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Estimating Utility-Consistent Poverty Lines

Channing Arndt

University of Copenhagen

Kenneth R. Simler

World Bank - Poverty Reduction Group

March 1, 2005

IFPRI Food Consumption and Nutrition Division Discussion Paper No. 189

The "Cost of Basic Needs" (CBN) approach to drawing consumption-based poverty lines is widely applied and lays credible claim to being the best practice for estimating poverty measures. Unfortunately, a growing mass of evidence indicates that poverty estimates obtained under the CBN approach are often demonstrably utility inconsistent. Here, we introduce an information theoretic approach for estimating utility-consistent poverty lines. An example of the approach is provided for the case of Mozambique. The approach represents a powerful addition to the poverty analyst's tool kit and enhances the attractiveness of the CBN approach for practical poverty
measurement problems.

Number of Pages in PDF File: 36

Keywords: poverty lines, entropy estimation, revealed preferences, Mozambique

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Date posted: October 28, 2008  

Suggested Citation

Arndt, Channing and Simler, Kenneth R., Estimating Utility-Consistent Poverty Lines (March 1, 2005). IFPRI Food Consumption and Nutrition Division Discussion Paper No. 189. Available at SSRN: http://ssrn.com/abstract=1288817 or http://dx.doi.org/10.2139/ssrn.1288817

Contact Information

Channing Arndt
University of Copenhagen ( email )
+1 970 689 2112 (Phone)
Kenneth R. Simler (Contact Author)
World Bank - Poverty Reduction Group ( email )
1818 H Street, NW
Washington, DC 20433
United States
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