Statistical Analysis of Census and Survey Data using Stata University of Cape Coast July 2011

Transcription

1 Statistical Analysis of Census and Survey Data using Stata University of Cape Coast July 2011

2 INEQUALITY, POVERTY MEASUREMENT WITH DASP AND STATA (See the do file inequality_poverty) OBJECTIVES: This morning we will learn to: Prepare our data to assess changes in Ghanaian wellbeing measured in income Generate Lorenz Curves (For inequality comparisons) Calculate Gini Coefficients (As one measure of inequality) Generate Cumulative Distribution Functions (For poverty comparisons) Calculate Headcount ratios (As one measure of poverty)

3 Getting the income data into shape Make sure your measure of wellbeing is as good as it can be (welfare) The issue of deflators is key here. Make sure all years are comparable in real units Make sure that household size is take care of

4 Using DASP We have set this up for you If you cannot see DASP as an option under User Enter: _daspmenu in the command line You can download DASP into Stata on your computer in the office from: DASP user manual in your folder Also the text book by Duclos and Araar

5 A kernel density plot With DASP *DASP/distributive tools/density curves (Page 44) cdensity rwelfare, hgroup(roundnew) min(0) max( ) Fiddle with the Minimums and the Maximums cdensity lnrwelfare, hgroup(wave) min(0) max(30)

6 INEQUALITY

7 Cumulative pct. of income 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Understanding a Lorenz Curve Lorenz Curve P 0% 25% 50% 75% 100% Cumulative pct. of population Q Line of equality Y1

8 Cumulative pct. of income Lorenz Dominance 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Lorenz Curve 0% 25% 50% 75% 100% Cumulative pct. of population Line of equality Y1 Y2 The Lorenz curve for Y2 is everywhere above the line for Y1. We say that Y2 Lorenz dominates Y1. Y2 would be more equal than Y1 by any good measure of inequality.

9 Cumulative pct. of income Intersecting Lorenz Curves 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Lorenz Curve 0% 25% 50% 75% 100% Cumulative pct. of population Line of equality Y1 Y2 Y3 The Lorenz curve for Y3 intersects the Lorenz curve for Y1. Inequality is worse at the bottom, but better at the top. The inequality ranking is ambiguous. In this case we can always find some inequality measure that ranks Y1 above Y3, and some measure that ranks Y3 above Y1.

10 LORENZ PLOTS and INEQUALITY DOMINANCE (Page 43 and 44) dasp/curves/lorenz with group variable==roundnew clorenz rwelfare, hgroup(roundnew)

11 Cumulative pct. of income Definition of Gini coefficient in terms of Lorenz curve 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Lorenz Curve P 0% 25% 50% 75% 100% Cumulative pct. of population Q Line of equality Y1 G=P/(P+Q) Note that G=0 if perfect equality; G=1 for maximum inequality (one person gets all income)

12 MEASURING INEQUALITY Using Inequality Indices (Pages 23, 24, 25) DASP/inequality/Gini igini rwelfare, hgroup(roundnew)

13 POVERTY

14 Cumulative percent Cumulative Distribution Function Cum ulative Distribution Function Incom e

15 Cumulative percent CDF gives us a very general way to compare distributions Cumulative Distribution Function Income CDF-Y1 CDF-Y2

16 Cumulative percent Add a poverty line at 15 Cumulative Distribution Function Income CDF-Y1 CDF-Y2 Poverty line

17 Cumulative percent What percentage is in poverty? Cumulative Distribution Function Income CDF-Y1 CDF-Y2 Poverty line Y1 has 60% in poverty Y2 has 70% in poverty What if we used a different poverty line? This graph shows poverty dominance Y1 would have lower poverty for any poverty line

18 Cumulative percent What if CDFs intersect? Cumulative Distributive Function CDF-Y1 CDF-Y2 Poverty line Y1 has lower poverty if the poverty line is <25. Y2 has lower poverty if the poverty line is >25. This is similar to intersecting Lorenz curves. Which population has lower poverty depends on the poverty line. Y1 has lower poverty at the bottom of the distribution, so if we are mostly concerned about extreme poverty then we may prefer Y1 to Y2. Income

19 POVERTY CDF PLOTS and POVERTY DOMINANCE DASP/Curves/FGT (Page 42) Set maximum at cfgt rwelfare, alpha(0) hgroup(n) min(0) max( )

20 MEASURING POVERTY USING FGT INDICES (Page 13) DASP/poverty/FGT Note you have to specify a group variable and alpha and a poverty line For a headcount ratio alpha=0 There are two poverty lines in Ghana: Extremely Poor: cedis Poor: cedis ifgt rwelfare, alpha(0) hgroup(roundnew) pline(288470)

21 Assignment Find the Gini coefficients for each region for round 4 and for round 5 and copy this information into a table in Excel. Then copy this table into Word and write a paragraph in which you describe the key findings.