On the Utility Consistency of Poverty Lines

40 Pages Posted: 20 Apr 2016

See all articles by Martin Ravallion

Martin Ravallion

Georgetown University

Michael Lokshin

World Bank - Development Research Group (DECRG); National Research University Higher School of Economics

Date Written: October 2003

Abstract

Although poverty lines are widely used as deflators for intergroup welfare comparisons, their internal consistency is rarely given close scrutiny. A priori considerations suggest that commonly used methods cannot be relied on to yield poverty lines that are consistent in terms of utility, or for capabilities more generally. The theory of revealed preference offers testable implications of utility consistency for "poverty baskets" under homogeneous preferences. A case study of Russia's official poverty lines reveals numerous violations of revealed preference criteria - violations that are not solely attributable to heterogeneity in preferences associated with climatic differences.

This paper - a product of the Poverty Team, Development Research Group - is part of a larger effort in the group to improve poverty measurement methodology.

Suggested Citation

Ravallion, Martin and Lokshin, Michael, On the Utility Consistency of Poverty Lines (October 2003). World Bank Policy Research Working Paper No. 3157. Available at SSRN: https://ssrn.com/abstract=636576

Martin Ravallion (Contact Author)

Georgetown University ( email )

Washington, DC 20057
United States

Michael Lokshin

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-473-1772 (Phone)
202-522-1153 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/mlokshin

National Research University Higher School of Economics

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

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