The Importance of Household Size and Composition in Constructing Poverty Profiles: An Illustration from Vietnam

The calculation of income-poverty profiles should allow for household size and composition, but rarely does so. Failure to do this means that the poverty profile will be distorted. The appropriate adjustments are straightforward, requiring simple assumptions which, whilst arbitrary, are better than ignoring the problem. Not making these adjustments distorts not only the relationship between household size and poverty, but all aspects of the poverty profile correlated to household size. For the case of Vietnam, this article shows that, if the adjustments are not made, rural poverty is under-stated as is poverty amongst those with little education, minority ethnic groups and female-headed households. Far fewer children live in poverty than is suggested when the appropriate data adjustments are not made.