Poverty Measurement: An Index Related to a Theil Measure of Inequality.

A major problem that arises in measuring poverty is the adequate expression, in a poverty index, of the information from the incomes of individuals below the poverty line. This article evaluates several poverty indexes on the basis of their ability to satisfy five properties desirable for a poverty index. The only index that satisfies all five properties is one related to a Theil measure of inequality. Simulations show that this index and an index related to the coefficient of variation provide appropriate ranks for the desirability of various algorithms for transferring income to the poor.