Are We Confusing Poverty with Preferences?

Modifying the national poverty line to the context of observed consumption patterns of the poor is becoming popular. A context-specific poverty line would be more consistent with preferences. This paper provides theoretical and empirical evidence that the contrary holds and that the national poverty line is more appropriate for comparing living standards among the poor, at least under prevailing conditions in Mozambique and Ghana. The problem lies in the risk of downscaling the burden associated with cheap-calorie diets and the low nonfood component of the rural poor. The paper illustrates how observed behavior may neither reveal preferences nor detect heterogeneous preferences among the poor. Rather, the consumption pattern is the upshot of the poverty condition itself. Poverty is confused with preferences if observed cheap-calorie diets are seen as a matter of taste, whereas in fact they reflect a lack of means to consume a preferred diet of higher quality, as food Engel curve estimates indicate. Likewise, a smaller nonfood component is not a matter of a particular distaste, but an adaptation to the fact that various nonfood items (such as transport) and basic services (such as electricity and health) are simply absent in rural areas.

Bibliographic Details

Main Authors:	van den Boom, Bart, Halsema, Alex, Molini, Vasco
Format:	Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2015-04
Subjects:	SANITATION, POVERTY THRESHOLD, EXPENSIVE ITEMS, LIVING STANDARDS, UTILITY CONSISTENCY, RURAL POVERTY THRESHOLD, HOUSEHOLD SIZE, POVERTY LINE, EXPENSIVE FOOD, EXPENSIVE CALORIES, RURAL LINE, RELATIVE PRICE, FOOD CONSUMPTION, BALANCED DIET, INCOME, SCHOOLING, NATIONAL POVERTY LINE, ADMINISTRATIVE REGIONS, NON-FOOD COMPONENT, ECONOMIC REVIEW, DEVELOPING COUNTRIES, NONFOOD ITEMS, FOOD QUALITY, CASSAVA, HOUSING, POLITICAL ECONOMY, WELFARE FUNCTION, POORER REGIONS, REGIONAL DIVERSITY, NATIONAL POVERTY, TOMATOES, POOR PEOPLE, CORRELATION COEFFICIENT, INTERNATIONAL POVERTY LINES, PRICE VECTOR, FOOD CONSUMPTION PER CAPITA, RURAL POOR, SCALAR ADJUSTMENT, NON-FOOD PRICES, REGION, POVERTY REDUCTION, RURAL FOOD, MAIZE, UTILITY-CONSISTENT POVERTY LINE, CEREALS, RURAL HOUSEHOLD, FOOD BASKET, MEASURING POVERTY, RURAL HOUSEHOLDS, DEVELOPMENT ECONOMICS, FOOD POVERTY LINE, HOUSEHOLD HEAD, POOR HOUSEHOLD, FOOD PRICE, INTERNATIONAL POVERTY COMPARISONS, ACCESS TO SAFE DRINKING WATER, POVERTY INCIDENCE, FOOD POVERTY LINES, FOOD REQUIREMENTS, WELFARE LEVEL, POVERTY STATUS, VEGETABLES, CASH INCOME, HOUSEHOLD SURVEYS, POVERTY RANKINGS, CONSISTENT POVERTY, RELATIVE PRICES, WELFARE INDICATORS, URBAN POVERTY LINE, POVERTY PROFILES, HOUSEHOLD MEMBERS, FOOD BUNDLES, FOOD PRODUCTS, NONFOOD COMPONENT, POVERTY PROFILE, BASIC FOODS, HOUSEHOLD HEADS, INDIFFERENCE CURVE, UTILITY-CONSISTENT POVERTY, FOOD ITEMS, RURAL GAP, RURAL POVERTY LINE, POVERTY LINES, STAPLE FOODS, CONSUMPTION, BEEF, HUMAN ENERGY, POVERTY COMPARISONS, CASE STUDY, SPECIFIC POVERTY LINE, FOOD POVERTY, POVERTY MEASUREMENT, BASIC NEEDS, LIVING STANDARDS SURVEY, FOOD COMPONENT, RURAL AREA, EQUIVALENCE SCALES, POLICY MAKERS, PARTICULAR POVERTY LINE, DEVELOPMENT ISSUES, UTILITY FUNCTION, RURAL POVERTY, URBAN AREAS, HOUSEHOLD, FOOD EXPENDITURE, MALNUTRITION, RURAL, NUTRITION, FOOD, UTILITY LEVEL, FOOD DEMAND, SOCIAL WELFARE, EXPENDITURE LEVEL, PROTEINS, GEOGRAPHIC AREAS, TARGETING, ECONOMIC DEVELOPMENT, DEMAND FOR FOOD, RURAL DIMENSION, CONSISTENT POVERTY LINES, FOOD SHARE, REGIONS, DRINKING WATER, EXTREME POVERTY, CONSUMPTION PATTERNS, RURAL AREAS, POVERTY, MEAT, FOOD BUNDLE, HOUSEHOLD CONSUMPTION, FOOD AVAILABILITY, RICE, HOUSEHOLD NEEDS, HOUSEHOLD EXPENDITURES, HOUSEHOLD WELFARE, NON-FOOD EXPENDITURE, OVERALL POVERTY LINE, POLICY RESEARCH, STARVATION, POVERTY RATE, REDUCTION OF POVERTY, POOR, POVERTY ASSESSMENT, CONSUMPTION PER CAPITA, FOOD PRICES, POVERTY BASKETS, OFFICIAL POVERTY, POLICY ANALYSIS, POVERTY ASSESSMENTS, FOODS, FOOD ITEM, YAM, RURAL HEADCOUNT, POOR HOUSEHOLDS,
Online Access:	http://documents.worldbank.org/curated/en/2015/04/24415505/confusing-poverty-preferences http://hdl.handle.net/10986/21862
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