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Asset versus consumption poverty and poverty dynamics in the presence of multiple equilibria in rural Ethiopia

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  • Liverpool, Lenis Saweda O.
  • Winter-Nelson, Alex

Abstract

Effective poverty reduction programs require careful measurement of poverty status. Several studies have shown conceptually that assets reflecting productive capacity form a more robust basis for identifying the poor than do flow variables such as expenditures or income. Nonetheless, little work has empirically compared poverty measurements based on assets and expenditures. This paper uses panel data from Ethiopia to generate an asset-based poverty classification scheme. Regression results are used to estimate an asset index and classify households into categories of structural poverty. Asset index dynamics are also explored to test for the existence of multiple asset index equilibria; evidence of potential poverty traps. Results provide evidence of multiple equilibria in the study sample as a whole as well as convergence at different levels over space, depending on commercialization opportunities and agroecological factors. The asset-based poverty classifications consistently predict future poverty status more accurately than do income-based measures, confirming that the asset-based measure could be used to more carefully target poverty interventions in rural areas and to more accurately assess the impact of those interventions.

Suggested Citation

  • Liverpool, Lenis Saweda O. & Winter-Nelson, Alex, 2010. "Asset versus consumption poverty and poverty dynamics in the presence of multiple equilibria in rural Ethiopia," IFPRI discussion papers 971, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:fpr:ifprid:971
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    Cited by:

    1. Kanwal Zahra & Tasneem Zafar, 2015. "Marginality as a Root Cause of Urban Poverty: A Case Study of Punjab," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 54(4), pages 629-650.
    2. Mogues, Tewodaj & Petracco, Carly & Randriamamonjy, Josee, 2011. "The wealth and gender distribution of rural services in Ethiopia: A public expenditure benefit incidence analysis," IFPRI discussion papers 1057, International Food Policy Research Institute (IFPRI).
    3. Jolejole-Foreman, Maria Christina & Baylis, Katherine R. & Lipper, Leslie, 2012. "Land Degradation’s Implications on Agricultural Value of Production in Ethiopia: A look inside the bowl," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126251, International Association of Agricultural Economists.
    4. Tsehay, Abrham Seyoum & Bauer, Siegfried, 0. "Poverty and Vulnerability Dynamics: Empirical Evidence from Smallholders in Northern Highlands of Ethiopia," Quarterly Journal of International Agriculture, Humboldt-Universität zu Berlin, vol. 51.
    5. Tsehay, Abrham Seyoum & Bauer, Siegfried, 2012. "Poverty Dynamics and Vulnerability: Empirical Evidence from Smallholders in Northern Highlands of Ethiopia," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126873, International Association of Agricultural Economists.

    More about this item

    Keywords

    asset index; asset poverty; Commercialization; expenditures; income-based measures; index equilibria; Poverty dynamics; Poverty reduction; regression;

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