The importance of consecutive spells of poverty: a longitudinal poverty index

Abstract

Traditional measures of poverty persistence, such as ’poverty rate’ (i.e., the number of years spent in poverty upon the total number of observations) or the ’persistent-risk-of-poverty rate’, do not devote enough attention to the sequence of poverty spells. In particular, they are insufficient in underlining the different effects associated with occasional single spells of poverty and the consecutive years of poverty. Here, we propose a new index which measures the severity of poverty, taking into account the way poverty and non-poverty spells follow one another along individual life courses. The index is normalized and increases with the number of consecutive years in poverty along the sequence, while the index decreases when the distance between two years of poverty increases. All the years spent in poverty concur with the measurement of the persistency in poverty but with a decreasing contribution as long as the distance between two years of poverty become longer. A weighted version of the index is also proposed, explicitly taking the distance from the poverty line of poor people into account. Both the indexes are supported by a conceptual framework and characterised via properties and axioms. They are validated according to content, construct and criterion validity assessment and tested on a sample drawn from young European adults participating in European Community Households Panel survey.