics in household study.
Availability of household or individual income and consumption measure requires the definition of poverty lines. Poverty lines are the cut-off points separating the poor from the rich done in two main ways, which are the relative poverty line and the absolute poverty line. The absolute poverty lines are in absolute standards of how household meet their basic needs. Further, alternative definition includes the food-energy intake method, which defines poverty by finding consumption spending level at which a person’s food intake energy is sufficient. This method leads to differential poverty lines in excess of the cost of living facing the poor. This is because consumption of nutrients patterns varies. In addition, cost of the basic method values unequivocal bundles of food consumed by the poor. These alternative methods are on self-reported assessment of poverty and are effective when they do not resonate with social norms.
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