Multidimensional Decomposition of the Sen Index: Some Further Thoughts

Given the multiplicative decomposition of the Sen index into three commonly used poverty statistics – the poverty rate (poverty incidence), poverty gap ratio (poverty depth) and 1 plus the Gini index of poverty gap ratios of the poor (inequality of poverty) – the index becomes much easier to use and to interpret for economists, policy analysts and decision makers. Based on the recent findings on simultaneous subgroup and source decomposition of the Gini index, we examine possible further decompositions of the Sen index and its components for policy analysis.