ABSTRACT
‘Poverty’ can be said to exist in a given society when one or more persons do not attain a level of economic well-being deemed to constitute a reasonable minimum by the standards of that society. Saying that poverty ‘exists’ is only the first step; for many purposes, including policy analysis, one must also say ‘how much’ poverty exists. The key questions for the applied economist to answer before measuring poverty are: How do we assess ‘economic well-being’? At what point do we say that a person is not poor? And: How do we aggregate this information into a measure of poverty? The first two questions are sometimes referred to as the ‘identification problem’ (which individuals are poor, and how poor are they?) while the third is called the ‘aggregation problem’ (how much poverty is there?).
