Identifying the Vulnerable: Concepts and Measurement

Vulnerability to poverty, which broadly captures the susceptibility to becoming poor in the future, has become an integral part of any deprivation assessment. In this paper, we take a fresh look at measuring vulnerability, where we separate out the identification part of whether an individual is vulnerable, from their level of vulnerability. Given the substantial informational challenges that one faces in the context of measuring vulnerability, our framework allows for different information sets for identification and aggregation. These challenges lead us to propose identification rules based on the future probability of falling into poverty. We axiomatically characterise these identification rules along with a widely used measure of vulnerability. Using a simple societal measure we show that societal vulnerability can be decomposed into vulnerabilities arising from the different shocks. Further, we provide an empirical illustration of the identification and measurement rules proposed in this paper using real-world data from Bangladesh.