A New Multiplicative Decomposition For The Foster-Greer-Thorbecke Poverty Indices

This paper identifies a multiplicative decomposition for the Foster-Greer-Thorbecke poverty indices as a product of the three components which should be involved in every poverty index: the incidence of poverty, measured by the headcount ratio, the intensity of poverty, measured by the aggregate income gap ratio and the inequality among the poor measured by an increasing transformation of the corresponding inequality index of the Generalized Entropy family. Then, taking data from the Spanish Household Budget Surveys (SHB) as a basis we show the advantages and possibilities of this framework in regard to completing and detailing information in studies of poverty over time.