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On the welfarist rationale for relative poverty lines

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  • Ravallion, Martin

Abstract

The theory and evidence supporting a relativist approach to poverty measurement are critically reviewed. Various sources of welfare interdependence are identified, including the idea of"relative deprivation"as well other (positive and negative) welfare effects for poor people of belonging to a better-off group. An economic model combines informal risk sharing with the idea of a"positional good,"and conditions are derived in which the relative deprivation effect dominates, implying a relative poverty measure. The paper then reviews the problems encountered in testing for welfare effects of relative deprivation and discusses the implications of micro evidence from Malawi. The results are consistent with the emphasis given to absolute level of living in development policy discussions. However, relative deprivation is still evident in the data from this poor but unequal country, and it is likely to become a more important factor as the country develops.

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  • Ravallion, Martin, 2008. "On the welfarist rationale for relative poverty lines," Policy Research Working Paper Series 4486, The World Bank.
    • Handle: RePEc:wbk:wbrwps:4486
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    References listed on IDEAS

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    Cited by:

    1. Decerf,Benoit Marie A & Ferrando,Mery & Quinn,Natalie N., 2021. "Global Income Poverty Measurement with Preference Heterogeneity : Theory and Application," Policy Research Working Paper Series 9844, The World Bank.
    2. Ravallion, Martin & Chen, Shaohua, 2019. "Global poverty measurement when relative income matters," Journal of Public Economics, Elsevier, vol. 177(C), pages 1-1.
    3. DECERF, Benoit, 2014. "Income poverty measures with relative poverty lines," LIDAM Discussion Papers CORE 2014022, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Martin Ravallion, 2016. "Toward better global poverty measures," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(2), pages 227-248, June.
    5. Ravallion, Martin, 2019. "Global inequality when unequal countries create unequal people," European Economic Review, Elsevier, vol. 111(C), pages 85-97.
    6. Francesco Andreoli & Mauro Mussini & Vincenzo Prete, 2019. "Urban poverty: Theory and evidence from American cities," Working Papers 08/2019, University of Verona, Department of Economics.
    7. Benoit Decerf & Mery Ferrando, 2020. "Income Poverty has been Halved in the Developing World, even when Accounting for Relative Poverty," Working Papers 546, ECINEQ, Society for the Study of Economic Inequality.
    8. Ravallion,Martin & Chen,Shaohua, 2017. "Welfare-consistent global poverty measures," Policy Research Working Paper Series 8170, The World Bank.
    9. Ravallion, Martin & Himelein, Kristen & Beegle, Kathleen, 2013. "Can subjective questions on economic welfare be trusted ? evidence for three developing countries," Policy Research Working Paper Series 6726, The World Bank.
    10. Decerf,Benoit Marie A, 2022. "Absolute and Relative Poverty Measurement : A Survey," Policy Research Working Paper Series 10008, The World Bank.
    11. Benoit Decerf, 2021. "Combining absolute and relative poverty: income poverty measurement with two poverty lines," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 56(2), pages 325-362, February.
    12. Decerf, Benoit, 2017. "Why not consider that being absolutely poor is worse than being only relatively poor?," Journal of Public Economics, Elsevier, vol. 152(C), pages 79-92.
    13. Martin Ravallion & Shaohua Chen, 2011. "Weakly Relative Poverty," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1251-1261, November.
    14. Moatsos Michail, 2016. "Global Absolute Poverty: Behind the Veil of Dollars," Journal of Globalization and Development, De Gruyter, vol. 7(2), pages 1-28, December.
    15. Marcelo Arbex & Enlinson Mattos, 2010. "Poverty and the Optimal General Income Tax-cum-Audit Policy," Working Papers 02-2010, Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto.
    16. Decerf, B., 2015. "A new index combining the absolute and relative aspects of income poverty: Theory and application," LIDAM Discussion Papers CORE 2015050, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    17. World Bank, 2015. "Tanzania Poverty Assessment," World Bank Publications - Reports 21871, The World Bank Group.

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    Keywords

    Rural Poverty Reduction; Economic Theory&Research; Inequality; Population Policies;
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