Reference Groups and the Poverty Line: An Axiomatic Approach with an Empirical Illustration

From:
Department for International Development
Published
1 January 2015
Country:
India, China
Document Type:
Working Paper
Theme:
Economic Growth
Authors:
Chakravarty, S.R., Chattopadhyay, N., Nissanov, Z., Silber, J.

Abstract

A recent trend in the study of poverty is to consider a relative poverty line, one that is responsive to the nature of the income distribution. We develop an axiomatic approach to the determination of an amalgam poverty line. Given a reference income (e.g. the mean or the median), the amalgam poverty line becomes a weighted average of the absolute poverty line and the reference income, where the weights depend on the policy maker’s preferences for aggregating the two components. The paper ends with an empirical illustration comparing rural and urban areas in the People’s Republic of China and India.

Citation

Chakravarty, S.R.; Chattopadhyay, N.; Nissanov, Z.; Silber, J. Reference Groups and the Poverty Line: An Axiomatic Approach with an Empirical Illustration. UNU-WIDER, Helsinki, Finland (2015) 24 pp. [WIDER Working Paper No. 2015/002]

Reference Groups and the Poverty Line: An Axiomatic Approach with an Empirical Illustration

Published 1 January 2015
Contents