Spatial Dependence of Poverty Rate and Socio-Economic Indicators in Nigeria: An Empirical Analysis

Abstract

This study investigates the spatial dependence between the poverty rate and various socio-economic indicators in Nigeria. The analysis is based on a dataset comprising unique geographic identifiers and the poverty rate along with other relevant variables. Descriptive statistics reveal that the poverty rate exhibits moderate variability with an average of 4.1240. The correlation analysis shows significant relationships between the poverty rate and household size as well as income level, indicating that larger households and higher incomes are associated with higher and lower poverty rates, respectively. Spatial regression models, including Spatial Autoregressive (SAR), Spatial Error (SEM), Spatial Durbin (SDM), and Spatial Autoregressive Conditional (SAC) models, are employed to explore the spatial dependence. Results indicate the presence of spatial clustering and positive autocorrelation in the poverty rate, as indicated by the Moran's I index with a value of 0.3579 (p-value = 0.0012). However, tests for spatial heteroscedasticity do not reveal significant departures from the assumption of constant error variance. The findings suggest that spatial factors play a crucial role in explaining the poverty rate in Nigeria. The positive spatial autocorrelation indicates the presence of localized poverty clusters, emphasizing the importance of considering spatial effects in policy formulation and targeted interventions. The significant relationships between the poverty rate and household size and income level underscore the need for comprehensive strategies to address these socio-economic indicators for poverty reduction.