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Vulnerability to poverty: Theory

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  • Cesar Calvo

    (Universidad de Piura, Peru)

Abstract

Two competing strands exist within the theoretical literature on vulnerability to poverty, each with its own policy implications. Vulnerability may be seen as low expected utility and thus stress the danger of self-perpetuating poverty, as the poor shy away from risky, yet necessary decisions to escape their hardship. Alternatively, vulnerability is often construed as expected poverty and provides policy-makers with a forward-looking viewpoint that both sheds light and raises new questions on how best to formulate the targeting of social spending. This paper provides an overview of the theoretical work underpinning each of these competing views.

Suggested Citation

  • Cesar Calvo, 2016. "Vulnerability to poverty: Theory," Working Papers 409, ECINEQ, Society for the Study of Economic Inequality.
    • Handle: RePEc:inq:inqwps:ecineq2016-409
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    File URL: http://www.ecineq.org/milano/WP/ECINEQ2016-409.pdf
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    References listed on IDEAS

    as
    1. Ethan Ligon & Laura Schechter, 2003. "Measuring Vulnerability," Economic Journal, Royal Economic Society, vol. 113(486), pages 95-102, March.
    2. Binswanger, Hans P, 1981. "Attitudes toward Risk: Theoretical Implications of an Experiment in Rural India," Economic Journal, Royal Economic Society, vol. 91(364), pages 867-890, December.
    3. Carter, Michael R. & Lybbert, Travis J., 2012. "Consumption versus asset smoothing: testing the implications of poverty trap theory in Burkina Faso," Journal of Development Economics, Elsevier, vol. 99(2), pages 255-264.
    4. Hai‐Anh H. Dang & Peter F. Lanjouw, 2017. "Welfare Dynamics Measurement: Two Definitions of a Vulnerability Line and Their Empirical Application," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(4), pages 633-660, December.
    5. Ethan Ligon & Laura Schechter, 2002. "Measuring Vulnerability: The Director's Cut," WIDER Working Paper Series DP2002-86, World Institute for Development Economic Research (UNU-WIDER).
    6. Satya R. Chakravarty, 2019. "A New Index of Poverty," Themes in Economics, in: Satya R. Chakravarty (ed.), Poverty, Social Exclusion and Stochastic Dominance, pages 31-37, Springer.
    7. Fafchamps, Marcel & Pender, John, 1997. "Precautionary Saving, Credit Constraints, and Irreversible Investment: Theory and Evidence from Semiarid India," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(2), pages 180-194, April.
    8. Povel, Felix, 2015. "Measuring Exposure to Downside Risk with an Application to Thailand and Vietnam," World Development, Elsevier, vol. 71(C), pages 4-24.
    9. Cesar Calvo & Stefan Dercon, 2013. "Vulnerability to individual and aggregate poverty," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 41(4), pages 721-740, October.
    10. Cesar Calvo & Stefan Dercon, 2007. "Chronic Poverty and All That: The Measurement of Poverty over Time," CSAE Working Paper Series 2007-04, Centre for the Study of African Economies, University of Oxford.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Poverty; vulnerability; risk aversion.;
    All these keywords.

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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