Adapting Monetary Poverty Lines to Reflect the Costs of Disabilities: An Empirical Application to Peru

Persons with disabilities incur extra costs of living (e.g., for personal assistance, assistive devices, medical care, transportation), which are not captured in monetary poverty lines. This has several negative consequences. First, governments underestimate the rate of poverty among persons with disabilities. Second, many persons with disabilities are erroneously excluded from social programs. Finally, even for those persons with disabilities who are declared eligible, the value of the benefits set by the governments is likely to be insufficient (for example, to close the poverty gap). These problems can be avoided by assigning them a higher weight when calculating per-capita income, known in the literature as an “equivalence scale.” We estimate a correction to the standard, unadjusted poverty line based on nationally representative survey data from Peru and complement the analysis with information from focus groups and interviews with persons with disabilities, caregivers, and public servants. We estimate that each person with disabilities should be counted as 1.47 persons without disabilities when calculating the household per-capita income: this is equivalent to saying that a person with disabilities requires an income of 1.47 poverty lines to be considered non-poor. This adjustment would imply that an additional 15.1% of individuals living in a household with persons with disabilities would be classified as poor, and hence would be eligible to receive social programs. It also implies that the monetary value of their social programs should be 47% higher than for persons without disabilities. Even though this correction alone is not enough to ensure full participation in society, it is a critical part of addressing the extra costs of living faced by individuals with disabilities.