Multidimensional Poverty Measurement with Individual Preferences

44 Pages Posted: 2 Feb 2014

See all articles by Koen Decancq

Koen Decancq

University of Antwerp; KU Leuven - Center for Economic Studies; Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE); University of Mannheim - Mannheim Centre for European Social Research (MZES)

Marc Fleurbaey

Princeton University - Woodrow Wilson School of Public and International Affairs

Francois Maniquet

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Date Written: January 31, 2014

Abstract

We propose a new class of multidimensional poverty indices. Aggregation of the different dimensions relies on individual preferences. The Pareto principle is, therefore, satisfied among the poor. The indices add up individual measures of poverty that are computed as a convex transform of the fraction of the poverty line vector to which the agent is indifferent. The axiomatic characterization of this class retains the usual axioms of focus and subgroup consistency and it introduces additional principles for interpersonal poverty comparisons and for inequality aversion among the poor. We illustrate our approach with Russian survey data between 1995 and 2005. We find that taking preferences into account leads to considerable differences in the identification of the poor compared to standard poverty measures.

Keywords: multidimensional poverty measurement, preferences.

JEL Classification: D63, D71.

Suggested Citation

Decancq, Koen and Fleurbaey, Marc and Maniquet, Francois, Multidimensional Poverty Measurement with Individual Preferences (January 31, 2014). Princeton University William S. Dietrich II Economic Theory Center Research Paper No. 058. Available at SSRN: https://ssrn.com/abstract=2388959 or http://dx.doi.org/10.2139/ssrn.2388959

Koen Decancq

University of Antwerp ( email )

Prinsstraat 13
Antwerp, Antwerp 2000
Belgium

KU Leuven - Center for Economic Studies ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

University of Mannheim - Mannheim Centre for European Social Research (MZES) ( email )

D-68131 Mannheim
Germany

Marc Fleurbaey (Contact Author)

Princeton University - Woodrow Wilson School of Public and International Affairs ( email )

Princeton University
Princeton, NJ 08544-1021
United States

Francois Maniquet

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium
+32 10 474328 (Phone)
+32 10 474301 (Fax)

HOME PAGE: http://www.core.ucl.ac.be/staff/maniquetcore.htm

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