Volume 6, Issue 24 (4-2007)                   refahj 2007, 6(24): 177-190 | Back to browse issues page

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Bagheri F, Kavand H. (2007). Affluence Line Estimation for Iranian Households. refahj. 6(24), 177-190.
URL: http://refahj.uswr.ac.ir/article-1-2131-en.html
Abstract:   (4204 Views)

Objectives: The paper proposes a simple methodology to estimate an affluence line for Iran. There is a reasonable volume of studies about poor and their characteristics, but little is known about rich. In this regard, one can refer to Marcelo Medeiors who estimated an affluence line for the Brazil in l999, utilizing the data from the household expenditure and income survey. The idea that poverty is morally unacceptable and can be eradicated through redistribution of wealth provides the grounds for the methodology. Therefore the line is defined as the value that delimitates the aggregated income required to eradicate poverty by the way of transfers from the rich to the poor. Nonetheless, income transfer to the poor are not a permanent solution to the problem of poverty. A real policy has to take many other aspects of the dynamics of an economy into the consideration. Rather, the affluence line methodology aims at defining a statistical tool to allow studies that can contribute to more effective design of redistributionist measures. This kind of line requires the construction of a redistribution rule. To do this, first, one has to presume that, for all individual, the well-being resulted from the addition of an extra amount of any resources decreases as the owned amount of this resource increases. Since it is for poor individual, the transfer an additional income unit is able to provide a higher well-being than it would for rich individual. As a result of this, it is determined that the transfers for the elimination of poverty should occur from the richest individual to the poorest one. Method: The input from Statistical Center of Iran Rural and Urban household expenditure and income survey, provide necessary data for various studies in measuring both poverty and affluence line. This study also takes advantages of raw data from the same project. The period under the study in this paper, covers the years between 1380 and 1383. The poverty line in this study is absolute, based on the 2300 calories, which has been calculated and applied using data on Household expenditure and income survey. To calculate the affluence line, the data on household total expenditure1 have been used. Since the mentioned statistical data is for the household, so for estimating the affluence line for the household members, provided that all the household members enjoy the same level of welfare, the household total expenditure, divided on its members, will be per head and then the related calculation in following four phase have been accomplished: a) Measuring poverty gap (Gp) b) Measuring wealth differences for each of the population members c) Determining the number of affluent people in the population d) Measuring the affluence line (Zr) Findings & Results: Based on the results, in the 1383 on urban areas the affluence line for each individual by month has been about 816 thousand Tomans and the absolute poverty line (2300 calories) about 39 thousand Tomans, and on the rural areas the affluence line for each individual by month has been about 485 thousand Tomans and absolute poverty line (2300 calories) about 19 thousand Tomans, which shows the wide gap between the earning of poor and affluent people. Outcomes based on the calculation of affluence line shows that the number of affluent people (needed for compensation of people below poverty line) in rural areas from 87 thousand in 1380 has been reached to 49 thousand in 1383, while the number of poor people in this period has been reduced. On the contrary, on the urban areas the number of affluent people from 79 thousand has been reached to 173 thousand. The figures illustrate that during the period the poverty alleviation policies have been more effective in rural areas than that of urban. The trend of reducing the poverty rate attesting the very matter, that is to say in rural areas the poverty rate in 1380 has been reduced from 11.5 % to 8.6 % in 1383, while in urban areas it increases from 10% to 12.4%.

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Type of Study: orginal |
Received: 2015/09/11 | Accepted: 2015/09/11 | Published: 2015/09/11

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