Economics 1st Edition by Dean Karlan,Jonathan Morduch

Exercise 9

Poverty in Decilia is measured relatively, with people in the bottom 10 percent of the income distribution being defined as poor. Suppose a politician in Decilia promises to halve the poverty rate in five years. Explain why this could never be achieved given the poverty statistic Decilia uses. Propose an alternative measure of poverty that would allow the politician to achieve that goal.