A new multiplicative decomposition for the Foster-Greer-Thorbecke poverty indices

This paper explores a unified framework for the study of changes in poverty over time as measured by the Foster-Greer-Thorbecke poverty indices. First we identify a multiplicative decomposition for the indices of this family as a product of the three components which should be involved in every poverty index: the incidence, the intensity and the inequality in the distribution of the income of the poor. Then we establish a connection between this procedure and the methodology developed by Nanak Kakwani (2000) to decompose the change in poverty into the growth and inequality effects. Finally, taking the Spanish Household Budget Surveys (SHB) for 1973/74, 1980/81 and 1990/91 as a basis we show the advantages and possibilities of this framework in regard to completing and detailing information in studies of poverty over time.