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.
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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.
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