Search results for "Median income"
showing 2 items of 2 documents
Median vs. Mean in Poverty Alleviation
2011
When evaluating poverty, the relative poverty line may be taken as a percentage of either normalized median or normalized mean income. It is proved that, for any family of non-intersecting Lorenz curves, when the poverty line is set relative to the normalized median income, reducing poverty become less costly in proportion to the total income when inequality is great and increasing; a counter-example proves that such a change may be associated with greater poverty. However, when the poverty line is set relative to the normalized mean income, the relative cost of poverty alleviation always increases with inequality and poverty, as expected. One concludes that the poverty line should be taken…
Poverty Reduction: The Paradox of the Endogenous Poverty Line
2007
When evaluating poverty, the relative poverty line may be considered as a percentage of the median income or it may be a percentage of the average income. It is proved that, with a poverty line relative to the median income, reducing poverty may become less costly in proportion to the total income as poverty increases (measured by the Sen, the Sen-Shorrocks-Thon or the Foster-Greer-Thorbecke poverty indexes) by passing from a Lorenz concentration curve to another curve associated with more poverty. This is obviously a paradox, although a largely overlooked one. However, it is shown that the paradox vanishes if the poverty line is relative to the average income. The demonstration is both exp…