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5.1 Poverty measurement 5.1 Poverty measurement
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PPM 1 and PPM2: principles of diminishing marginal WB and the existence of a maximum WB PPM 1 and PPM2: principles of diminishing marginal WB and the existence of a maximum WB
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GPPM 1: the good practice of applying PPM 1 and PPM2 GPPM 1: the good practice of applying PPM 1 and PPM2
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PPM3: the principle of the minimal error PPM3: the principle of the minimal error
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GPPM2: the good practice of minimising errors GPPM2: the good practice of minimising errors
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PPM4: the principle of replicable full cardinalisation (generalised dichotomisation) PPM4: the principle of replicable full cardinalisation (generalised dichotomisation)
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GPMM3: the good practice of cardinalising indicators GPMM3: the good practice of cardinalising indicators
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PPM5: the principle of symmetry PPM5: the principle of symmetry
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GPPM4: the good practice of full conceptual and measurement consistency GPPM4: the good practice of full conceptual and measurement consistency
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PPM6 and GPPM5: the principle and good practice of full normativity PPM6 and GPPM5: the principle and good practice of full normativity
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5 Principles and good practices of poverty measurement
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Published:December 2023
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Abstract
This chapter explores the principle (Pr) of decreasing marginal objective well-being (OWB) and the Pr of the existence of a maximum OWB. OWB-scales require: 1) defining normative-thresholds and identifying maximum OWB; 2) normalising scales, equalising ranges, and setting normative thresholds at the same point (score 1); 3) applying these Pr above normative thresholds on the bases of satiation reality of most needs (N), and the fact that consumption (C) results from concurrent time (T) and goods and services (G&S): as T cannot be increased/accumulated, when G&S increase, effective C is limited by fixed T, which generates decreasing marginal OWB and maximum OWB. It goes on to discuss the Pr of minimum error (PME). Most researchers exclude non-income indicators or do not cardinalise them, assigning excluded indicators a zero weight: the largest-possible- error. Regarding the Pr of complete and replicable cardinalisation (PrCRC) /generalised dichotomisation (GD), usually, non-cardinal variables are dichotomised: the worst solution gets a 0 score; the normative solution scores 1; intermediate solutions are also given a 0 score although they deserve intermediate scores, resulting in a huge information loss and a violation of PME. In the Integrated Poverty Measurement Method (IPMM), PrCRC is applied, rescuing intermediate values and respecting PME. I developed PrCRC, which is an algorithm. Scores are cardinal, which allows calculation of all aggregate poverty measures (APM). PrCRC generates equidistant CCRD. PrCRC does not mean eliminating normative judgements; these are present in the ordering of solutions and in defining the true thresholds. Compared to dichotomisation, GD reduces measurement errors substantially. Finally, the chapter examines the Pr of symmetry. Truncated poverty lines (PL) which reflect only the cost of one or a few N, cannot be compared with total current income (Y); truncated PL should be compared with available Y to meet the N it includes. Comparing truncated PL with total household income (HHY), is the asymmetry error.
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