Iran Parliamentary Think Tank Draws Rural-Urban Poverty Lines

EghtesadOnline: The research arm of Iranian Parliament has determined the absolute poverty line in urban and rural areas of the country in its latest analytical study.

News ID: ۷۸۴۳۸۱

09 December 2018

An absolute poverty line is essential if one intends to judge the effect of poverty alleviation policies over time, or estimate the impact of a project (for example microcredit) on poverty, or identify “the poor” for a targeted food subsidy system.

The determination of poverty line depends in large measure on the intended use of the poverty rates, i.e. the ratio of the number of people whose income falls below the poverty line; taken as half the median household income of the total population, the Majlis Research Center's website reported.

The researchers of the parliamentary think tank employed the basic needs approach to calculate the poverty line in the fiscal 2016-17, according to Financial Tribune.

The basic needs approach is the most commonly used approach in setting the poverty line. It first estimates the cost of acquiring enough food for adequate nutrition—usually 2,100 calories per person per day—and then adds the cost of other essentials such as clothing and shelter.

When price information is unavailable, the food energy intake method can be used. This method measures per capita expenditure (or income) against food consumption (in calories per person per day) to determine the expenditure (or income) level at which a household acquires enough food.

The researchers constructed separate poverty lines for nine major regions of the country: four poverty lines for urban clusters and five for rural clusters.

The poverty line computed for urban areas of the exclusive cluster covering the capital city Tehran stands at around 7.7 million rials ($66.9) a month for each person, with a poverty rate of 11.9%.

It should be noted that thresholds vary by the number and age of adults and the number of children under age 18 in the family unit. The first adult coefficient, according to the standards of this study is at 1, the second adult at 0.7 and children at 0.5. For example, the poverty line calculated for a four-member household in Tehran county cluster is 20.79 million rials ($180.7) which is the result of multiplying 7.7 million rials by 2.7.

The second urban cluster includes the most populous urban areas of the country, referring to those with population above one million, namely Kermanshah, Tehran and Alborz provinces in addition to provincial capitals Mashhad, Shiraz, Kermanshah, Qom and Karaj. The monthly poverty level measured for the households in this cluster is around 5 million rials ($43.4) while the poverty rate is around 14.6%.

The poverty levels calculated for the remaining two urban clusters stand at around 3.6 million rials ($31.3) and 4.1 million rials ($35.6) and the poverty rates measured for them are 15.5% and 15.3%. The overall poverty rate of Iran's urban areas is 14.9%.

Poverty threshold calculated for the rural cluster, including those in the provinces of Sistan-Baluchestan, Ilam and Kohgilouyeh-Boyerahmad is set at 2 million rials ($17.3)—the lowest poverty level among rural clusters. The poverty rate measured for this cluster is at 13.5%. The cluster, including the rural areas of Tehran and Alborz, has a poverty line of 4.3 million rials ($37.3) and a poverty rate of 14.5%, suggesting that this cluster includes the highest percentage of poor households. The remaining three clusters have a poverty line between these two levels. The overall poverty rate in rural areas stands at 11.6%.

Official, Up-to-Date Data Remain Elusive in Iran

Prior to the release of the parliamentary report earlier this month, there was no official report to inform the people whether they are living above the poverty line with their current income or below it.

However, the information is not expected to offer much solace to those already bearing the burden of poverty.

The last official statistics on poverty dates back to 2007-8 when the poverty line stood at 6.5 million rials a month (about $55).

Nevertheless, the recent report is not considered official.

"The Ministry of Cooperatives, Labor and Social Welfare is the government body responsible for determining the poverty line in Iran," Omid Ali Parsa, the head of Statistical Center of Iran, said in March.

"It is beyond the purview of SCI to calculate the figures about the minimum level of income deemed adequate in the country."

A study published by the Institute for Management and Planning Studies supervised by chief economist, Masoud Nili, last year culled 975 figures as the poverty line from official and unofficial sources in 41 reports released by the Statistical Center of Iran and the Central Bank of Iran as well as independent research centers.

According to welfare economists, Majid Eynian and Davoud Souri, co-authors of the study, 12.31% of all Iranians are poor and a total of 10.61% of urban and 17.03% of rural households live in poverty.