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Poverty comparisons with non-compatible data: theory and illustrations

  • Lanjouw, Jean Olson
  • Lanjouw, Peter

Comparisons of poverty rates are only rarely based on identical underlying definitions of welfare. The authors examine the sensitivity of poverty rates calculated from alternative definitions of consumption. They consider what theory can say about the direction of bias in comparisons and show that under certain conditions robust comparisons are possible. Data from Ecuador, El Salvador, and Pakistan show that the magnitude of biases can be substantial. Their robustness result is used as a baseline to explore the tradeoffs involved in aggregating noisy expenditure components. Although nonfood expenditures are often thought to be especially poorly measured, the authors'data indicate that the more comprehensive is the measure of consumption spending, the better it is as a measure of welfare.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1709.

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Date of creation: 31 Jan 1997
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Handle: RePEc:wbk:wbrwps:1709
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  1. Atkinson, Anthony B, 1991. "Comparing Poverty Rates Internationally: Lessons from Recent Studies in Developed Countries," World Bank Economic Review, World Bank Group, vol. 5(1), pages 3-21, January.
  2. Ravallion, Martin & Bidani, Benu, 1994. "How Robust Is a Poverty Profile?," World Bank Economic Review, World Bank Group, vol. 8(1), pages 75-102, January.
  3. Deininger, K & Squire, L, 1996. "Measuring Income Inequality : A New Data-Base," Papers 537, Harvard - Institute for International Development.
  4. Atkinson, A B, 1987. "On the Measurement of Poverty," Econometrica, Econometric Society, vol. 55(4), pages 749-64, July.
  5. repec:cup:cbooks:9780521433297 is not listed on IDEAS
  6. Ravallion, Martin, 1994. "Poverty rankings using noisy data on living standards," Economics Letters, Elsevier, vol. 45(4), pages 481-485, August.
  7. repec:cup:cbooks:9780521438827 is not listed on IDEAS
  8. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
  9. Ravallion, Martin, 1988. "Expected Poverty under Risk-Induced Welfare Variability," Economic Journal, Royal Economic Society, vol. 98(393), pages 1171-82, December.
  10. 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.
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