Poverty Lines In Theory And Practice

A poverty line helps focus the attention of governments and civil society on the living conditions of the poor. This paper offers a critical overview of alternative approaches to setting poverty lines. In reviewing the methods found in practice, the paper tries to throw light on, and go some way toward resolving, ongoing debates about poverty measurement, emphasizing those debates which would appear to have greatest bearing on policy discussions.

This book is an introduction to the theory and practice of poverty measurement. On completing this book you will be able to perform sophisticated analyses of income or consumption distribution for any standard household dataset using the ADePT program (a free download from the World Bank s website).

A new and significant study in the field of community power, presenting a new approach to the analysis and correlates of power.

Although poverty lines are widely used as deflators for intergroup welfare comparisons, their internal consistency is rarely given close scrutiny. A priori considerations suggest that commonly used methods cannot be relied on to yield poverty lines that are consistent in terms of utility, or for capabilities more generally. The theory of revealed preference offers testable implications of utility consistency for "poverty baskets" under homogeneous preferences. A case study of Russia's official poverty lines reveals numerous violations of revealed preference criteria--violations that are not solely attributable to heterogeneity in preferences associated with climatic differences. This paper--a product of the Poverty Team, Development Research Group--is part of a larger effort in the group to improve poverty measurement methodology.

Abstract: The theory and evidence supporting a relativist approach to poverty measurement are critically reviewed. Various sources of welfare interdependence are identified, including the idea of "relative deprivation" as well other (positive and negative) welfare effects for poor people of belonging to a better-off group. An economic model combines informal risk sharing with the idea of a "positional good," and conditions are derived in which the relative deprivation effect dominates, implying a relative poverty measure. The paper then reviews the problems encountered in testing for welfare effects of relative deprivation and discusses the implications of micro evidence from Malawi. The results are consistent with the emphasis given to absolute level of living in development policy discussions. However, relative deprivation is still evident in the data from this poor but unequal country, and it is likely to become a more important factor as the country develops.

Issues concerning economic inequality and poverty have become increasingly central to public debate over the past fifty years. The literature on measuring economic inequality and poverty has vastly expanded, developing many new methods, but also has generated many controversies. Economic Inequality and Poverty provides a systematic treatment of the development of inequality and poverty, focusing on how income inequality and poverty measurements have evolved in recent decades, and shows how to resolve some of the methodological and factual conflicts that have arisen. The book's primary focus is on the analysis of the relationships between individuals' or households' distributions of economic variables. These relationships are crucial in understanding many economic phenomena. Kakwani and Son employ household surveys to illustrate the application of their framework, showing how it can help in drawing evidence-based policy conclusions.