THE MEASUREMENT OF INEQUALITY AND POVERTY - A POLICY-MAKERS GUIDE TO THE LITERATURE

Mathematical measures of poverty and inequality embody values that reflect the historical, political, social, intellectual and ethical forces prevalent at the time of their formulation. So that policy makers may select measures of poverty and inequality that are consistent with their values, it is important to make explicit the value judgements implicit in the measures. Models designed to measure poverty and inequality fall into four categories: absolute poverty measures; absolute income measures; relative poverty measures; and relative inequality measures. This article examines the principal models within each category and discusses the assumptions, limitations and values implicit in the models.