Poverty Gap Index

The poverty gap index (PG Index) measures the average shortfall of families or individuals from the poverty line. More formerly, it is the average gap, over a population, between the poverty line and the income of poor families, expressed as a percentage of the poverty line.

Measures of poverty are critically important indicators of a society’s well-being and serve as a foundation for establishing public policy, allocating resources, and distributing social services. In the United States, the poverty line was originally formulated in the 1960s. The objective was to provide a criterion for determining the proportion and number of families in the country who were at risk of not meeting their basic consumption needs.

Over time, the poverty threshold also became widely used to formulate public policy, ...