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Identifying the Poor: A Multiple Indicator Approach

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  • Ramses H. Abul Naga

Abstract

The standard approach to the study of poverty assumes the existence of an ideal variable that captures the extent of deprivation. In this paper we postulate that poverty is involved with many dimensions. We use a latent variable framework to predict the extent of an individual's hardship as a function ?i =ax1i + bx2i +..., where the x's are indicators of i's income status, yi, and the latter variable is not observed.

Suggested Citation

  • Ramses H. Abul Naga, 1994. "Identifying the Poor: A Multiple Indicator Approach," STICERD - Distributional Analysis Research Programme Papers 09, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  • Handle: RePEc:cep:stidar:09
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    References listed on IDEAS

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    1. Milton Friedman & Simon Kuznets, 1954. "Income from Independent Professional Practice," NBER Books, National Bureau of Economic Research, Inc, number frie54-1.
    2. Ravallion, Martin, 1988. "Expected Poverty under Risk-Induced Welfare Variability," Economic Journal, Royal Economic Society, vol. 98(393), pages 1171-1182, December.
    3. Chaudhuri, Shubham & Ravallion, Martin, 1994. "How well do static indicators identify the chronically poor?," Journal of Public Economics, Elsevier, vol. 53(3), pages 367-394, March.
    4. Lillard, Lee A & Willis, Robert J, 1978. "Dynamic Aspects of Earning Mobility," Econometrica, Econometric Society, vol. 46(5), pages 985-1012, September.
    5. Sawhill, Isabel V, 1988. "Poverty in the U.S.: Why Is It So Persistent?," Journal of Economic Literature, American Economic Association, vol. 26(3), pages 1073-1119, September.
    6. Goldberger, Arthur S, 1972. "Structural Equation Methods in the Social Sciences," Econometrica, Econometric Society, vol. 40(6), pages 979-1001, November.
    7. Glewwe, P., 1990. "Efficient Allocation Of Transfers To The Poor: The Problem Of Unobserved Household Income," Papers 70, World Bank - Living Standards Measurement.
    8. Glewwe, Paul & van der Gaag, Jacques, 1990. "Identifying the poor in developing countries: Do different definitions matter?," World Development, Elsevier, vol. 18(6), pages 803-814, June.
    9. John Dreze & Peter Lanjouw & Nicholas Stern, 1992. "Economic Mobility and Agricultural Labour in Rural India: A Case Study," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 27, pages 25-54.
    10. van Praag, Bernard M S & Hagenaars, Aldi J M & van Eck, Wim, 1983. "The Influence of Classification and Observation Errors on the Measurement of Income Inequality," Econometrica, Econometric Society, vol. 51(4), pages 1093-1108, July.
    11. Anand, S. & Harris, C., 1989. "Food And Standard Of Living: An Analysis Based On Sri Lanka Data," Economics Series Working Papers 9984, University of Oxford, Department of Economics.
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    Cited by:

    1. Harkness, Susan, 2004. "Social and Political Indicators of Human Well-being," WIDER Working Paper Series 033, World Institute for Development Economic Research (UNU-WIDER).
    2. Riccardo Massari, 2005. "A Measure of Welfare Based on Permanent Income Hypothesis: An Application on Italian Households Budgets," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 64(1), pages 55-92, September.
    3. Abul Naga, Ramses H., 2003. "The allocation of benefits under uncertainty: a decision-theoretic framework," Economic Modelling, Elsevier, vol. 20(4), pages 873-893, July.
    4. Ramses H. Abul Naga, 1997. "Prediction and Sufficiency in the Model Factor Analysis," STICERD - Distributional Analysis Research Programme Papers 31, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    5. Ramsès H. Abul Naga & Enrico Bolzani, 2006. "Poverty and Permanent Income: A Methodology for Cross-Section Data," Annals of Economics and Statistics, GENES, issue 81, pages 195-223.

    More about this item

    Keywords

    Poverty; latent variable; indicators;

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • C39 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Other

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