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On Some Statistical Methods for Modelling the Incidence of Poverty
Author(s) -
Pudney Stephen
Publication year - 1999
Publication title -
oxford bulletin of economics and statistics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.131
H-Index - 73
eISSN - 1468-0084
pISSN - 0305-9049
DOI - 10.1111/1468-0084.00135
Subject(s) - econometrics , poverty , logit , probit model , probit , estimation , statistics , parametric statistics , series (stratigraphy) , mathematics , economics , economic growth , paleontology , management , biology
This paper analyzes a common method of estimating the pattern of individual characteristics associated with poverty – the logit/probit technique applied to a dummy variable identifying those individuals who are below a poverty line. We show that this procedure is seriously flawed by a fundamental logical difficulty and further statistical complications when the poverty line is estimated or when generalized poverty measures are used. An alternative approach is proposed, based on a semi‐parametric series expansion appproximation to the conditional income distribution. Estimation, testing and summary procedures are established and applied to Hungarian survey data.