Guidelines for Constructing Consumption Aggregates For Welfare Analysis
Poverty is a complex phenomenon involving multiple dimensions of deprivation, of which the lack of goods and services is only one. Even so, there is a good deal of consensus on the value of using a consumption aggregate as a summary measure of living standards, itself an important component of human welfare. In recent years, in much of the World Bank’s operational work as well as in applied research, consumption aggregates constructed from survey data have been used to measure poverty, to analyze changes in living standards over time, and to assess the distributional impacts of various programs and policies.
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