Fair and Welfare-Consistent Global Income Poverty Measurement : Theory and Application
There is growing support for the idea that global income poverty should be assessed with a measure accounting for both own income and relative income. The trade-off that such a measure makes between own income and relative income is the key questio...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/undefined/407061636400299012/Fair-and-Welfare-Consistent-Global-Income-Poverty-Measurement-Theory-and-Application http://hdl.handle.net/10986/36556 |
| Summary: | There is growing support for the idea
that global income poverty should be assessed with a measure
accounting for both own income and relative income. The
trade-off that such a measure makes between own income and
relative income is the key question. Non-paternalism
requires that this trade-off be welfareconsistent, that is,
related to individual preferences. This paper studies the
implications of requiring that the poverty measure makes a
fair and welfare-consistent aggregation of individual
preferences. The results provide support for the absolute
and relative global lines proposed in the literature but
rule out the use of classical poverty indexes. In
particular, the paper finds that the ubiquitoushead-count
ratio violates a minimal welfare-consistency property. The
paper shows empirically that using a modification of the
head-count ratio that satisfies this property has major
implications for the evaluation of global poverty. |
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