Global Income Poverty Measurement with Preference Heterogeneity: Theory and Application

Benoit Marie A Decerf, Mery Ferrando and Natalie Quinn

No 9844, Policy Research Working Paper Series from The World Bank

Abstract: There is growing support for monitoring global poverty using a measure that accounts for both own and relative income. This paper shows how—in the context of heterogeneous preferences over these factors—the well-known conflict between fairness and welfare-consistency can be resolved, establishing the first preference-based foundation for both the established societal global poverty line and recently proposed hierarchical poverty indices. The paper reformulates one hierarchical index as a modified headcount ratio. Unlike all classic poverty indices, this index is necessarily reduced when an individual escapes poverty. The application highlights that the proposed index substantially changes the assessment of global poverty reduction.

Keywords: Inequality; International Trade and Trade Rules; Poverty Impact Evaluation; Small Area Estimation Poverty Mapping; Poverty Monitoring & Analysis; Poverty Diagnostics; Poverty Lines; Poverty Assessment; Services & Transfers to Poor; Disability; Access of Poor to Social Services; Economic Assistance; Social Development & Poverty (search for similar items in EconPapers)
Date: 2021-11-08
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Working Paper: Global Income Poverty Measurement with Preference Heterogeneity: Theory and Application (2022)
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