Description: On the Welfarist Rationale for Relative Poverty Lines

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On the Welfarist Rationale for Relative Poverty Lines

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...

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Bibliographic Details
Main Author:	Ravallion, Martin
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ABSOLUTE POVERTY ABSOLUTE POVERTY LINE AGGREGATE POVERTY AGRICULTURE AVERAGE INCOME BASIC NEEDS CITIZENS CONSUMER DEMAND CONSUMPTION AGGREGATE CONSUMPTION EXPENDITURE CONSUMPTION GROWTH COST FUNCTIONS CROSS-COUNTRY COMPARISONS DECOMPOSABLE POVERTY DECOMPOSABLE POVERTY MEASURES DEMAND FUNCTIONS DEPENDENT VARIABLE DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICIES DEVELOPMENT POLICY ECONOMETRICS ECONOMIC GROWTH ECONOMIC INEQUALITY ECONOMIC PERFORMANCE ECONOMIC REVIEW ECONOMIC STATUS ECONOMIC STUDIES ECONOMIC THEORIES ECONOMICS ELASTICITY EMPIRICAL ANALYSIS EMPIRICAL APPROACHES EMPIRICAL EVIDENCE EMPIRICAL RESULTS EMPIRICAL STUDIES EMPIRICAL WORK EMPLOYMENT OPPORTUNITIES EXPECTED VALUE FOOD ITEMS FUNCTIONAL FORMS HOUSEHOLD HEAD HOUSEHOLD INCOME HOUSEHOLD LEVEL HOUSEHOLD MEMBERS HOUSEHOLD SIZE HOUSEHOLD SURVEY HOUSING INCOME INCOME DISTRIBUTION INCOME EFFECT INCOME ELASTICITY INCOME GAINS INCOME INEQUALITY INCOME LEVEL INCOME POVERTY INCOMES INCREASING FUNCTION INDIFFERENCE CURVES INDIVIDUAL WELFARE INEQUALITY INFORMAL INSURANCE INSURANCE LIVING STANDARDS LOCAL COMMUNITIES LOG INCOME LOW INCOMES MARGINAL PROPENSITY TO CONSUME MEAN CONSUMPTION MEAN INCOME MEASUREMENT ERROR MEASUREMENT ERRORS MEASUREMENT OF POVERTY MEASUREMENT PROBLEMS MEASURING POVERTY MORTALITY NEGATIVE COEFFICIENT NEGATIVE EXTERNALITIES NEGATIVE EXTERNALITY PACE OF URBANIZATION POLICY DISCUSSIONS POLICY MAKING POLICY RESEARCH POLICY RESEARCH WORKING PAPER POLITICAL ECONOMY POOR POOR AREA POOR AREAS POOR COUNTRIES POOR COUNTRY POOR PEOPLE POOR PEOPLES POOR RURAL HOUSEHOLDS POSITIVE EFFECT POSITIVE EXTERNALITIES POSITIVE EXTERNALITY POVERTY ANALYSIS POVERTY COMPARISONS POVERTY GAP POVERTY GAP INDEX POVERTY INCREASES POVERTY INDICES POVERTY LINE POVERTY LINES POVERTY MEASURE POVERTY MEASUREMENT POVERTY MEASURES POVERTY PROFILE POVERTY RATE POVERTY REDUCTION PRIVATE TRANSFERS PROGRESS PROPORTIONAL INCREASE PUBLIC ECONOMICS PUBLIC GOOD PUBLIC GOODS PUBLIC KNOWLEDGE PURCHASING POWER QUALITY OF LIFE REAL INCOME RECIPROCITY RELATIVE EARNINGS RELATIVE INCOME RELATIVE POVERTY RELATIVE PRICES RESPECT RISK SHARING RURAL RURAL AREAS RURAL ECONOMY SOCIAL ASSISTANCE SOCIAL CAPITAL SOCIAL FACTORS SOCIAL JUSTICE SOCIAL SECURITY SPILLOVER URBAN AREAS UTILITY FUNCTION UTILITY VALUE VILLAGE ECONOMIES WAGES WEALTH WELFARE INDICATOR WELFARE MEASURES WESTERN EUROPE WORKING CONDITIONS
Online Access:	http://documents.worldbank.org/curated/en/2008/01/8962513/welfarist-rationale-relative-poverty-lines http://hdl.handle.net/10986/6466

Description
Summary:	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.