What is Sen Poverty Index (SPI) | UPSC Economy notes

Sen Poverty Index (SPI) Step 1: The problem with normal poverty measures Headcount Ratio (HCR): tells us how many people are poor. 👉 Example: 40 out of 100 people are poor → HCR = 40%. But this ignores how poor they are and differences among poor people . Step 2: What Sen did Amartya Sen said: “We should not just count poor people, but also see how much below the poverty line they are , and whether all poor are equally poor or some are much worse off .” So, his index adds 3 things together: How many are poor (Headcount). How poor they are on average (Poverty Gap). Inequality among the poor (some poor are closer to PL, others are far below). Step 3: Simple example Suppose Poverty Line = ₹1,000 per month. Case A: Poor people’s incomes = ₹900, ₹850, ₹870. All are just below PL . Inequality among poor is low. 👉 Poverty is not very deep. Case B: Poor people’s incomes = ₹900, ₹500, ₹300. Some are very far below PL . Inequality among poor is high. 👉 Poverty is much worse. ⚡ Headcount (HCR) is the same in both case…