Living Income measurement methods A comparative study and application to cocoa farmers in Cameroon

How should the cost of a decent life be quantified? Are the available living income methods and indicators valid welfare measures? Additionally, are these suitable for the contexts where they are being leveraged for agrifood policies and interventions? This paper critically examines two prevailing methodologies for estimating living income indicators and their application in rural agricultural contexts, with a focus on cocoa producers in Cameroon. It compares the main approaches for estimating a living income benchmark (LIB), documenting and highlighting key differences in data sources and computational assumptions. The study finds that LIB estimates are highly sensitive to food expenditure assumptions and the valuation of non-food, non-housing (NFNH) elements of a decent life. Statistical and indicator property tests are then applied to assess the robustness of the living income gap (LIG). Stochastic dominance analysis demonstrates that LIG indicators consistently identify vulnerable groups and thus harness targeting potential. Simulations based on poverty axioms indicate the indicators are distribution sensitive, illustrating their potential for informing the design and monitoring of LIG-reducing policy instruments. As a result of these tests, a new censored LIG is proposed that further enhances the possibility of measuring and monitoring the LIG among more vulnerable strata. Ultimately, while the living income approach reframes the narrative on welfare analyses from a subsistence to decency framework, the potential of the indicators to support equitable outcomes in agrifood systems would be enhanced by integrating greater methodological rigor, replicability and harmonisation.