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Eating Like Which "Joneses?" An Iterative Solution to the Choice of a Poverty Line "Reference Group."

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  • Pradhan, Menno, et al

Abstract

A standard method for calculating poverty lines (e.g. Ravallion, 1994) is not fully specified. The choice of the "reference population" for determining food baskets is left to the decision of the individual analyst. However, the poverty line can be quite sensitive to the real income of the reference group because the "quality" of the food basket--measured as the food expenditures per calorie--rises sharply with income. We propose that the reference group be centered on the poverty line. To address the obvious circularity problem in choosing a reference population at the poverty line to define the poverty line, we use an iterative approach. This iterative method provides a methodological anchor that fixes the reference group. Copyright 2001 by The International Association for Research in Income and Wealth.

Suggested Citation

  • Pradhan, Menno, et al, 2001. "Eating Like Which "Joneses?" An Iterative Solution to the Choice of a Poverty Line "Reference Group."," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(4), pages 473-487, December.
    • Handle: RePEc:bla:revinw:v:47:y:2001:i:4:p:473-87
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    Cited by:

    1. Adama BAH, 2013. "Estimating Vulnerability to Poverty using Panel data: Evidence from Indonesia," Working Papers 201325, CERDI.
    2. Asep Suryahadi & Wenefrida Widyanti & Sudarno Sumarto, 2003. "Short-term poverty dynamics in rural Indonesia during the economic crisis," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(2), pages 133-144.
    3. Andy Sumner & Peter Edward, 2013. "From Low Income, High Poverty to High-Income, No Poverty? An Optimistic View of the Long-Run Evolution of Poverty in Indonesia By International Poverty Lines, 1984–2030," Working Papers in Economics and Development Studies (WoPEDS) 201310, Department of Economics, Padjadjaran University, revised Jun 2013.
    4. Jing Dai & Stefan Sperlich & Walter Zucchini, 2011. "Estimating and Predicting Household Expenditures and Income Distributions," MAGKS Papers on Economics 201147, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    5. World Bank, 2010. "Paraguay Poverty Assessment : Determinants and Challenges for Poverty Reduction [Paraguay - Estudio de pobreza : determinantes y desafíos para la reduccion de la pobreza]," World Bank Publications - Reports 12585, The World Bank Group.
    6. Adama BAH, 2013. "Finding the Best Indicators to Identify the Poor," Working Papers 201324, CERDI.
    7. Andy Sumner, 2013. "The Evolution Of Education And Health Poverty During Economic Development:The Case Of Indonesia, 1991–2007," Working Papers in Economics and Development Studies (WoPEDS) 201311, Department of Economics, Padjadjaran University, revised May 2013.
    8. Sudarno Sumarto & Daniel Suryadarma & Asep Suryahadi, 2007. "Predicting Consumption Poverty using Non-Consumption Indicators: Experiments using Indonesian Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 81(3), pages 543-578, May.
    9. Daniel Suryadarma & Rima Prama Artha & Asep Suryahadi & Sudarno Sumarto, "undated". "A Reassessment of Inequality and Its Role in Poverty Reduction in Indonesia," Working Papers 364, Publications Department.
    10. Thaiyoong Penny Mok & Gillis Maclean & Paul Dalziel, 2013. "Alternative Poverty Lines for Malaysia," Asian Economic Journal, East Asian Economic Association, vol. 27(1), pages 85-104, March.
    11. Wenefrida Dwi Widyanti & Asep Suryahadi & Sudarno Sumarto & Athia Yumna, "undated". "The Relationship between Chronic Poverty and Household Dynamics: Evidence from Indonesia," Working Papers 339, Publications Department.
    12. Muhammad Nashihin, 2009. "An examination of methods to estimate poverty line in Indonesia," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 1(3), pages 161-175, April.
    13. Krisztina Kis-Katos & Robert Sparrow, 2011. "Child Labor and Trade Liberalization in Indonesia," Journal of Human Resources, University of Wisconsin Press, vol. 46(4), pages 722-749.
    14. Andrew Grodner & Thomas J. Kniesner, 2008. "Labor supply with social interactions: econometric estimates and their tax policy implications," Research in Labor Economics, in: Work, Earnings and Other Aspects of the Employment Relation, pages 1-23, Emerald Group Publishing Limited.
    15. Thomas Otter, 2009. "Micro Level Estimation of Income - Simulated welfare mapping (poverty maps) for Paraguay 1992 and 2002," Ibero America Institute for Econ. Research (IAI) Discussion Papers 187, Ibero-America Institute for Economic Research.
    16. Suryahadi, Asep & Suryadarma, Daniel & Sumarto, Sudarno, 2009. "The effects of location and sectoral components of economic growth on poverty: Evidence from Indonesia," Journal of Development Economics, Elsevier, vol. 89(1), pages 109-117, May.

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