Article

Poverty Lines across the World

Martin Ravallion

in The Oxford Handbook of the Economics of Poverty

Published in print November 2012 | ISBN: 9780195393781
Published online December 2012 | | DOI: http://dx.doi.org/10.1093/oxfordhb/9780195393781.013.0004

Series: Oxford Handbooks

 Poverty Lines across the World

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This article considers alternative views of how to define and estimate the poverty line. Low-income countries tend to use absolute measures of poverty while high-income countries tend to use relative measures of poverty. Using a sample of ninety-five countries, it shows that for all but the poorest fifth of countries, there is a positive relationship between the poverty line and average consumption. The relationship holds for high- and low-income countries grouped separately. This suggests that even countries that deploy absolute poverty measures are sensitive to local conceptions of what it means to be poor. A method called “ weakly relative poverty lines” is proposed for drawing the poverty line with both absolute and relative components. Empirically, poverty lines that are drawn using this method fit well with the cross-sectional distribution of poverty lines worldwide. These lines are relatively flat across low-income countries, and beyond a certain consumption per capita threshold, they rise with average consumption across middle- and high-income countries. Weakly relative poverty lines are welfare-consistent and that they should be considered for broad adoption.

Keywords: poverty measures; poverty lines; low-income countries; high-income countries; relative measures; absolute measures

Article.  13551 words. 

Subjects: Economics ; Health, Education, and Welfare

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