Annual Forum Papers

Estimating Utility Consistent Poverty Lines

  • Year: 2004
  • Author(s): Channing Arndt; Kenneth Simler
  • Countries and Regions: Mozambique

The "Cost of Basic Needs" (CBN) approach to drawing consumption based poverty lines is widely applied and lays credible claim to being the best practice for estimating poverty measures. Unfortunately, a growing mass of evidence indicates that poverty estimates obtained under the CBN approach are often demonstrably utility inconsistent. Here, we introduce an information theoretic approach for estimating utility consistent poverty lines. An example of the approach is provided for the case of Mozambique. The approach represents a powerful addition to the poverty analyst's toolkit and enhances the attractiveness of the CBN approach for practical poverty measurement problems.