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Estimating Utility-Consistent Poverty Lines

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  • Arndt, Channing
  • Simler, Kenneth R.

Abstract

The “Cost of Basic Needs” (CBN) approach to drawing consumption-based poverty lines is widely applied and lays credible claim to being the best practice for estimating poverty measures. Unfortunately, a growing mass of evidence indicates that poverty estimates obtained under the CBN approach are often demonstrably utility inconsistent. Here, we introduce an information theoretic approach for estimating utility-consistent poverty lines. An example of the approach is provided for the case of Mozambique. The approach represents a powerful addition to the poverty analyst’s tool kit and enhances the attractiveness of the CBN approach for practical poverty measurement problems.

Suggested Citation

  • Arndt, Channing & Simler, Kenneth R., 2005. "Estimating Utility-Consistent Poverty Lines," FCND Discussion Papers 59591, CGIAR, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:ags:fcnddp:59591
    DOI: 10.22004/ag.econ.59591
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    1. 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.
    2. Simler, Kenneth R. & Arndt, Channing, 2006. "Poverty Comparisons with Endogenous Absolute Poverty Lines," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25775, International Association of Agricultural Economists.
    3. Arndt, Channing & Thurlow, James, 2009. "Inequality and Poverty Impacts of Trade Distortions in Mozambique," Agricultural Distortions Working Paper Series 52794, World Bank.
    4. Fox, Louise & Sohnesen, Thomas Pave, 2013. "Household enterprises in Mozambique : key to poverty reduction but not on the development agenda ?," Policy Research Working Paper Series 6570, The World Bank.
    5. 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.
    6. Emily Schmidt & Rachel Gilbert & Brian Holtemeyer & Kristi Mahrt, 2021. "Poverty analysis in the lowlands of Papua New Guinea underscores climate vulnerability and need for income flexibility," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(1), pages 171-191, January.

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