Giovanni Marano, Gianni Betti, Francesca Gagliardi
DEPS, University of Siena
Abstract
The traditional approach to poverty measurement utilises only monetary variables as indicators of individuals’ intensity of the state of deprivation, causing measurement errors of the phenomenon under investigation. Moreover, when adopted in a longitudinal context, this approach tends to overestimate transition poverty. Since poverty is not directly observable, a latent definition can be adopted: in such a conception is possible to use Markov chain models in their latent acceptation. This paper proposes to use Latent class Markov models which allow taking into account more observed (manifest) variables. We define those variables via monetary and non-monetary fuzzy indicators.
Keywords
Poverty dynamics, Measurement errors, LCMM
JEL Codes
I32, C13
