Probability Model for Poverty Index

Abstract

The Lorenz curve and Gini-concentration co-efficient were used to describe the income inequality of families in the selected village, and the incidence of poverty assessed in Poverty Gap (PG) proposed by Foster-Greer-Thorbecke (FGT) was employed as a poverty indicator. The paper is an attempt to study and examine the problem of poverty and the incidence of income inequality in the study area of Thanga Karang. The paper also aims at analyzing the mode of income distribution among the households of the study area. Thanga Karang, a village of 257 households, is regarded to be selected village. To gather information about poverty, a household survey was conducted. A statistical analysis of PG is performed, and parameters and are fitted to the beta distribution using the method of moments and the maximum likelihood approach. The statistically significant values of \(\alpha\) and \(\beta\) are respectively \(\hat{\alpha}\) = 0.2989 and \(\hat{\beta}\) = 3.4722 by method of moments; \(\hat{\alpha}\) = 1.459 and \(\hat{\beta}\) = 3.001 by method of maximum likelihood. As a result, the PG, a poverty index, best fits the assumed model (i.e. Beta distribution). The Gini concentration co-efficient is 0.5253, according to the research. It suggests that income inequality among the household is observed in 52.53 percentages.