Are We Confusing Poverty with Preferences?

36 Pages Posted: 20 Apr 2016

See all articles by Bart Boom

Bart Boom

VU University Amsterdam - Center for World Food Studies

Alex Halsema

VU University Amsterdam - Center for World Food Studies

Vasco Molini

World Bank

Date Written: April 23, 2015

Abstract

Modifying the national poverty line to the context of observed consumption patterns of the poor is becoming popular. A context-specific poverty line would be more consistent with preferences. This paper provides theoretical and empirical evidence that the contrary holds and that the national poverty line is more appropriate for comparing living standards among the poor, at least under prevailing conditions in Mozambique and Ghana. The problem lies in the risk of downscaling the burden associated with cheap-calorie diets and the low nonfood component of the rural poor. The paper illustrates how observed behavior may neither reveal preferences nor detect heterogeneous preferences among the poor. Rather, the consumption pattern is the upshot of the poverty condition itself. Poverty is confused with preferences if observed cheap-calorie diets are seen as a matter of taste, whereas in fact they reflect a lack of means to consume a preferred diet of higher quality, as food Engel curve estimates indicate. Likewise, a smaller nonfood component is not a matter of a particular distaste, but an adaptation to the fact that various nonfood items (such as transport) and basic services (such as electricity and health) are simply absent in rural areas.

Keywords: Poverty Assessment, Poverty Monitoring & Analysis, Poverty Diagnostics, Poverty Lines, Food Security, Poverty Impact Evaluation, Nutrition, Small Area Estimation Poverty Mapping

Suggested Citation

Boom, Bart and Halsema, Alex and Molini, Vasco, Are We Confusing Poverty with Preferences? (April 23, 2015). World Bank Policy Research Working Paper No. 7247, Available at SSRN: https://ssrn.com/abstract=2598358

Bart Boom (Contact Author)

VU University Amsterdam - Center for World Food Studies

De Boelelaen 1105
1081 HV Amsterdam, 1081 HV
Netherlands

Alex Halsema

VU University Amsterdam - Center for World Food Studies

De Boelelaen 1105
1081 HV Amsterdam, 1081 HV
Netherlands

Vasco Molini

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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