Fuzzy Index Poverty (FIP): Measuring poverty in rural area of Terengganu

Abstract

Previously, several attempts have been made to find a suitable way of measuring poverty. The current practice in measuring poverty is based on assumption that the poor can be identified by determining a poverty line. As pointed out by Cerioli and Zani (1990) and by Cheli et al. (1994), among others, the problem is due to the fact that a sharp division of the total population between poor and non-poor is unrealistic. The traditional approaches usually assess the poverty status of an individual based solely on a unique indicator of such income or expenditure. Thus there is a need for an efficient poverty measures to be developed. Due to the weaknesses of traditional poverty measurement, the research introduces a composite of multidimensional poverty indicators. Data collected from the questionnaire on Household Income Survey/ Basic Amenities (HIS/ BA) year 2004 and 2007 which was conducted by the Department of Statistics Malaysia, Terengganu (DOS) were used. Fuzzy set was used to calculate poverty index to assess the living condition of households in rural areas of Terengganu. The results show that the use of Fuzzy Index Poverty on several poverty indicators provides a more complete picture of poverty than the traditional approach that use common indicators such as disposable income or expenditure.