HOUSEHOLD INCOME ANDEXPENDITURE SURVEY (HIES) 2010

CHAPTER 6MEASUREMENT OF POVERTY

HOUSEHOLD INCOME ANDEXPENDITURE SURVEY (HIES) 2010

CHAPTER 6MEASUREMENT OF POVERTY

MD. NADIM RAHMAN – ID: 13169002

MDP 621: Poverty, Livelihood, Food andNutrition Security

Measurement Method

Cost of Basic Needs (CBN) – Used by Bangladesh Bureau ofStatistics since 1995-96

Food poverty line: Lower Poverty Line - The extreme poor households are those

households whose total expenditures on food and nonfoodcombined are equal to or less than the food poverty line.

Upper Poverty Line - The moderate poor households are thosehouseholds whose total expenditures are equal to or less thanthe upper poverty line.

Cost of Basic Needs (CBN) – Used by Bangladesh Bureau ofStatistics since 1995-96

Food poverty line: Lower Poverty Line - The extreme poor households are those

households whose total expenditures on food and nonfoodcombined are equal to or less than the food poverty line.

Upper Poverty Line - The moderate poor households are thosehouseholds whose total expenditures are equal to or less thanthe upper poverty line.

Poverty Incidence (Overall)

Steeply Declining incidence of povertybetween 2005 and 2010 Upper Poverty Line – from 40% to 31.5% national rate.

Poverty reduced by 8.5% at national level.

Poverty alleviation in the rural areas was speedier than in theurban areas.

In about 20 years since 1991-92, the country's poverty leveldropped by 25.2% points.

Bangladesh is close to achieving the millennium developmentgoal (MDG) about halving the poverty incidence by 2015

Upper Povertyline

2005 2010 Difference

Rural 43.8% 35.2% 8.6%

Upper Poverty Line – from 40% to 31.5% national rate.Poverty reduced by 8.5% at national level.

Poverty alleviation in the rural areas was speedier than in theurban areas.

In about 20 years since 1991-92, the country's poverty leveldropped by 25.2% points.

Bangladesh is close to achieving the millennium developmentgoal (MDG) about halving the poverty incidence by 2015

Rural 43.8% 35.2% 8.6%

Urban 28.4% 21.3% 7.1%

Steeply Declining incidence of povertybetween 2005 and 2010 Lower Poverty Line – from 25.1% to 17.6% national rate.

Poverty level dropped by 17.6% points and now it is less thanhalf than it was in 1991-1992

Bangladesh already achieved the MDG target of reducing theincidence of extreme poverty by half by 2015.

LowerPoverty line

2005 2010 Difference

Rural 28.6% 21.1% 8.5%

Urban 14.6% 7.7% 7.5%

Lower Poverty Line – from 25.1% to 17.6% national rate.

Poverty level dropped by 17.6% points and now it is less thanhalf than it was in 1991-1992

Bangladesh already achieved the MDG target of reducing theincidence of extreme poverty by half by 2015.

Urban 14.6% 7.7% 7.5%

Poverty incidence by Divisions

Significant Reduction of Poverty inDivisions Lowest poverty rate recorded in Chittagong division at 26.2%

and highest in Rangpur division at 46.2% (upper poverty line) The sharp reduction of poverty rate in Chittagong division

using the upper poverty line may be attributed to its highreduction in urban area (11.8%) during the period.

The urban HCR of poverty in Chittangang division came downto 39.0% in 2005 from 55.9% in 2000, a reduction of 16.9%points during the period.

The reduction of HCR of poverty is significant in urban areasof other divisions as well.

Lowest poverty rate recorded in Chittagong division at 26.2%and highest in Rangpur division at 46.2% (upper poverty line)

The sharp reduction of poverty rate in Chittagong divisionusing the upper poverty line may be attributed to its highreduction in urban area (11.8%) during the period.

The urban HCR of poverty in Chittangang division came downto 39.0% in 2005 from 55.9% in 2000, a reduction of 16.9%points during the period.

The reduction of HCR of poverty is significant in urban areasof other divisions as well.

Poverty incidence by PG and SPG

Poverty Gap (PG) and SquaredPoverty Gap (SPG) The Poverty Gap (PG), which estimates the depth of poverty

of a country's population, is estimated at 3.1% at the nationallevel. It has reduced by 1.5% points since 2005.

The reductions of PG indicate that the average consumptionlevel of the people living below the poverty lines improvedduring the period 2005 to 2010.

Lowest gap in Chittagong division at 2.2% and highest gap inBarisal division at 5.4%. The gap has decreased for theremaining divisions as well.

The Squared Poverty Gap (SPG), which measures the severityof the poverty, estimated at 0.8% at the national level. It hasreduced by 0.5% since 2005. This indicates that the severity ofpoverty has reduced during the period 2005 to 2010

The Poverty Gap (PG), which estimates the depth of povertyof a country's population, is estimated at 3.1% at the nationallevel. It has reduced by 1.5% points since 2005.

The reductions of PG indicate that the average consumptionlevel of the people living below the poverty lines improvedduring the period 2005 to 2010.

Lowest gap in Chittagong division at 2.2% and highest gap inBarisal division at 5.4%. The gap has decreased for theremaining divisions as well.

The Squared Poverty Gap (SPG), which measures the severityof the poverty, estimated at 0.8% at the national level. It hasreduced by 0.5% since 2005. This indicates that the severity ofpoverty has reduced during the period 2005 to 2010

Poverty incidence by Household Size

Poverty Reduction by Household Size

The lowest HCR is 7.5% at the national level for householdshaving number of household members 1-2 which correspondsto 9.3% in rural area and 2.8% in urban area.

Improvement of HCR of this size of family observed all overthe country.

HCR of poverty using lower poverty line is the highest for thefamily size 7-8 which is recorded at 28.2% which was 29.9%in 2005.

It appears that HCR increases with the increase of householdsize up to member size 7-8 and starts falling afterwards ashousehold size increases.

The lowest HCR is 7.5% at the national level for householdshaving number of household members 1-2 which correspondsto 9.3% in rural area and 2.8% in urban area.

Improvement of HCR of this size of family observed all overthe country.

HCR of poverty using lower poverty line is the highest for thefamily size 7-8 which is recorded at 28.2% which was 29.9%in 2005.

It appears that HCR increases with the increase of householdsize up to member size 7-8 and starts falling afterwards ashousehold size increases.

Poverty incidence by Age of HouseholdHead

Poverty Reduction by Age ofHousehold Head Shows similar pattern in 2010 and 2005 both for the lower

and upper poverty lines. At the beginning, the HCR increases for the age <=29 to 30-

39 of head and then falls for the subsequent age groups. The lowest HCR of poverty is found for the head of age group

60+. This reflects the existence of more earners in the largefamily.

Shows similar pattern in 2010 and 2005 both for the lowerand upper poverty lines.

At the beginning, the HCR increases for the age <=29 to 30-39 of head and then falls for the subsequent age groups.

The lowest HCR of poverty is found for the head of age group60+. This reflects the existence of more earners in the largefamily.

Poverty incidence by SelectedHousehold Characteristics

Poverty Reduction by SelectedHousehold Characteristics The HCR of incidence of poverty by sex of head of household

is estimated at 26.6% for the female headed householdswhereas it is 32.1% for male headed ones.

The HCR of incidence of poverty is found significantly less forfemale headed households than that of male headedhouseholds.

HCR of incidence of poverty by marital status using the upperpoverty line is 31.4% for the married, 23.3% for theunmarried and 33.9% for the widowed/divorced persons.

The HCR of poverty reduced for all these categories duringthe period 2005 to 2010.

Using the upper poverty line, the HCR was 31.6% for theMuslims and 31.1% for the non-Muslims in 2010.

The HCR of incidence of poverty by sex of head of householdis estimated at 26.6% for the female headed householdswhereas it is 32.1% for male headed ones.

The HCR of incidence of poverty is found significantly less forfemale headed households than that of male headedhouseholds.

HCR of incidence of poverty by marital status using the upperpoverty line is 31.4% for the married, 23.3% for theunmarried and 33.9% for the widowed/divorced persons.

The HCR of poverty reduced for all these categories duringthe period 2005 to 2010.

Using the upper poverty line, the HCR was 31.6% for theMuslims and 31.1% for the non-Muslims in 2010.

Poverty incidence by Education

Poverty Reduction by Education

Traditionally, incidence of poverty is high among the illiterates.The 2010 survey findings reveal similar results. In 2010, theestimates of HCR poverty by literacy status using the upperpoverty line are 42.8% for the illiterates and 19.0% for theliterates. It is 23.8% points higher among the illiterates thanamong the literates. Significant poverty reduction observedamong the illiterates during the period 2005 to 2010.

The HCR of incidence of poverty by educational statusshows a high negative correlation with educational status.Poverty incidence decreases as educational status increases.The estimates show that HCR using the upper poverty line is42.8% for no education, 35.7% for grade I-IV, 22.6% forgrade V-IX and 7.5% for SSC and above.

Traditionally, incidence of poverty is high among the illiterates.The 2010 survey findings reveal similar results. In 2010, theestimates of HCR poverty by literacy status using the upperpoverty line are 42.8% for the illiterates and 19.0% for theliterates. It is 23.8% points higher among the illiterates thanamong the literates. Significant poverty reduction observedamong the illiterates during the period 2005 to 2010.

The HCR of incidence of poverty by educational statusshows a high negative correlation with educational status.Poverty incidence decreases as educational status increases.The estimates show that HCR using the upper poverty line is42.8% for no education, 35.7% for grade I-IV, 22.6% forgrade V-IX and 7.5% for SSC and above.

Poverty Reduction by Main Occupation ofthe Heads of Households and Residence

Poverty incidence by Land-holding

Poverty Reduction by Land-holding

Traditionally, the poor have less land to support their families.There exists strong negative correlation between landownership and incidence of poverty. That is, as land sizeincreases, the incidence of poverty decreases. Bangladesh stillhas an agriculture- dominant economy where about 48 percentof the people live on agriculture.

The HCR of the landless households is lower than the small landowners mainly due to their involvement in non-agriculturalactivities which provides them with income enough to escapepoverty through engaging in various non-farm economicactivities.

Traditionally, the poor have less land to support their families.There exists strong negative correlation between landownership and incidence of poverty. That is, as land sizeincreases, the incidence of poverty decreases. Bangladesh stillhas an agriculture- dominant economy where about 48 percentof the people live on agriculture.

The HCR of the landless households is lower than the small landowners mainly due to their involvement in non-agriculturalactivities which provides them with income enough to escapepoverty through engaging in various non-farm economicactivities.

Poverty incidence by Per CapitaIncome of the Poor

Poverty Reduction by Per-capitaincome of the Poor Using the lower poverty line, per capita income of the poor in

nominal terms at the national level is Tk. 1102.84 at nationallevel, Tk. 1083.72 in the rural area and Tk. 1250.18 in theurban area in 2010. On average, the per capita income of thepoor increased nearly 74% in 2010 over that in 2005

Per capita income of the poor is at the highest level in Dhakadivision at Tk 1159.30 and at the lowest level in Sylhet divisionat Tk 996.95

Using the lower poverty line, per capita income of the poor innominal terms at the national level is Tk. 1102.84 at nationallevel, Tk. 1083.72 in the rural area and Tk. 1250.18 in theurban area in 2010. On average, the per capita income of thepoor increased nearly 74% in 2010 over that in 2005

Per capita income of the poor is at the highest level in Dhakadivision at Tk 1159.30 and at the lowest level in Sylhet divisionat Tk 996.95

Poverty incidence by Per CapitaExpenditure of the Poor

Poverty Reduction by Per-capitaExpenditure of the Poor Per capita expenditure of the poor is Tk 1245.76 at the

national level, Tk 1200.02 in the rural areas and Tk 1457.65in the urban areas. It recorded an average increase of nearly85% in 2010 over the 2005 national level.

Chittagong division recorded the highest per capitaexpenditure with Tk 1174.50 and Rangpur division recordedthe lowest with Tk 1027.07

Though per capita expenditure increased more than percapita income which indicates higher cost of living. Factorsinvolved are price hike, unjust profit making by middlemen,corruption, political unrest, increased transportation cost,increase of fuel and power cost, reduced residential land etc.

Per capita expenditure of the poor is Tk 1245.76 at thenational level, Tk 1200.02 in the rural areas and Tk 1457.65in the urban areas. It recorded an average increase of nearly85% in 2010 over the 2005 national level.

Chittagong division recorded the highest per capitaexpenditure with Tk 1174.50 and Rangpur division recordedthe lowest with Tk 1027.07

Though per capita expenditure increased more than percapita income which indicates higher cost of living. Factorsinvolved are price hike, unjust profit making by middlemen,corruption, political unrest, increased transportation cost,increase of fuel and power cost, reduced residential land etc.

Factors of Bangladesh’s EnhancedGrowth and Declining Poverty Rapid growth in garments exports and growth in manufacturing

activities Relatively higher paying rural non-farm opportunities

increased Labour force slowly began to shift away from agriculture

Declining population growth rates (1.579% - 2012 est.),improved human capital.

Increased access to microfinance loans

Rapid growth in garments exports and growth in manufacturingactivities

Relatively higher paying rural non-farm opportunitiesincreased

Labour force slowly began to shift away from agriculture

Declining population growth rates (1.579% - 2012 est.),improved human capital.

Increased access to microfinance loans

Factors of Bangladesh’s EnhancedGrowth and Declining Poverty Improved infrastructure mainly in the form of more extensive

road communications networks Increased foreign remittance earnings Substantial improvements in living conditions–including housing

characteristics, and access to sanitation facilities, electricity,and communications.

The poor in Bangladesh are more likely to belong tohouseholds with a larger number of dependents, lowereducation among household members, and with the householdhead engaged in daily wage labour.

Improved infrastructure mainly in the form of more extensiveroad communications networks

Increased foreign remittance earnings Substantial improvements in living conditions–including housing

characteristics, and access to sanitation facilities, electricity,and communications.

The poor in Bangladesh are more likely to belong tohouseholds with a larger number of dependents, lowereducation among household members, and with the householdhead engaged in daily wage labour.

Observation

Poverty has been decreasing gradually in the country keepingpace with the increasing growth of per head national income

Bangladesh has reduced poverty levels and improved livingstandards significantly in recent years despite global economicmeltdown and natural calamities

The main objective of the present government is to alleviatepoverty and establish equity. The poverty reduction rate willhelp achieve the other objectives of the MillenniumDevelopment Goals (MGDs) by 2015.

Poverty has been decreasing gradually in the country keepingpace with the increasing growth of per head national income

Bangladesh has reduced poverty levels and improved livingstandards significantly in recent years despite global economicmeltdown and natural calamities

The main objective of the present government is to alleviatepoverty and establish equity. The poverty reduction rate willhelp achieve the other objectives of the MillenniumDevelopment Goals (MGDs) by 2015.

Observation

Poor households are also more likely to be landless orfunctionally landless and less likely to receive domestic orforeign remittances.

In the proposed perspective plan 2021, the government iscommitted to cutting extreme poverty to 10% and achievingdouble-digit GDP growth by 2021, the final year of itsimplementation period.

Based on the perspective plan, the government is also framingthe sixth five year development plan to achieve the targets ofthe double-digit growth, develop the country's weakinfrastructure and cut hunger and eliminate disparity.

Poor households are also more likely to be landless orfunctionally landless and less likely to receive domestic orforeign remittances.

In the proposed perspective plan 2021, the government iscommitted to cutting extreme poverty to 10% and achievingdouble-digit GDP growth by 2021, the final year of itsimplementation period.

Based on the perspective plan, the government is also framingthe sixth five year development plan to achieve the targets ofthe double-digit growth, develop the country's weakinfrastructure and cut hunger and eliminate disparity.

Observation

Households geographical location has a strong influence on itseconomic status.

As education appears to play an important role in increasingurban inequality, raising the level of general education isessential.

In addition to raising general educational level, it is necessaryto provide primary education throughout the country in orderto mitigate poverty.

It is imperative to raise agricultural productivity in both ruraland urban sectors.

Non-agricultural activities should be promoted according to thepattern of comparative advantages.

Households geographical location has a strong influence on itseconomic status.

As education appears to play an important role in increasingurban inequality, raising the level of general education isessential.

In addition to raising general educational level, it is necessaryto provide primary education throughout the country in orderto mitigate poverty.

It is imperative to raise agricultural productivity in both ruraland urban sectors.

Non-agricultural activities should be promoted according to thepattern of comparative advantages.

Thank You