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  3. American Economic Review
  4. December 2017
  5. Absolute Poverty: When Necessity Displaces Desire

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Absolute Poverty: When Necessity Displaces Desire

  • Robert C. Allen
American Economic Review
vol. 107, no. 12, December 2017
(pp. 3690–3721)
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Abstract

A new basis for an international poverty measurement is proposed based on linear programming for specifying the least cost diet and explicit budgeting for nonfood spending. This approach is superior to the World Bank's $1-a-day line because it is (i) clearly related to survival and well being; (ii) comparable across time and space since the same nutritional requirements are used everywhere while nonfood spending is tailored to climate; (iii) adjusts consumption patterns to local prices; (iv) presents no index number problems since solutions are always in local prices; and (v) requires only readily available information. The new approach implies much more poverty than the World Bank's, especially in Asia.

Citation

Allen, Robert C. 2017. "Absolute Poverty: When Necessity Displaces Desire." American Economic Review, 107 (12): 3690–3721. DOI: 10.1257/aer.20161080

Additional Materials

JEL Classification

  • C61 Optimization Techniques; Programming Models; Dynamic Analysis
  • I14 Health and Inequality
  • I31 General Welfare; Well-Being
  • I32 Measurement and Analysis of Poverty
  • O15 Economic Development: Human Resources; Human Development; Income Distribution; Migration