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Estimating Utility-Consistent Poverty Lines with Applications to Egypt and Mozambique

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  • Channing Arndt
  • Kenneth R. Simler

Abstract

A fundamental premise of absolute poverty lines is that they represent the same level of utility through time and space. Disturbingly, a series of recent studies in middle- and low-income economies show that even carefully derived poverty lines rarely satisfy this premise. This article proposes an information-theoretic approach to estimating cost-of-basic-needs (CBN) poverty lines that are utility consistent. Applications to date illustrate that utility-consistent poverty measurements derived from the proposed approach and those derived from current CBN best practices often differ substantially, with the current approach tending to systematically overestimate (underestimate) poverty in urban (rural) zones. (c) 2010 by The University of Chicago. All rights reserved.

Suggested Citation

  • Channing Arndt & Kenneth R. Simler, 2010. "Estimating Utility-Consistent Poverty Lines with Applications to Egypt and Mozambique," Economic Development and Cultural Change, University of Chicago Press, vol. 58(3), pages 449-474, April.
  • Handle: RePEc:ucp:ecdecc:v:58:y:2010:i:3:p:449-474
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    File URL: http://dx.doi.org/10.1086/650413
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    1. Ravallion, Martin & Sen, Binayak, 1996. "When Method Matters: Monitoring Poverty in Bangladesh," Economic Development and Cultural Change, University of Chicago Press, vol. 44(4), pages 761-792, July.
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    Cited by:

    1. Alfani, Federica & Azzarri, Carlo & d'Errico, Marco & Molini, Vasco, 2012. "Poverty in Mozambique : new evidence from recent household surveys," Policy Research Working Paper Series 6217, The World Bank.
    2. Channing Arndt & Sam Jones & Vincenzo Salvucci, 2015. "When do relative prices matter for measuring income inequality? The case of food prices in Mozambique," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 13(3), pages 449-464, September.
    3. Laura Anselmi & Mylène Lagarde & Kara Hanson, 2015. "Health service availability and health seeking behaviour in resource poor settings: evidence from Mozambique," Health Economics Review, Springer, vol. 5(1), pages 1-13, December.
    4. van den Boom,Bart & Halsema,Alex & Molini,Vasco, 2015. "Are we confusing poverty with preferences ?," Policy Research Working Paper Series 7247, The World Bank.
    5. Anselmi, Laura & Lagarde, Mylène & Hanson, Kara, 2015. "Going beyond horizontal equity: An analysis of health expenditure allocation across geographic areas in Mozambique," Social Science & Medicine, Elsevier, vol. 130(C), pages 216-224.

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