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Poverty measurement (in India) : defining group-specific poverty lines or taking preferences into account?
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Dimri, Aditi and Maniquet, Francois (2017) Poverty measurement (in India) : defining group-specific poverty lines or taking preferences into account? Working Paper. Coventry: University of Warwick. Department of Economics. Warwick economics research papers series (WERPS), 2017 (1143). (Unpublished)
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Official URL: https://warwick.ac.uk/fac/soc/economics/research/w...
Abstract
We study absolute income poverty measurement when agents differ in preferences and face different prices. The difficulty arising from price heterogeneity is typically solved using equivalent income, but the choice of the reference price vector remains arbitrary. We provide a way to solve this arbitrariness problem by making the poverty measure consistent with preferences: an agent qualifies as poor if and only if she prefers the poverty line bundle to her current consumption bundle.
We then prove that defining group/region specific poverty lines is another way of recovering consistency with preferences, provided one uses the headcount ratio. Comparing the resulting three approaches using Indian data, we find that the different approaches leads to different poverty conclusions. We show that not taking preferences into account leads to severely underestimating urban poverty.
| Item Type: | Working or Discussion Paper (Working Paper) | ||||||
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| Subjects: | H Social Sciences > HC Economic History and Conditions | ||||||
| Divisions: | Faculty of Social Sciences > Economics | ||||||
| Library of Congress Subject Headings (LCSH): | Poverty -- Mathematical models -- India | ||||||
| Series Name: | Warwick economics research papers series (WERPS) | ||||||
| Publisher: | University of Warwick. Department of Economics | ||||||
| Place of Publication: | Coventry | ||||||
| ISSN: | 0083-7350 | ||||||
| Official Date: | 2017 | ||||||
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| Volume: | 2017 | ||||||
| Number: | 1143 | ||||||
| Institution: | University of Warwick | ||||||
| Status: | Not Peer Reviewed | ||||||
| Publication Status: | Unpublished | ||||||
| Access rights to Published version: | Open Access | ||||||
| RIOXX Funder/Project Grant: |
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| Version or Related Resource: | This paper also appears as CAGE Discussion Paper No: 352 |
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