Poverty Measurement and Choice of Poverty Reduction Strategy: The Importance of Poverty Measurement in Determining the Right Strategy

Abstract

This study aimed at testing the poverty measurement and the choice of poverty reduction strategy by using the data in four regencies and one municipal in Special Province of Yogyakarta (Indonesia). The study observed the number of poor people in those regions for eight-year periods (2001-2008) after the Law of Local Government Autonomy was in force in 2000. By using averagely 140 observations for each regency and municipal and employing ANOVA 2-Ways Analysis, the empirical results surprisingly revealed that only one regency and municipal produced nearly correct measurement on poverty. As to inter-temporal comparisons of the poverty number for each region, the statistical testing validated the inconsistency of poverty measure used. It gave evidence that the choice of poverty lines and poverty measures was a product of local government’s arbitrary decision, and of course, based on the finding; it called for robustness analysis of the poverty measurement used by the local government. To this respect, the choice of poverty reduction strategy should be seen as the free-vested interest decision in determining the poverty measurement. It needs a customization strategy based on the measure taken.