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Testing Poverty Lines

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  • Martin Ravallion
  • Michael Lokshin

Abstract

In theory, a poverty line can be defined as the cost of a common (inter‐personally comparable) utility level across a population. But how can one know if this holds in practice? For groups sharing common consumption needs but facing different prices, the theory of revealed preference can be used to derive testable implications of utility consistency knowing only the “poverty bundles” and their prices. Heterogeneity in needs calls for extra information. We argue that subjective welfare data offer a credible means of testing utility consistency across different needs groups. A case study of Russia's official poverty lines shows how revealed preference tests can be used in conjunction with qualitative information on needs heterogeneity. The results lead us to question the utility consistency of Russia's official poverty lines.

Suggested Citation

  • Martin Ravallion & Michael Lokshin, 2006. "Testing Poverty Lines," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 52(3), pages 399-421, September.
    • Handle: RePEc:bla:revinw:v:52:y:2006:i:3:p:399-421
    DOI: 10.1111/j.1475-4991.2006.00196.x
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    Citations

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    Cited by:

    1. Hina Nazli & Edward Whitney & Kristi Mahrt, 2015. "Poverty trends in Pakistan," WIDER Working Paper Series 136, World Institute for Development Economic Research (UNU-WIDER).
    2. Emily Schmidt & Rachel Gilbert & Brian Holtemeyer & Kristi Mahrt, 2021. "Poverty analysis in the lowlands of Papua New Guinea underscores climate vulnerability and need for income flexibility," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(1), pages 171-191, January.
    3. Ravallion, Martin & Lokshin, Michael, 2010. "Who cares about relative deprivation?," Journal of Economic Behavior & Organization, Elsevier, vol. 73(2), pages 171-185, February.
    4. Daniel Gottlieb & Alexander Fruman, 2011. "A quality-index of poverty measures," Working Papers 239, ECINEQ, Society for the Study of Economic Inequality.
    5. Cojocaru, Alexandru & Diagne, Mame Fatou, 2013. "How reliable and consistent are subjective measures of welfare in Europe and Central Asia ? evidence from the second life in transition survey," Policy Research Working Paper Series 6359, The World Bank.
    6. Pape, Utz & Verme, Paolo, 2023. "Measuring Poverty in Forced Displacement Contexts," GLO Discussion Paper Series 1245, Global Labor Organization (GLO).
    7. Kseniya Abanokova & Hai-Anh H. Dang, 2023. "Poverty in Russia: a bird’s-eye view of trends and dynamics in the past quarter of a century," Chapters, in: Jacques Silber (ed.), Research Handbook on Measuring Poverty and Deprivation, chapter 58, pages 627-635, Edward Elgar Publishing.
    8. Beneberu Assefa Wondimagegnhu & Beyadegie Wubie Worku & Amelmal Afework Tamene & Almaz Giziew Adugna, 2022. ""Struggling to Keep the Wolf from the Door"? Analysis of Rural Poverty Using a Consumption-Based Approach in West Belesa District, Ethiopia," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 159(1), pages 319-350, January.
    9. Wim Marivoet & Tom De Herdt, 2015. "Poverty Lines as Context Deflators: A Method to Account for Regional Diversity with Application to the Democratic Republic of Congo," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(2), pages 329-352, June.
    10. Channing Arndt & Kenneth R. Simler, 2007. "Consistent poverty comparisons and inference," Agricultural Economics, International Association of Agricultural Economists, vol. 37(2‐3), pages 133-139, September.
    11. World Bank, 2010. "The Invisible Poor : A Portrait of Rural Poverty in Argentina," World Bank Publications - Books, The World Bank Group, number 2436.
    12. Julia Johannsen & Manfred Zeller & Stephan Klasen, 2007. "The capability dilemma in operational poverty assessment," Ibero America Institute for Econ. Research (IAI) Discussion Papers 159, Ibero-America Institute for Economic Research.
    13. Shireen Kanji, 2011. "Labor Force Participation, Regional Location, and Economic Well-Being of Single Mothers in Russia," Journal of Family and Economic Issues, Springer, vol. 32(1), pages 62-72, March.
    14. Bjorn Van Campenhout & Haruna Sekabira & Fiona Nattembo, 2015. "Uganda - A new set of utility consistent poverty line," WIDER Working Paper Series 129, World Institute for Development Economic Research (UNU-WIDER).
    15. Antonio M. Salcedo & Gregorio Izquierdo Llanes, 2020. "Refining the Monetary Poverty Indicators Under a Join Income-Consumption Statistical Approach: An Application to Spain Based on Empirical Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 147(2), pages 501-516, January.
    16. van den Boom,Bart & Halsema,Alex & Molini,Vasco, 2015. "Are we confusing poverty with preferences ?," Policy Research Working Paper Series 7247, The World Bank.
    17. Channing Arndt & Kristi Mahrt & Finn Tarp, 2016. "Absolute poverty lines," WIDER Working Paper Series 008, World Institute for Development Economic Research (UNU-WIDER).

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