We explore how to measure poverty over time, by focusing on trajectories
of poverty rather than poverty at a particular point in time. We
consider welfare outcomes over a period in time, consisting of a number
of spells. We offer a characterization of desirable properties for
measuring poverty across these spells, as well as an explicit discussion
of three issues. First, should there be scope for compensation so that a
poor spell can be compensated for by a non-poor spell? Second, is there
scope for discounting or should all spells be equally valued? Third,
does the actual sequence of poor spells matter, for example whether they
are consecutive or not? We offer a number of measures that implicitly
offer different answers to these questions, in a world of certainty.
Finally, we also offer an extension towards a forwardlooking measure of
vulnerability, defined as the threat of poverty over time, that
incorporates risk. An application to data from Ethiopia shows that
especially the assumption of compensation results in different inference
Chronic poverty and all that: the measurement of poverty over time. CPRC Working Paper No. 89, Chronic Poverty Research Centre (CPRC), Manchester, UK, ISBN: 1-904049-88-5, iv + 24 pp.