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Reference Groups and the Poverty Line: An Axiomatic Approach with an Empirical Illustration

In: Poverty, Social Exclusion and Stochastic Dominance

Author

Listed:
  • Satya R. Chakravarty

    (Indian Statistical Institute)

  • Nachiketa Chattopadhyay

    (Indian Statistical Institute)

  • Joseph Deutsh

    (Bar-Ilan University)

  • Zoya Nissanov

    (Ariel University)

  • Jacques Silber

    (Bar-Ilan University)

Abstract

A recent trend in the study of poverty is to consider a relative poverty line, one that is responsive to the nature of the income distribution. We develop an axiomatic approach to the determination of an amalgam poverty line. Given a reference income (e.g., the mean or the median), the amalgam poverty line becomes a weighted average of the absolute poverty line and the reference income, where the weights depend on the policy maker’s preferences for aggregating the two components. The paper ends with an empirical illustration comparing urban and rural areas in the People’s Republic of China and India.

Suggested Citation

  • Satya R. Chakravarty & Nachiketa Chattopadhyay & Joseph Deutsh & Zoya Nissanov & Jacques Silber, 2019. "Reference Groups and the Poverty Line: An Axiomatic Approach with an Empirical Illustration," Themes in Economics, in: Satya R. Chakravarty (ed.), Poverty, Social Exclusion and Stochastic Dominance, pages 39-61, Springer.
    • Handle: RePEc:spr:thechp:978-981-13-3432-0_5
    DOI: 10.1007/978-981-13-3432-0_5
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    References listed on IDEAS

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    5. Foster, James E, 1998. "Absolute versus Relative Poverty," American Economic Review, American Economic Association, vol. 88(2), pages 335-341, May.
    6. Martin Ravallion & Gaurav Datt & Dominique van de Walle, 1991. "Quantifying Absolute Poverty In The Developing World," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 37(4), pages 345-361, December.
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    10. Slesnick, Daniel T, 1993. "Gaining Ground: Poverty in the Postwar United States," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 1-38, February.
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    Cited by:

    1. Ghazali, Samane & Zibaei, Mansour & Azadi, Hossein, 2023. "Impact of livelihood strategies and capitals on rangeland sustainability and nomads' poverty: A counterfactual analysis in Southwest Iran," Ecological Economics, Elsevier, vol. 206(C).
    2. Ravallion,Martin & Chen,Shaohua, 2017. "Welfare-consistent global poverty measures," Policy Research Working Paper Series 8170, The World Bank.
    3. Fernández-Morales, Antonio, 2016. "Measuring poverty with the Foster, Greer and Thorbecke indexes based on the Gamma distribution," MPRA Paper 69648, University Library of Munich, Germany.

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    More about this item

    Keywords

    Absolute poverty; Amalgam threshold; India; People’s Republic of China; Poverty line; Relative poverty;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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