Eating Like Which 'Joneses?' an Iterative Solution to the Choice of a Poverty Line 'Reference Group'

Posted: 26 Sep 2003

See all articles by Menno Prasad Pradhan

Menno Prasad Pradhan

Vrije Universiteit Amsterdam, School of Business and Economics; University of Amsterdam - Faculty of Economics and Business (FEB)

Asep Suryahadi

SMERU Research Institute

Sudarno Sumarto

SMERU Research Institute

Lant Pritchett

Harvard University - Harvard Kennedy School (HKS); Center for Global Development

Abstract

A standard method for calculation poverty lines (e.g. Ravallion, 1994) is not fully specified. The choice of the "reference population" for determining food baskets is left to the decision of the individual analyst. However, the poverty line can be quite sensitive to the real income of the reference group because the "quality" of the food basket - measured as the food expenditures per calorie - rises sharply with income. We propose that the reference group be centered on the poverty line. To address the obvious circularity problem in choosing a reference population at the poverty line to define the poverty line, we use an iterative approach. This iterative method provides a methodological anchor that fixes the reference group.

Suggested Citation

Pradhan, Menno and Suryahadi, Asep and Sumarto, Sudarno and Pritchett, Lant, Eating Like Which 'Joneses?' an Iterative Solution to the Choice of a Poverty Line 'Reference Group'. Available at SSRN: https://ssrn.com/abstract=434040

Menno Pradhan (Contact Author)

Vrije Universiteit Amsterdam, School of Business and Economics ( email )

De Boelelaan 1105
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University of Amsterdam - Faculty of Economics and Business (FEB) ( email )

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Asep Suryahadi

SMERU Research Institute ( email )

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Indonesia

HOME PAGE: http://www.smeru.or.id

Sudarno Sumarto

SMERU Research Institute ( email )

Jl. Tulung Agung No. 46
Jakarta, 10310
Indonesia

Lant Pritchett

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States
617-496-4562 (Phone)
617-496-2554 (Fax)

HOME PAGE: http://ksghome.harvard.edu/~lpritch/

Center for Global Development

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