Eating Like Which 'Joneses'? An Iterative Solution to the Choice of Poverty Line Reference Group

Poverty and Inequality Analysis

A standard method for calculating poverty lines (e.g. Ravallion, 1994) is not fully specified. The choice of the “reference population” for determining food baskets is left to the decision of the individual analyst. However, the poverty line can be quite sensitive to the real income of the reference group because the “quality” of the food basket—measured as the food expenditures per calories—rises sharply with income. We propose that the reference group be centered on the poverty line. To address the obvious circularity problem in choosing a reference population at the poverty line to define the poverty line, we use an iterative approach. This iterative method provides a methodological anchor thet fixes the reference group.

Research Area 
Research Topic 
poverty measurement
poverty line
Publication Type 
Journal Article
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