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POVERTY INCIDENCE, TREND AND PROFILING
6 POVERTY INCIDENCE, TREND AND PROFILING
SUMMARY.
The analysis of NRVA 2011-12 indicates that poverty has not changed over time, with about 36 percent of the population still consuming below the poverty line. Poverty remains higher in rural areas and amongst
the Kuchi population. Poverty has also remained unchanged within most regions, and signiicant changes in poverty are observed in only two regions: in the North-East, where poverty headcount increased from 36.4 to
50.9 percent, and in the North where it declined from 39.4 to 31.7. While average per capita consumption has increased, one of the explanations for stagnating poverty over time is widening inequality, with consumption
of richer parts of the population growing faster. The top consumption quintile has experienced annual growth rates more than three times higher than the bottom one over the four years in between the latest two NRVA
survey rounds. At the same time, inequality measured by the Gini index has increased from 29.7 to 31.6. As the labor endowment is one of the most critical assets for households, poverty is strongly correlated with
household size and demographic composition, being the highest in households with higher dependency
ratios. Similarly, education and employment status of the household head are matched with wide differences in poverty vulnerability. In particular, the analysis reveals that about 70 percent of the poor
population belongs to households headed by illiterate or uneducated individuals. Moreover, household head’s underemployment, casual labor and employment in the farm or construction sectors are strongly
correlated with higher poverty incidence.
6.1 Introduction
One of the main objectives of the NRVA is to provide information on living standards, on their evolution over time, and their distribution over households. Of particular concerns are living standards amongst the poorest segments of the
population, and NRVA survey data provide the principal means for estimating the extent and severity of poverty in Afghanistan.
The measure of welfare adopted to assess population living standards is based on household consumption. In particular, an individual is considered as poor if herhis level of consumption is not suficient to satisfy basic needs i.e. if herhis
consumption falls below the minimum threshold identiied by the poverty line. In line with international standards, the oficial absolute poverty line for Afghanistan is estimated following the Cost of Basic Needs CBN approach and it was
set using the NRVA 2007-08. The CBN absolute poverty line represents the level of per capita consumption at which the members of a household can be expected to meet their “basic needs” in terms of both food and non-food consumption.
1
In order to assess the evolution of wellbeing over time, the 2007-08 poverty line was updated to 2011-12 prices to relect changes in the cost of living.
2
This chapter focuses on the estimation and trend analysis of poverty and inequality, and it presents some basic correlates between household characteristics and poverty.
1 More speciically, the food component of the poverty line captures the cost of consuming 2,100 Kcal per day following the typical food consumption patterns
of the relatively poor; the non-food component of the poverty line is estimated as the median non-food expenditure of individuals with food consumption around the food poverty line. See IRoA and WB 2010.
2 For more details, see Annex VII.
6.2 Measuring trends in poverty 2007-2011
There are three major poverty indexes that are calculated on the basis of poverty lines. The irst is the headcount index, which represents the percentage of the population whose monthly per capita consumption expenditure are below the
poverty line. This index is the most commonly used for poverty measurement mainly because of its simplicity and ease of interpretation. However, the major limitation of the headcount index is its insensitiveness to the “degree” of poverty,
i.e. its inability to provide information as to whether the poor consume just or far below the poverty line. In fact, two populations with the same poverty headcount index might have totally different living standards in that in one, the poor
are concentrated just below the poverty line, while in the other they have consumption levels well below the line. The second index used for poverty measurement is the poverty gap. This index represents the average distance between
the consumption levels of the poor and the poverty line, thus capturing whether the poor have consumption just or far below the poverty line. The squared poverty gap, the third poverty measure, is similar in construction to the poverty
gap but it differs in that it applies an increasing weight to greater distances below the poverty line, thus capturing the “severity” of poverty.
3
Table 6.1 reports the evolution of poverty over time. It clearly indicates that poverty has not changed over time,
irrespective of the poverty indicator used. In order to further conirm the lack of poverty changes over time,
Table 1 also reports the 95 conidence interval for each poverty estimate.
4
At the national level and for each of the three poverty indicators, none of the differences over time is statistically signiicant at a 5-percent level.
Table 6.1: Trends of poverty measures, by survey year
a
Poverty indicators Survey year
95 Conidence Interval 2007-08
2011-12 2007-08
2011-12 Poverty headcount
36.3 36.5
[34.96, 37.62] [34.84, 38.14]
Poverty Gap 7.9
8.6 [7.49, 8.31]
[8.11, 9.10] Squared Poverty Gap
2.6 3.0
[2.39, 2.75] [2.75, 3.19]
a
Provinces of Helmand and Khost were excluded from the original sample in both survey years.
As evidenced in the 2007-08 NRVA report, Afghanistan is characterized by sharp differences in poverty incidence by residence and by region. The analysis of NRVA 2011-12 conirms previous results Figure 6.1. The incidence of poverty
in rural areas is 9 percentage points higher than in urban ones, being 37.7 and 28.9 percent respectively. The nomadic Kuchi population is the most vulnerable to absolute poverty, with poverty rates of 53.8 percent.
In line with the results observed at the national level, poverty has not changed signiicantly over time within each of the domains considered; it remains constant by residence and region, with the only exceptions being the North and North
East regions where poverty has signiicantly – respectively – decreased and increased over time Figure 6.1.
3 Formally, the three measures poverty headcount, poverty gap and squared poverty gap belong to the Foster-Greer-Thorbecke FGT class of poverty measures.
4 As poverty measures are estimates based on sample surveys, they are subject to sampling errors. The conidence interval indicates the range in which the
true or population indicator would lie with a probability of 95.
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POVERTY INCIDENCE, TREND AND PROFILING
MDG Indicator 1.2
Poverty gap ratio
8.6 percent
