A new GLO Discussion Paper argues that negative and zero incomes cannot be treated equally in terms of household well-being and that standard methods used by practitioners fail to recognize this fact likely resulting in overestimations of poverty.

GLO Discussion Paper No. 914, 2021

Bottom Incomes and the Measurement of Poverty: A Brief Assessment of the Literature – Download PDF
by Ceriani, Lidia & Hlasny, Vladimir & Verme, Paolo

GLO Fellow Paolo Verme

Author Abstract: The paper discusses the main issues related to negative and zero incomes that are relevant for the measurement of poverty. It shows the prevalence of non-positive incomes in high- and middle-income countries, provides an analysis of the sources and structure of these incomes, outlines the various approaches proposed by scholars and statistical agencies to treat non-positive incomes, and explains how non-positive incomes and alternative correction methods impact the measurement of standard poverty indexes. It is argued that negative and zero incomes cannot be treated equally in terms of household well-being and that standard methods used by practitioners fail to recognize this fact likely resulting in overestimations of poverty.

GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS,  EconPapers). Complete list of all GLO DPs – downloadable for free.

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