Question

How is the method of ‘Poverty Gap Ratio’ useful in estimating the intensity of poverty?
In what way the method of ‘Squared Poverty Gap Ratio’ an improvement over the
‘Poverty Gap Ratio’?

Answer 1

The poverty gap index is a measure of the intensity of poverty. It is defined as the average poverty gap in the population as a proportion of the poverty line.

The poverty gap index is an improvement over the poverty measure headcount ratio which simply counts all the people below a poverty line, in a given population, and considers them equally poor.Poverty gap index estimates the depth of poverty by considering how far, on the average, the poor are from that poverty line.
The poverty gap index (PGI) is calculated as

Answer 2

The poverty gap is the average shortfall of the total population from the poverty line. This measurement is used to reflect the intensity of poverty. The poverty line used to measure this gap is the amount typical to the poorest countries in the world combined with the latest information on the cost of living in developing countries. The poverty line is indicated by the widely accepted international standard for extreme poverty.

The poverty gap indicator is produced by the World Bank Development Research Group. It measures poverty using information from household per capita income/consumption. The poverty gap data is available for 115 countries worldwide and is updated semiannually in April and September.

A higher poverty gap index means that poverty is more severe. The poverty gap index estimates the depth of poverty by considering how far, on the average, the poor are from that poverty line.