You will set a poverty line based on expenditure required to consume 2,200 calories per day. The poverty line information is as follows, in grams per person per day:
Food Grams per person, per day cereals 397 pulses 40 milk 58 oil 20 meat 12 fish 48 potatoes 27 vegetables 150 sugar 20 fruit 20 * In principle this diet yields 2,200 Calories per person per day.
Using the dataset “prices2012.dta” which has village level data on food prices
1. Calculate the annual poverty line based on food consumption (be careful about days, weeks, year and also about kg and gram) 2. Calculate the total poverty line which is the food poverty line plus 20% for essential nonfood expenditure. 3. Provide a descriptive analysis of the cost of reaching the poverty line, where it is highest and why (which components) 4. Save your new .dta file under a different name (e.g. prices2012_cp.dta) 5. Repeat the exercise “using prices2005.dta” 6. Merge your two files together to create a joint dataset
ii. Poverty measurement exercise
Using the price data you have created
1. Merge with the consumption files (consumption2005 and consumption2012) 2. Calculate the number of households that are below the poverty line in both years 3. Has poverty changed over time? 4. Discuss whether larger households are poorer 5. Would this change if we take into account household composition do you think? Discuss.
Answers
Answer:
☬Hey Dude☬
A common method used to measure poverty is based on income or consumption levels. A person is considered poor if his or her income or consumption level falls below a given minimum level necessary to fulfill basic needs. (a) While determining the poverty line in India, a minimum level of food requirement, clothing, footwear, fuel and light educational and medical requirement etc are determined for subsistence. These physical quantities are multiplied by their price in rupees. (b) The present formula for food requirement while estimating the poverty line is based on the desired calorie requirement. (c) Food items such a cereals, pulses, vegetables, milk, oil, sugar etc together provide these needed calories. The need of calories depends on age and the work done by a person. (d) The accepted average calorie requirement in India is 2400 calories per person per day in rural areas and 2100 calories per person per day in urban areas. (e) The calorie requirement of the people in rural areas is higher than that of the people living in urban areas because they do more physical work as compared to urban people. (f) On the basis of these calculations for the year 2000, the poverty line for a person was fixed at ` 328 per month for the rural areas and ` 454 for the urban areas. (g) Despite less calorie requirement the higher amount for urban areas is because of the high prices of many essential products in urban centers.