Estimating Utility-Consistent Poverty Lines

IFPRI Food Consumption and Nutrition Division Discussion Paper No. 189

36 Pages Posted: 28 Oct 2008

See all articles by Channing Arndt

Channing Arndt

United Nations - World Institute for Development Economics Research (UNU/WIDER)

Kenneth R. Simler

affiliation not provided to SSRN

Date Written: March 1, 2005

Abstract

The "Cost of Basic Needs" (CBN) approach to drawing consumption-based poverty lines is widely applied and lays credible claim to being the best practice for estimating poverty measures. Unfortunately, a growing mass of evidence indicates that poverty estimates obtained under the CBN approach are often demonstrably utility inconsistent. Here, we introduce an information theoretic approach for estimating utility-consistent poverty lines. An example of the approach is provided for the case of Mozambique. The approach represents a powerful addition to the poverty analyst's tool kit and enhances the attractiveness of the CBN approach for practical poverty measurement problems.

Keywords: poverty lines, entropy estimation, revealed preferences, Mozambique

Suggested Citation

Arndt, Channing and Simler, Kenneth R., Estimating Utility-Consistent Poverty Lines (March 1, 2005). IFPRI Food Consumption and Nutrition Division Discussion Paper No. 189, Available at SSRN: https://ssrn.com/abstract=1288817 or http://dx.doi.org/10.2139/ssrn.1288817

Channing Arndt

United Nations - World Institute for Development Economics Research (UNU/WIDER) ( email )

Katajanokanlaituri 6 B
Helsinki, FI‐00160
Finland

Kenneth R. Simler (Contact Author)

affiliation not provided to SSRN

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