A Welfarist Theory Unifying Monetary and Non-Monetary Poverty Measurement

Multidimensional poverty measures are increasingly used in practice even though they face strongcriticism and generate longlasting debates. These contentions primarily find their origin in the divergencebetween standard poverty identification practices and a welfarist definition of the poor. This paper fills this gapby constructing a poverty measurement theory that (i) adopts a welfarist definition of the poor, (ii) acknowledges thatthe relevant welfare function is only partially known and (iii) encompasses both market and non-market dimensions ofwell-being. The theory shows that standard identification practices are not flexible enough in order to properlyaccount for the multidimensional nature of well-being. This nature implies that an individual is poor when sheexperiences an extremely low outcome in some dimension or/and when she cumulates moderately low outcomes in severaldimensions. The paper proposes a simple refinement thatbetter reflects this insight. The paper uses the theory in order to provide answers to several longlasting debates. Thetheory provides a conceptual foundation from which practitioners may derive guidance for the many choices they face.