Physics – Physics and Society
Scientific paper
2005-07-06
Physics
Physics and Society
13 pages in single spaced latex, 4 figures, submitted to 'Econometrica'
Scientific paper
With a new deprivation (or poverty) function, in this paper, we theoretically study the changes in poverty with respect to the `global' mean and variance of the income distribution using Indian survey data. We show that when the income obeys a log-normal distribution, a rising mean income generally indicates a reduction in poverty while an increase in the variance of the income distribution increases poverty. This altruistic view for a developing economy, however, is not tenable anymore once the poverty index is found to follow a pareto distribution. Here although a rising mean income indicates a reduction in poverty, due to the presence of an inflexion point in the poverty function, there is a critical value of the variance below which poverty decreases with increasing variance while beyond this value, poverty undergoes a steep increase followed by a decrease with respect to higher variance. Following these results, we make quantitative predictions to correlate a developing with a developed economy.
Chattopadhyay Amit K.
Mallick Sushanta K.
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