Question

Poverty Gap is a better measure of absolute poverty than Head Count Ratio because:
1. Household income data is not available
2. It is difficult to define minimum health standards.
3. It indicates total income shortfall that needs to be corrected to remove absloute poverty.
4. None of the above
5.

Answer 1

Correct Answer - Option 3 : It indicates total income shortfall that needs to be corrected to remove absloute poverty.

The correct answer is It indicates a total income shortfall that needs to be corrected to remove absolute poverty.

•  Poverty:
  • Poverty is the social phenomenon in which a section of society is unable to fulfill its basic necessities of life.
  • There are two types of Poverty. one is absolute poverty and the other is relative poverty.
    • Absolute poverty 
      • In this type minimum commodities required for basic needs are identified and calculated in monetary terms.
      • Then population whose level of income is less than this monetary value will be below the poverty line and hence poor. 
      • It is expressed as a number of poor people as a proportion of the population. This measure is also called the Headcount Ratio.
    • Relative poverty:
      • This measure of Poverty is the relative measure of the top 5-10% population with the bottom 5-10% of the population.
      • It reflects the relative standards of poverty
      • It also calculates the inequality in society.
  • Poverty Gap:
    • It is the mean shortfall from the poverty line, given as a percentage of the poverty line.
    • It measures the intensity of poverty. 
    • It shows the extent to which individuals on average fall below the poverty line.
    • It indicates the total income shortfall that needs to be corrected to remove absolute poverty. Hence, option 3 is correct