CHAPTER 6 MEASUREMENT OF POVERTY HOUSEHOLD INCOME AND EXPENDITURE SURVEY (HIES) 2010 CHAPTER 6 MEASUREMENT OF POVERTY MD. NADIM RAHMAN ID: 13169002 MDP 621: Poverty, Livelihood, Food and Nutrition Security Measurement Method Cost of Basic Needs (CBN) Used by Bangladesh Bureau of Statistics since 1995-96 Food poverty line: Lower Poverty Line - The extreme poor households are those households whose total expenditures on food and nonfood combined are equal to or less than the food poverty line. Upper Poverty Line - The moderate poor households are those households whose total expenditures are equal to or less than the upper poverty line. Cost of Basic Needs (CBN) Used by Bangladesh Bureau of Statistics since 1995-96 Food poverty line: Lower Poverty Line - The extreme poor households are those households whose total expenditures on food and nonfood combined are equal to or less than the food poverty line. Upper Poverty Line - The moderate poor households are those households whose total expenditures are equal to or less than the upper poverty line. Poverty Incidence (Overall) Steeply Declining incidence of poverty between 2005 and 2010 Upper Poverty Line from 40% to 31.5% national rate. Poverty reduced by 8.5% at national level. Poverty alleviation in the rural areas was speedier than in the urban areas. In about 20 years since 1991-92, the country's poverty level dropped by 25.2% points. Bangladesh is close to achieving the millennium development goal (MDG) about halving the poverty incidence by 2015 Upper Poverty line 2005 2010 Difference Rural 43.8% 35.2% 8.6% Upper Poverty Line from 40% to 31.5% national rate. Poverty reduced by 8.5% at national level. Poverty alleviation in the rural areas was speedier than in the urban areas. In about 20 years since 1991-92, the country's poverty level dropped by 25.2% points. Bangladesh is close to achieving the millennium development goal (MDG) about halving the poverty incidence by 2015 Rural 43.8% 35.2% 8.6% Urban 28.4% 21.3% 7.1% Steeply Declining incidence of poverty between 2005 and 2010 Lower Poverty Line from 25.1% to 17.6% national rate. Poverty level dropped by 17.6% points and now it is less than half than it was in 1991-1992 Bangladesh already achieved the MDG target of reducing the incidence of extreme poverty by half by 2015. Lower Poverty line 2005 2010 Difference Rural 28.6% 21.1% 8.5% Urban 14.6% 7.7% 7.5% Lower Poverty Line from 25.1% to 17.6% national rate. Poverty level dropped by 17.6% points and now it is less than half than it was in 1991-1992 Bangladesh already achieved the MDG target of reducing the incidence of extreme poverty by half by 2015. Urban 14.6% 7.7% 7.5% Poverty incidence by Divisions Significant Reduction of Poverty in Divisions Lowest poverty rate recorded in Chittagong division at 26.2% and highest in Rangpur division at 46.2% (upper poverty line) The sharp reduction of poverty rate in Chittagong division using the upper poverty line may be attributed to its high reduction in urban area (11.8%) during the period. The urban HCR of poverty in Chittangang division came down to 39.0% in 2005 from 55.9% in 2000, a reduction of 16.9% points during the period. The reduction of HCR of poverty is significant in urban areas of other divisions as well. Lowest poverty rate recorded in Chittagong division at 26.2% and highest in Rangpur division at 46.2% (upper poverty line) The sharp reduction of poverty rate in Chittagong division using the upper poverty line may be attributed to its high reduction in urban area (11.8%) during the period. The urban HCR of poverty in Chittangang division came down to 39.0% in 2005 from 55.9% in 2000, a reduction of 16.9% points during the period. The reduction of HCR of poverty is significant in urban areas of other divisions as well. Poverty incidence by PG and SPG Poverty Gap (PG) and Squared Poverty Gap (SPG) The Poverty Gap (PG), which estimates the depth of poverty of a country's population, is estimated at 3.1% at the national level. It has reduced by 1.5% points since 2005. The reductions of PG indicate that the average consumption level of the people living below the poverty lines improved during the period 2005 to 2010. Lowest gap in Chittagong division at 2.2% and highest gap in Barisal division at 5.4%. The gap has decreased for the remaining divisions as well. The Squared Poverty Gap (SPG), which measures the severity of the poverty, estimated at 0.8% at the national level. It has reduced by 0.5% since 2005. This indicates that the severity of poverty has reduced during the period 2005 to 2010 The Poverty Gap (PG), which estimates the depth of poverty of a country's population, is estimated at 3.1% at the national level. It has reduced by 1.5% points since 2005. The reductions of PG indicate that the average consumption level of the people living below the poverty lines improved during the period 2005 to 2010. Lowest gap in Chittagong division at 2.2% and highest gap in Barisal division at 5.4%. The gap has decreased for the remaining divisions as well. The Squared Poverty Gap (SPG), which measures the severity of the poverty, estimated at 0.8% at the national level. It has reduced by 0.5% since 2005. This indicates that the severity of poverty has reduced during the period 2005 to 2010 Poverty incidence by Household Size Poverty Reduction by Household Size The lowest HCR is 7.5% at the national level for households having number of household members 1-2 which corresponds to 9.3% in rural area and 2.8% in urban area. Improvement of HCR of this size of family observed all over the country. HCR of poverty using lower poverty line is the highest for the family size 7-8 which is recorded at 28.2% which was 29.9% in 2005. It appears that HCR increases with the increase of household size up to member size 7-8 and starts falling afterwards as household size increases. The lowest HCR is 7.5% at the national level for households having number of household members 1-2 which corresponds to 9.3% in rural area and 2.8% in urban area. Improvement of HCR of this size of family observed all over the country. HCR of poverty using lower poverty line is the highest for the family size 7-8 which is recorded at 28.2% which was 29.9% in 2005. It appears that HCR increases with the increase of household size up to member size 7-8 and starts falling afterwards as household size increases. Poverty incidence by Age of Household Head Poverty Reduction by Age of Household Head Shows similar pattern in 2010 and 2005 both for the lower and upper poverty lines. At the beginning, the HCR increases for the age <=29 to 30- 39 of head and then falls for the subsequent age groups. The lowest HCR of poverty is found for the head of age group 60+. This reflects the existence of more earners in the large family. Shows similar pattern in 2010 and 2005 both for the lower and upper poverty lines. At the beginning, the HCR increases for the age <=29 to 30- 39 of head and then falls for the subsequent age groups. The lowest HCR of poverty is found for the head of age group 60+. This reflects the existence of more earners in the large family. Poverty incidence by Selected Household Characteristics Poverty Reduction by Selected Household Characteristics The HCR of incidence of poverty by sex of head of household is estimated at 26.6% for the female headed households whereas it is 32.1% for male headed ones. The HCR of incidence of poverty is found significantly less for female headed households than that of male headed households. HCR of incidence of poverty by marital status using the upper poverty line is 31.4% for the married, 23.3% for the unmarried and 33.9% for the widowed/divorced persons. The HCR of poverty reduced for all these categories during the period 2005 to 2010. Using the upper poverty line, the HCR was 31.6% for the Muslims and 31.1% for the non-Muslims in 2010. The HCR of incidence of poverty by sex of head of household is estimated at 26.6% for the female headed households whereas it is 32.1% for male headed ones. The HCR of incidence of poverty is found significantly less for female headed households than that of male headed households. HCR of incidence of poverty by marital status using the upper poverty line is 31.4% for the married, 23.3% for the unmarried and 33.9% for the widowed/divorced persons. The HCR of poverty reduced for all these categories during the period 2005 to 2010. Using the upper poverty line, the HCR was 31.6% for the Muslims and 31.1% for the non-Muslims in 2010. Poverty incidence by Education Poverty Reduction by Education Traditionally, incidence of poverty is high among the illiterates. The 2010 survey findings reveal similar results. In 2010, the estimates of HCR poverty by literacy status using the upper poverty line are 42.8% for the illiterates and 19.0% for the literates. It is 23.8% points higher among the illiterates than among the literates. Significant poverty reduction observed among the illiterates during the period 2005 to 2010. The HCR of incidence of poverty by educational status shows a high negative correlation with educational status. Poverty incidence decreases as educational status increases. The estimates show that HCR using the upper poverty line is 42.8% for no education, 35.7% for grade I-IV, 22.6% for grade V-IX and 7.5% for SSC and above. Traditionally, incidence of poverty is high among the illiterates. The 2010 survey findings reveal similar results. In 2010, the estimates of HCR poverty by literacy status using the upper poverty line are 42.8% for the illiterates and 19.0% for the literates. It is 23.8% points higher among the illiterates than among the literates. Significant poverty reduction observed among the illiterates during the period 2005 to 2010. The HCR of incidence of poverty by educational status shows a high negative correlation with educational status. Poverty incidence decreases as educational status increases. The estimates show that HCR using the upper poverty line is 42.8% for no education, 35.7% for grade I-IV, 22.6% for grade V-IX and 7.5% for SSC and above. Poverty Reduction by Main Occupation of the Heads of Households and Residence Poverty incidence by Land-holding Poverty Reduction by Land-holding Traditionally, the poor have less land to support their families. There exists strong negative correlation between land ownership and incidence of poverty. That is, as land size increases, the incidence of poverty decreases. Bangladesh still has an agriculture- dominant economy where about 48 percent of the people live on agriculture. The HCR of the landless households is lower than the small land owners mainly due to their involvement in non-agricultural activities which provides them with income enough to escape poverty through engaging in various non-farm economic activities. Traditionally, the poor have less land to support their families. There exists strong negative correlation between land ownership and incidence of poverty. That is, as land size increases, the incidence of poverty decreases. Bangladesh still has an agriculture- dominant economy where about 48 percent of the people live on agriculture. The HCR of the landless households is lower than the small land owners mainly due to their involvement in non-agricultural activities which provides them with income enough to escape poverty through engaging in various non-farm economic activities. Poverty incidence by Per Capita Income of the Poor Poverty Reduction by Per-capita income of the Poor Using the lower poverty line, per capita income of the poor in nominal terms at the national level is Tk. 1102.84 at national level, Tk. 1083.72 in the rural area and Tk. 1250.18 in the urban area in 2010. On average, the per capita income of the poor increased nearly 74% in 2010 over that in 2005 Per capita income of the poor is at the highest level in Dhaka division at Tk 1159.30 and at the lowest level in Sylhet division at Tk 996.95 Using the lower poverty line, per capita income of the poor in nominal terms at the national level is Tk. 1102.84 at national level, Tk. 1083.72 in the rural area and Tk. 1250.18 in the urban area in 2010. On average, the per capita income of the poor increased nearly 74% in 2010 over that in 2005 Per capita income of the poor is at the highest level in Dhaka division at Tk 1159.30 and at the lowest level in Sylhet division at Tk 996.95 Poverty incidence by Per Capita Expenditure of the Poor Poverty Reduction by Per-capita Expenditure of the Poor Per capita expenditure of the poor is Tk 1245.76 at the national level, Tk 1200.02 in the rural areas and Tk 1457.65 in the urban areas. It recorded an average increase of nearly 85% in 2010 over the 2005 national level. Chittagong division recorded the highest per capita expenditure with Tk 1174.50 and Rangpur division recorded the lowest with Tk 1027.07 Though per capita expenditure increased more than per capita income which indicates higher cost of living. Factors involved are price hike, unjust profit making by middlemen, corruption, political unrest, increased transportation cost, increase of fuel and power cost, reduced residential land etc. Per capita expenditure of the poor is Tk 1245.76 at the national level, Tk 1200.02 in the rural areas and Tk 1457.65 in the urban areas. It recorded an average increase of nearly 85% in 2010 over the 2005 national level. Chittagong division recorded the highest per capita expenditure with Tk 1174.50 and Rangpur division recorded the lowest with Tk 1027.07 Though per capita expenditure increased more than per capita income which indicates higher cost of living. Factors involved are price hike, unjust profit making by middlemen, corruption, political unrest, increased transportation cost, increase of fuel and power cost, reduced residential land etc. Factors of Bangladeshs Enhanced Growth and Declining Poverty Rapid growth in garments exports and growth in manufacturing activities Relatively higher paying rural non-farm opportunities increased Labour force slowly began to shift away from agriculture Declining population growth rates (1.579% - 2012 est.), improved human capital. Increased access to microfinance loans Rapid growth in garments exports and growth in manufacturing activities Relatively higher paying rural non-farm opportunities increased Labour force slowly began to shift away from agriculture Declining population growth rates (1.579% - 2012 est.), improved human capital. Increased access to microfinance loans Factors of Bangladeshs Enhanced Growth and Declining Poverty Improved infrastructure mainly in the form of more extensive road communications networks Increased foreign remittance earnings Substantial improvements in living conditionsincluding housing characteristics, and access to sanitation facilities, electricity, and communications. The poor in Bangladesh are more likely to belong to households with a larger number of dependents, lower education among household members, and with the household head engaged in daily wage labour. Improved infrastructure mainly in the form of more extensive road communications networks Increased foreign remittance earnings Substantial improvements in living conditionsincluding housing characteristics, and access to sanitation facilities, electricity, and communications. The poor in Bangladesh are more likely to belong to households with a larger number of dependents, lower education among household members, and with the household head engaged in daily wage labour. Observation Poverty has been decreasing gradually in the country keeping pace with the increasing growth of per head national income Bangladesh has reduced poverty levels and improved living standards significantly in recent years despite global economic meltdown and natural calamities The main objective of the present government is to alleviate poverty and establish equity. The poverty reduction rate will help achieve the other objectives of the Millennium Development Goals (MGDs) by 2015. Poverty has been decreasing gradually in the country keeping pace with the increasing growth of per head national income Bangladesh has reduced poverty levels and improved living standards significantly in recent years despite global economic meltdown and natural calamities The main objective of the present government is to alleviate poverty and establish equity. The poverty reduction rate will help achieve the other objectives of the Millennium Development Goals (MGDs) by 2015. Observation Poor households are also more likely to be landless or functionally landless and less likely to receive domestic or foreign remittances. In the proposed perspective plan 2021, the government is committed to cutting extreme poverty to 10% and achieving double-digit GDP growth by 2021, the final year of its implementation period. Based on the perspective plan, the government is also framing the sixth five year development plan to achieve the targets of the double-digit growth, develop the country's weak infrastructure and cut hunger and eliminate disparity. Poor households are also more likely to be landless or functionally landless and less likely to receive domestic or foreign remittances. In the proposed perspective plan 2021, the government is committed to cutting extreme poverty to 10% and achieving double-digit GDP growth by 2021, the final year of its implementation period. Based on the perspective plan, the government is also framing the sixth five year development plan to achieve the targets of the double-digit growth, develop the country's weak infrastructure and cut hunger and eliminate disparity. Observation Households geographical location has a strong influence on its economic status. As education appears to play an important role in increasing urban inequality, raising the level of general education is essential. In addition to raising general educational level, it is necessary to provide primary education throughout the country in order to mitigate poverty. It is imperative to raise agricultural productivity in both rural and urban sectors. Non-agricultural activities should be promoted according to the pattern of comparative advantages. Households geographical location has a strong influence on its economic status. As education appears to play an important role in increasing urban inequality, raising the level of general education is essential. In addition to raising general educational level, it is necessary to provide primary education throughout the country in order to mitigate poverty. It is imperative to raise agricultural productivity in both rural and urban sectors. Non-agricultural activities should be promoted according to the pattern of comparative advantages. Thank You