Headcount Index

The headcount index is the proportion of a country’s population living below the official poverty line. It is commonly referred to as the poverty rate. It is the simplest and most widely used measure of poverty. It is found by taking the total number of people living below the poverty line and dividing it by the total population. For example, if a region has a total of 600 people and 90 live in poverty, then the headcount index would show a 15 percent poverty rate. Although the appeal of the headcount index is its simplicity, weaknesses in the measurement limit its usefulness in practice. Most of these weaknesses can be attributed to the index’s categorical treatment of those living in poverty. The index counts all ...