Measurement of Health, Human Capital, and Economic Welfare at The Poverty Level Influences using Heuristic Network Approach

Abstract

Poverty alleviation is still a major problem for many international and developing countries. In a weak economic situation, low-income households are very vulnerable to poverty. Therefore, the study of poverty is very important for various economic development plans. Analysis of various social aspects can conclude that poverty can be a function of the diminished ability of a person to live the type of life they choose. This study chooses aspects of health, human capital, and economic well-being as latent variables which are assumed to influence poverty. The relationship between variables modeled by the structure equation through the heuristic network. The purpose of this study is to evaluate the effect of all latent variables (also called independent variables) on poverty. This evaluation is carried out on all the final coefficients of the trained network. The results of the study have shown that the heuristic network significant enough to be used as a representation of the structural equation model. It has proven by MAPE of small enough. The results of this study also have shown that all independent variables did not interdependent. Indicator variables of health did not give any influence on poverty. This concluded that only indicator variables of human capital and economic well-being influence poverty. The results of this study have also shown that only food consumption (as one of indicator variable of economic well-being) which have a negative influence on poverty.