Insights and inference for the proportion below the relative poverty line

Abstract

We examine a commonly used relative poverty measure H p , defined to be the proportion of incomes falling below the relative poverty line, which is defined to be a fraction p of the median income. We do this by considering this concept for theoretical income populations, and its potential for determining actual changes following transfer of incomes from the wealthy to those whose incomes fall below the relative poverty line. In the process we derive and evaluate the performance of large sample confidence intervals for H p . Finally, we illustrate the estimators on real income data sets.