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Consistent poverty comparisons and inference

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  • Channing Arndt
  • Kenneth R. Simler

Abstract

Building upon the cost of basic needs (CBN) approach, an integrated approach to making consumption-based poverty comparisons is presented. This approach contains two principal modifications to the standard CBN approach. The first permits the development of multiple poverty bundles that are utility consistent. The second recognizes that the poverty line itself is a random variable whose variation influences the degree of confidence in poverty measures. We illustrate the empirical importance of these two methodological changes for the case of Mozambique. With utility consistency imposed, estimated poverty rates tend to be systematically higher in rural areas and lower in urban areas. We also find that the true confidence intervals on the poverty estimates-those incorporating poverty line variance-tend to be considerably larger than those that ignore poverty line variance. Finally, we show that these two methodological changes interact. Specifically, we find that imposing utility consistency on poverty bundles tends to tighten confidence intervals, sometimes dramatically, on provincial poverty estimates. We conclude that this revised approach represents an important advance in poverty analysis. The revised approach is straightforward and directly applicable in empirical work. Copyright 2007 International Association of Agricultural Economists.

Suggested Citation

  • Channing Arndt & Kenneth R. Simler, 2007. "Consistent poverty comparisons and inference," Agricultural Economics, International Association of Agricultural Economists, vol. 37(2-3), pages 133-139, September.
  • Handle: RePEc:bla:agecon:v:37:y:2007:i:2-3:p:133-139
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    References listed on IDEAS

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    4. Kenneth R. Simler & Channing Arndt, 2007. "Poverty Comparisons With Absolute Poverty Lines Estimated From Survey Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(2), pages 275-294, June.
    5. Arndt, Channing & Simler, Kenneth R., 2005. "Estimating utility-consistent poverty lines," FCND briefs 189, International Food Policy Research Institute (IFPRI).
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    Cited by:

    1. Arndt, Channing & Benfica, Rui & Tarp, Finn & Thurlow, James & Uaiene, Rafael, 2010. "Biofuels, poverty, and growth: a computable general equilibrium analysis of Mozambique," Environment and Development Economics, Cambridge University Press, vol. 15(01), pages 81-105, February.
    2. repec:unu:wpaper:wp2012-011 is not listed on IDEAS
    3. Resnick, Danielle & Tarp, Finn & Thurlow, James, 2012. "The Political Economy of Green Growth: Illustrations from Southern Africa," WIDER Working Paper Series 011, World Institute for Development Economic Research (UNU-WIDER).
    4. Danielle Resnick & Finn Tarp & James Thurlow, 2012. "The Political Economy Of Green Growth: Cases From Southern Africa," Public Administration & Development, Blackwell Publishing, vol. 32(3), pages 215-228, August.
    5. Wim Marivoet & Tom De Herdt, 2015. "Poverty Lines as Context Deflators: A Method to Account for Regional Diversity with Application to the Democratic Republic of Congo," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(2), pages 329-352, June.
    6. Ojimba, Thankgod Peter, 1. "Socio-Demographic Factors As Determinants Of Poverty In Crude Oil Polluted Crop Farms In Rivers State, Nigeria," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 1.
    7. Channing Arndt & Kristi Mahrt & Finn Tarp, 2016. "Absolute poverty lines," WIDER Working Paper Series 008, World Institute for Development Economic Research (UNU-WIDER).

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