چکیده:
Accurate Measuring of poverty and its distribution in various areas, in addition to being
crucial for cognitive purposes, could have different policy implications and affect policy
assessments. The Household expenditures criteria is typically used to measure poverty,
and poverty is often assessed using a poverty line and alternative indices. A major
difficulty associated with this method is, however, that it fails to take the purchasing
power of money in different areas into account. In fact, households with the same amount
of expenditures living in areas with higher price levels enjoy lower levels of welfare in
comparison with those living in areas with lower price levels. Since the consumer price
index cannot reflect the difference between price levels in different areas, this index is
not useful for evaluating differences in purchasing power. In this paper, we shall first
present an index which reflects price levels in the Iranian year ending in March 2012, and
then we shall test the equality of poverty measures hypothesis before and after adjusting
expenditures with the proposed price level index using statistical tests and the dominance
approach. According to the results, and regardless of the defined poverty line, adjusting
expenditures based on all poverty measures characterized by a week monotonicity, will
reduce the calculated poverty measures. Furthermore, after adjustment, the ranking of
provinces with respect to poverty will drastically change. This could change the share of
each province in reducing poverty budgets.
خلاصه ماشینی:
The Effect of Regional Price Adjustment of Household Expenditures on Poverty Indices in Iran’s Urban Areas Javad Arab Yarmohamadi* Esmaiel Abounoori† Ali Asghar Salem‡ Received: 28 May 2017 Approved: 10 Dec 2017 Accurate Measuring of poverty and its distribution in various areas, in addition to being crucial for cognitive purposes, could have different policy implications and affect policy assessments.
In this paper, we shall first present an index which reflects price levels in the Iranian year ending in March 2012, and then we shall test the equality of poverty measures hypothesis before and after adjusting expenditures with the proposed price level index using statistical tests and the dominance approach.
To develop such an index on the basis of the purchasing power parity index, the following measures were adopted: The data related to the price level of various goods across different regions (provinces) are collected and then based on each region’s population ratio to the whole country’s population and using the weighted average, each of the goods price at the national level is calculated.
This means that regardless of the value defined as poverty line and for all the poverty measures, the level of poverty decreases when the expenditures are adjusted with regional prices.
As demonstrated, the value of poverty measures decreases after adjusting household consumption expenditures based on the cost of living index.
Then, household expenditures were adjusted using the designed index, and five different poverty measures were calculated.
It was shown that adjusting expenditures with the cost of living index significantly changes the rank of each province in terms of poverty level.