Chronic Poverty and All that: The Measurement of Poverty Over Time

28 Pages Posted: 21 Jul 2010

See all articles by Cesar Calvo

Cesar Calvo

affiliation not provided to SSRN

Stefan Dercon

University of Oxford - Department of Economics

Date Written: August 1, 2007

Abstract

We explore how to measure poverty over time, by focusing on trajectories of poverty rather than poverty at a particular point in time. We consider welfare outcomes over a period in time, consisting of a number of spells. We offer a characterization of desirable properties for measuring poverty across these spells, as well as an explicit discussion of three issues. First, should there be scope for compensation so that a poor spell can be compensated for by a non-poor spell? Second, is there scope for discounting or should all spells be equally valued? Third, does the actual sequence of poor spells matter, for example whether they are consecutive or not? We offer a number of measures that implicitly offer different answers to these questions, in a world of certainty. Finally, we also offer an extension towards a forward-looking measure of vulnerability, defined as the threat of poverty over time, that incorporates risk. An application to data from Ethiopia shows that especially the assumption of compensation results in different inference on poverty.

Keywords: Poverty, Chronic Poverty, Poverty Dynamics, Ethiopia

Suggested Citation

Calvo, Cesar and Dercon, Stefan, Chronic Poverty and All that: The Measurement of Poverty Over Time (August 1, 2007). Chronic Poverty Research Centre Working Paper No. 89, Available at SSRN: https://ssrn.com/abstract=1646392 or http://dx.doi.org/10.2139/ssrn.1646392

Cesar Calvo

affiliation not provided to SSRN ( email )

Stefan Dercon (Contact Author)

University of Oxford - Department of Economics ( email )

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