Quantifying vulnerability to poverty - a proposed measure, applied to Indonesia
AbstractVulnerability is an important aspect of households'experience of poverty. Many households, while not currently in poverty, recognize that they are vulnerable to events - a bad harvest, a lost job, an illness, and unexpected expense, an economic downturn - that could easily push them into poverty. Most operational measures define poverty as some function of the shortfall of current income, or consumption expenditures from a poverty line, and hence measure poverty only at a single point in time. The authors propose a simple expansion of those measures to quantify vulnerability to poverty. They define vulnerability as a probability, the risk that a household will experience at least one episode of poverty in the near future. A household is defined as vulnerable if it has 50-50 odds, or worse of falling into poverty. Using those definitions, they calculate the"vulnerability of poverty line"(VPL) as the level of expenditures below which a household is vulnerable to poverty. The VPL allows the calculation of a"headcount vulnerability rate"(the proportion of households vulnerable to poverty), a direct analogue of the"headcount poverty rate". The authors implement this approach using two sets of panel data from Indonesia. First they show that if the poverty line is set so that the headcount poverty rate is twenty percent, the proportion of households vulnerable to poverty is roughly 30-50 percent. In addition to the twenty percent currently poor, an additional 10-30 percent of the population is at substantial risk of poverty. They illustrate the usefulness of this approach for targeting, by examining differences in vulnerability between households by gender, level of education, urban-rural residence, land-holding status, and sector of occupation of the head of household.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 2437.
Date of creation: 30 Sep 2000
Date of revision:
Health Economics&Finance; Environmental Economics&Policies; Health Systems Development&Reform; Services&Transfers to Poor; Poverty Reduction Strategies; Services&Transfers to Poor; Environmental Economics&Policies; Health Economics&Finance; Poverty Assessment; Achieving Shared Growth;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jalan, Jyotsna & Ravallion, Martin, 1998. "Transient Poverty in Postreform Rural China," Journal of Comparative Economics, Elsevier, vol. 26(2), pages 338-357, June.
- Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
- Gelbach, Jonath B. & Pritchett, Lant H., 1997. "More for the poor is less for the poor : the politics of targeting," Policy Research Working Paper Series 1799, The World Bank.
- Bob Baulch & John Hoddinott, 2000. "Economic mobility and poverty dynamics in developing countries," Journal of Development Studies, Taylor & Francis Journals, vol. 36(6), pages 1-24.
- Dreze, Jean & Srinivasan, P. V., 1997. "Widowhood and poverty in rural India: Some inferences from household survey data," Journal of Development Economics, Elsevier, vol. 54(2), pages 217-234, December.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If references are entirely missing, you can add them using this form.