Risk-adjusted poverty in Argentina: measurement and determinants

Guillermo Cruces and Quentin Wodon

Journal of Development Studies, 2007, vol. 43, issue 7, 1189-1214

Abstract: This paper presents a methodology for adjusting measures of income and poverty for the risk faced by a household. The approach draws on the standard economic concept of risk aversion, and it is based on the intuition that households will prefer a steady stream of income to a variable one with the same mean. Relying on a Constant Relative Risk Aversion utility function, we use panel data for Argentina to compute risk-adjusted income and poverty measures. At the aggregate level, we find that taking risk into account substantially increases the poverty headcount. Moreover, a regression analysis suggests that many household characteristics are correlated not only with the average income of the household over time, but also with its variability.

Date: 2007
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Working Paper: Risk-adjusted poverty in Argentina: measurement and determinants (2006)
Working Paper: Risk-adjusted poverty in Argentina: measurement and determinants (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:taf:jdevst:v:43:y:2007:i:7:p:1189-1214

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DOI: 10.1080/00220380701526329

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