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Estimating Utility-Consistent Poverty Lines with Applications to Egypt and Mozambique

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  • Channing Arndt
  • Kenneth R. Simler

Abstract

A fundamental premise of absolute poverty lines is that they represent the same level of utility through time and space. Disturbingly, a series of recent studies in middle- and low-income economies show that even carefully derived poverty lines rarely satisfy this premise. This article proposes an information-theoretic approach to estimating cost-of-basic-needs (CBN) poverty lines that are utility consistent. Applications to date illustrate that utility-consistent poverty measurements derived from the proposed approach and those derived from current CBN best practices often differ substantially, with the current approach tending to systematically overestimate (underestimate) poverty in urban (rural) zones. (c) 2010 by The University of Chicago. All rights reserved.

Suggested Citation

  • Channing Arndt & Kenneth R. Simler, 2010. "Estimating Utility-Consistent Poverty Lines with Applications to Egypt and Mozambique," Economic Development and Cultural Change, University of Chicago Press, vol. 58(3), pages 449-474, April.
    • Handle: RePEc:ucp:ecdecc:v:58:y:2010:i:3:p:449-474
    DOI: 10.1086/650413
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    1. Mukherjee, Sanjukta & Benson, Todd, 2003. "The Determinants of Poverty in Malawi, 1998," World Development, Elsevier, vol. 31(2), pages 339-358, February.
    2. Ravallion, Martin & Bidani, Benu, 1994. "How Robust Is a Poverty Profile?," The World Bank Economic Review, World Bank, vol. 8(1), pages 75-102, January.
    3. Golan, Amos & Judge, George G. & Miller, Douglas, 1996. "Maximum Entropy Econometrics," Staff General Research Papers Archive 1488, Iowa State University, Department of Economics.
    4. Ravallion, Martin & Sen, Binayak, 1996. "When Method Matters: Monitoring Poverty in Bangladesh," Economic Development and Cultural Change, University of Chicago Press, vol. 44(4), pages 761-792, July.
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    Cited by:

    1. Alfani, Federica & Azzarri, Carlo & d'Errico, Marco & Molini, Vasco, 2012. "Poverty in Mozambique : new evidence from recent household surveys," Policy Research Working Paper Series 6217, The World Bank.
    2. Anselmi, Laura & Lagarde, Mylène & Hanson, Kara, 2015. "Going beyond horizontal equity: An analysis of health expenditure allocation across geographic areas in Mozambique," Social Science & Medicine, Elsevier, vol. 130(C), pages 216-224.
    3. Shinkai, Naoko, 2016. "Examination of Poverty in Northern Mozambique: A Comparison of Social and Economic Dimensions," Working Papers 133, JICA Research Institute.
    4. Channing Arndt & Sam Jones & Vincenzo Salvucci, 2015. "When do relative prices matter for measuring income inequality? The case of food prices in Mozambique," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 13(3), pages 449-464, September.
    5. Channing Arndt & Kristi Mahrt & Finn Tarp, 2016. "Absolute poverty lines," WIDER Working Paper Series wp-2016-8, World Institute for Development Economic Research (UNU-WIDER).
    6. 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.
    7. Bjorn van Campenhout & Haruna Sekabira & Fiona Nattembo, 2015. "Uganda - A new set of utility consistent poverty lines," WIDER Working Paper Series wp-2015-129, World Institute for Development Economic Research (UNU-WIDER).
    8. Channing Arndt & Sam Jones & Vincenzo Salvucci, 2015. "When do relative prices matter for measuring income inequality? The case of food prices in Mozambique," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 13(3), pages 449-464, September.
    9. Channing Arndt & Kristi Mahrt & Finn Tarp, 2016. "Absolute poverty lines," WIDER Working Paper Series 008, World Institute for Development Economic Research (UNU-WIDER).
    10. Channing Arndt & Sam Jones & Kristi Mahrt & Vincenzo Salvucci & Finn Tarp, 2016. "A review of consumption poverty estimation for Mozambique," WIDER Working Paper Series wp-2016-35, World Institute for Development Economic Research (UNU-WIDER).
    11. Haruna Sekabira & Shamim Nalunga, 2020. "Farm Production Diversity: Is It Important for Dietary Diversity? Panel Data Evidence from Uganda," Sustainability, MDPI, vol. 12(3), pages 1-21, January.
    12. Bjorn van Campenhout & Haruna Sekabira & Dede H. Aduayom, 2014. "Consumption Bundle Aggregation in Poverty Measurement: Implications for Poverty and its Dynamics in Uganda," WIDER Working Paper Series wp-2014-150, World Institute for Development Economic Research (UNU-WIDER).
    13. Schmidt, Emily & Gilbert, Rachel & Holtemeyer, Brian & Mahrt, Kristi, 2020. "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(01), January.
    14. Channing Arndt & Sam Jones & Kristi Mahrt & Vincenzo Salvucci & Finn Tarp, 2016. "A review of consumption poverty estimation for Mozambique," WIDER Working Paper Series 035, World Institute for Development Economic Research (UNU-WIDER).
    15. 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).
    16. Laura Anselmi & Mylène Lagarde & Kara Hanson, 2015. "Health service availability and health seeking behaviour in resource poor settings: evidence from Mozambique," Health Economics Review, Springer, vol. 5(1), pages 1-13, December.
    17. Van Campenhout, Bjorn & Ssekabira, Haruna & Aduayom, Dede H., 2014. "Consumption bundle aggregation in poverty measurement: Implications for poverty and its dynamics in Uganda," WIDER Working Paper Series 150, World Institute for Development Economic Research (UNU-WIDER).
    18. van den Boom,Bart & Halsema,Alex & Molini,Vasco, 2015. "Are we confusing poverty with preferences ?," Policy Research Working Paper Series 7247, The World Bank.

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