Question
The table below above the distributions of income in two states (A and B) and in two sub-regions (rural and urban) of each state, in
The table below above the distributions of income in two states (A and B) and in two sub-regions (rural and urban) of each state, in a country. Every individual in these states lives in a household of size one and has an income of exactly 100, 200, or 10,000 dollars per year (so it is easy to describe the distributions and calculate poverty statistics). The first two sections of the table present the numbers and percentages of individuals in each region at each income level.
a) Fill in the two rows of poverty statistics in each of the last two sections of the table. For the first of these sections, use a poverty line of $201. For the last, use a poverty line of $101. b) Suppose attention is restricted to headcount ratio statistics employing a poverty line of $201. Representatives of State A are attempting to argue that their state should be given priority in the allocation of poverty alleviation funds. Would they prefer to employ statistics calculated at the state level (columns 3 and 6) or sub-region level (columns 1, 2, 4, and 5)? Why? c) Suppose attention is restricted to headcount ratio statistics calculated at the sub-region level, and representatives of State A are still attempting to make the same argument. Would they prefer to employ a poverty line of $201 or $101? Why? Would they prefer to use headcount ratio statistics or total income gap statistics?
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