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Analyzing Poverty and Inequality


From the PRSP Sourcebook

Poverty Measurement and Analysis

Once measures of welfare have been defined, a poverty line established, and poverty/inequality measures selected (see section on Measuring Poverty), the analysis of poverty and its determinants can be undertaken. Various tools are available for this analysis, from simple descriptions and tabulations (poverty profile), to regression analysis of poverty determinants, and further techniques to compare poverty profiles over time or across areas.

A review of these tools and techniques is provided in Ravallion (1992)Coudouel et al. (2002), and in Learning Materials from the World Bank Institute. This page is a summary of Coudouel et al. Please refer to the document, its technical notes, and its bibliography, also available in the highlight box, for further details.

Click on the corresponding subtopic in the left navigation menu to find information on:

  1. Analyzing poverty
    • Comparing characteristics of individuals/households in different poverty groups
    • Comparing poverty between groups 
    • Comparing poverty over time
    • Analyzing the correlates of poverty
  2. Analyzing inequality 
    • Comparing inequality 
    • Decomposing income inequality
    • Analyzing inequality, growth and poverty
  3. Analyzing vulnerability 
    • Comparing vulnerability across groups
    • Analyzing determinants of vulnerability

When comparing poverty, inequality, and vulnerability, it is important to test whether the observed differences in characteristics between different poverty groups, or the differences in poverty incidence between specific groups or over time are statistically significant. (See Issues under the 'Measuring Poverty' section for a discussion of issues of comparability between different surveys, sampling issues, etc.)

This page mainly focuses on quantitative measures. Qualitative techniques help in understanding household behavior, and the interpretation of quantitative results can be complemented, triangulated, and enriched with qualitative work. Qualitative techniques have been used to analyze, amongst other things:

  • Household participation in informal networks;
  • Patterns in household income and consumption, and in particular, seasonal variations;
  • People’s perceptions of poverty and vulnerability;
  • The strategies put in place by households to reduce their vulnerability to income changes 

In the latter case, it is important to see whether households engage in depletive strategies—when they sell their productive assets, diversify their income sources to reduce the probability of income changes; reduce their consumption in case of income change; or manage to find new means to increase their income—for instance by changing their labor supply. (See Qualitative data for more information.)

This page is based on Coudouel et al. (2002), Poverty Measurement and Analysis, in the PRSP Sourcebook, World Bank, Washington D.C.


Related Sections:

  • See Measuring Poverty, in particular its section on data sources, for a discussion of the type of analysis which alternative sources allow
  • See Mapping Poverty (coming shortly) to learn about the types of maps, their uses, and the techniques available for their elaboration
  • See World Bank Policies for Bank policy and for guidance on analyzing poverty.
  • See Country Documents for analyses of the poverty situation in various countries.
  • See Data and Data Sources for a guide to poverty trends and to household surveys that can be used to study poverty and an explanation of different types of data.
  • See Training Events and Materials for more resources on poverty analysis.
  • See Key Readings for a collection of related literature, including all the documents that are referenced on these pages.

Back to Poverty Analysis Home