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Abstract
This paper tests the sensitivity of poverty indexes to the choice of adult equivalence
scales, assumptions about the existence of economies of scale in consumption, methods
for treating missing and zero incomes, and different adjustments to handle income miss
reporting. We also perform sensitivity analysis to the use of different poverty lines and
poverty indexes, which are issues that have been much more explored in the literature.
The sensitivity analysis is applied to household survey data from 17 Latin American
countries, which include 92% of the population in the region. By varying these
parameters within reasonable boundaries, we find that the proportion of poor could be
said to be either 12.7 percent or 65.8 percent of the total population. Additionally, the
ranking of counties with respect to poverty is also highly sensitive. This points to the
need of justifying and being explicit about the underlying choices and definitions behind
poverty statistics, and to the need of performing sensitivity analysis illustrating the menu
of options that can answer the question of how much poverty there is.