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Poverty gap index

In order to summarize information on poverty, the WB (World Bank) typically uses two indexes, the first and most popular one, the headcount index for measuring the proportion of the population for whom consumption is less than the poverty line, and the second one, the poverty gap index (PGI), to measure the depth of poverty.
 

Explanation

 
The poverty gap (PG) is defined as the average difference between poor households' expenditure and the poverty line.
 
Two countries with the same headcount index may have quite different poverty levels. Country A and country B in the chart below both have the same headcount index, although the depth of poverty is evidently much greater in country A. There are many more people below the poverty line in country A (poverty gap A), than in country B (poverty gap B).
 
Poverty gap country A chart   Poverty gap country B chart
 
WB's PGI allows to compare the poverty status in both countries A and B, by expressing the poverty gap as a percentage of the poverty line:
 
Poverty gap index
 

Benefits and shortcomings of PG and of PGI

 
  • They can be interpreted as the average shortfall of poor people. They show how much would have to be transferred to the poor to bring their expenditure up to the poverty line, and present it as an average (PG) or in terms of the poverty line (PGI).
  • The PG and PGI do not capture differences in the severity of poverty amongst the poor and ignore "inequality among the poor".
  • They are comparatively difficult to understand and to construct.
 

Poverty headcount index and Poverty gap index for countries with a PGI above 10

 

Countries with Poverty Gap Indexes above 10 ¹

 Population below $1.9/day
(%)
Poverty gap at $1.9/day
(%)
Bangladesh43.711.2
Benin53.119
Burkina Faso55.319.9
Burundi77.732.9
Central African Republic66.333.1
Chad38.415.3
Congo, Dem. Rep.77.239.3
Côte d'Ivoire2910.3
Gambia, The45.317.7
Guinea35.310.3
Guiné-Bissau67.130.5
Haiti53.928.9
Kenya33.611.7
Lesotho59.731.8
Liberia68.628.1
Madagascar81.840.3
Malawi70.933.3
Mali49.315.2
Micronesia, Fed. Sts.50.428.5
Mozambique68.731.4
Niger50.313.9
Nigeria53.521.8
Papua New Guinea39.315.9
Rwanda60.323.7
Senegal3812.8
Sierra Leone52.316.7
Solomon Islands45.617.4
St. Lucia35.813.2
Suriname23.416.5
Swaziland4216.6
Tanzania46.614.4
Timor-Leste46.812.1
Togo54.223.2
Turkmenistan42.314.5
Uganda33.210.1
Uzbekistan66.825.3
Zambia64.431.6
¹ Retrived from http://iresearch.worldbank.org/PovcalNet/index.htm?2, on 7 March 2016.

References :

The information in this page has been extracted or adapted from these sources:

 
 
 
 
 
 

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