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Poor, or just feeling poor ? on using subjective data in measuring poverty

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  • Ravallion, Martin

Abstract

The challenges faced in calibrating poverty and welfare measures to objective data have long been recognized. Until recently, most economists have resisted a seemingly obvious solution, namely to ask people themselves:"Do you feel poor?"The paper studies the case for and against this approach. It is argued that, while one would not want to use self-assessments as welfare metrics in their own right, there is scope for using such data to help calibrate multidimensional measures. Indeed, the idea of a"social subjective poverty line"(below which people tend to think they are poor, but above which they do not) is arguably the most conceptually appealing way of defining poverty. However, the paper points to a number of concerns that have received insufficient attention, including the choice of covariates, survey design issues, measurement errors, frame-of-reference effects, and latent heterogeneity in personality traits and personal tradeoffs. Directions for future research are identified.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5968.

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Date of creation: 01 Feb 2012
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Handle: RePEc:wbk:wbrwps:5968

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Keywords: Rural Poverty Reduction; Economic Theory&Research; Services&Transfers to Poor; Crime and Society;

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  1. Senik, Claudia, 2004. "When information dominates comparison: Learning from Russian subjective panel data," Journal of Public Economics, Elsevier, Elsevier, vol. 88(9-10), pages 2099-2123, August.
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  7. Knight, John & Gunatilaka, Ramani, 2012. "Income, aspirations and the Hedonic Treadmill in a poor society," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 82(1), pages 67-81.
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  11. J. Solnick, Sara & Hemenway, David, 1998. "Is more always better?: A survey on positional concerns," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 37(3), pages 373-383, November.
  12. Beegle, Kathleen & Himelein, Kristen & Ravallion, Martin, 2012. "Frame-of-reference bias in subjective welfare," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 81(2), pages 556-570.
  13. Michael Lokshin & Martin Ravallion, 2008. "Testing for an economic gradient in health status using subjective data," Health Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 17(11), pages 1237-1259.
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  15. Gero Carletto & Alberto Zezza, 2004. "Being Poor, Feeling Poorer: Combining objective and subjective measures of welfare in Albania," Working Papers, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA) 04-12, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
  16. Mariano Rojas, 2007. "A Subjective Well-being Equivalence Scale for Mexico: Estimation and Poverty and Income-distribution Implications," Oxford Development Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 35(3), pages 273-293.
  17. Betsey Stevenson & Justin Wolfers, 2008. "Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox," CESifo Working Paper Series 2394, CESifo Group Munich.
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  20. Luca Corazzini, Lucio Esposito, Francesca Majorano., 2009. "Exploring the Absolutist Vs Relativist Perception of Poverty Using a Cross-Country Questionnaire Survey," ISLA Working Papers, ISLA, Centre for research on Latin American Studies and Transition Economies, Universita' Bocconi, Milano, Italy 32, ISLA, Centre for research on Latin American Studies and Transition Economies, Universita' Bocconi, Milano, Italy.
  21. Björn Gustafsson & Li Shi & Hiroshi Sato, 2004. "Can a subjective poverty line be applied to China? Assessing poverty among urban residents in 1999," Journal of International Development, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 16(8), pages 1089-1107.
  22. de Vos, Klaas & Garner, Thesia I, 1991. "An Evaluation of Subjective Poverty Definitions: Comparing Results from the U.S. and the Netherlands," Review of Income and Wealth, International Association for Research in Income and Wealth, International Association for Research in Income and Wealth, vol. 37(3), pages 267-85, September.
  23. Geeta Kingdon & John Knight, 2003. "Well-being poverty versus income poverty and capabilities poverty?," Economics Series Working Papers, University of Oxford, Department of Economics WPS/2003-16, University of Oxford, Department of Economics.
  24. Ravallion, Martin & Lokshin, Michael, 2000. "Who wants to redistribute?: The tunnel effect in 1990s Russia," Journal of Public Economics, Elsevier, Elsevier, vol. 76(1), pages 87-104, April.
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