Using asset index to reassess poverty in the Northern States of Malaysia: do the poor stay poor?

Abstract

Purpose

Currently, Malaysia uses the Poverty Line Income (PLI) to measure poverty. This is because income measurement is the easiest way to collect data, but in its simplicity, it fails to capture the broader meaning and implications of poverty. Asset index is one of the non-monetary poverty measurements which have been established by researchers but not used in measuring poverty in Malaysia. A household might be poor in income, but assets may prevent them from being trapped in poverty.

Design/methodology/approach

This study will reassess the poverty of 302 households in the Northern States of Malaysia using the asset index and also the current state of poverty incidence with change under asset index.

Findings

The results show that households in the Northern States of Malaysia are interpreted as being ‘poorer’ when poverty is measured using assets as opposed to income alone. Besides that, poverty incidence of Malay households, households living in urban area and households with middle-aged heads have high poverty incidence, while households with a head of households that is single and highly educated have low poverty incidence. The logistic regression analysis shows that the determinants of poverty incidence based on the asset index are Indian, Penang and Perak State, the age of the head of household, distance to the education centre from home.

Originality/value

This study shows the asset index measurement which have not been done in Malaysia. This will contribute to the improvement of poverty measurement of the country.

Citation

Mohamad Azhar, N.A.Z. and Mohd, S. (2020), "Using asset index to reassess poverty in the Northern States of Malaysia: do the poor stay poor?", International Journal of Social Economics, Vol. 47 No. 4, pp. 483-502. https://doi.org/10.1108/IJSE-03-2019-0187