Are Monetary Measures and Direct Measures of Poverty Substitutable? An Analysis Based on the ROC Curve
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2009
- handle: 10670/1.0gaegd
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Alessio Fusco, « Are Monetary Measures and Direct Measures of Poverty Substitutable? An Analysis Based on the ROC Curve », Recherches économiques de Louvain, ID : 10670/1.0gaegd
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This paper questions the practical usefulness of monetary approaches to poverty through an analysis of the overlap between direct and monetary measures of poverty. In contrast to the usual approach, our use of the Receiver Operating Characteristic Curve (ROC) enables us to assess the degree of overlap independently of the deprivation threshold used. Applying this method to data from the European Community Household Panel confirms findings from numerous other researches, that is to say, results from both methods do overlap but imperfectly. Therefore, these methods are complementary rather than substitutable. Therefore, this conclusion calls for further research into direct measures of poverty, so that these can better complement the widely used monetary measures.