A method of analysing subgroup poverty using a new decomposition of the Gini coefficient

Abstract

This paper analyses the properties of the Sen measure of poverty and then decomposes the measure by subgroups of population. It is shown that total poverty is the simple sum of the shares of all subgroups poverty or it is the weighted sum of within group poverty. The method is based on the disaggregation of the Gini coefficient among subgroups developed by Podder (1993) earlier. It is demonstrated that the decomposition satisfies the subgroup consistency in the sense that if poverty in a subgroup reduces by a certain degree, overall poverty must reduce by the same degree. The decomposition presented here is shown to be useful in answering important questions regarding the nature of poverty in a society. Thus, it extends the usefulness of the Sen measure in empirical research.