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Absolute Poverty: When Necessity Displaces Desire

Robert C. Allen ()

No 706, LIS Working papers from LIS Cross-National Data Center in Luxembourg

Abstract: A new basis for an international poverty measurement is proposed based on linear programming for specifying the least cost diet and explicit budgeting for non-food spending. This approach is superior to the World Bank’s ‘$-a-day’ line because it is (1) clearly related to survival and well being, (2) comparable across time and space since the same nutritional requirements are used everywhere while non-food spending is tailored to climate, (3) adjusts consumption patterns to local prices, (4) presents no index number problems since solutions are always in local prices, and (5) requires only readily available information. The new approach implies much more poverty than the World Bank’s, especially in Asia.

Keywords: absolute poverty; diet problem; linear programming; World Bank poverty line (search for similar items in EconPapers)
JEL-codes: I12 I32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-pke and nep-sea
Date: 2017-07
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Published in American Economic Review 107, no.12 (2017): 3690–3721.

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