AN ECONOMETRIC APPROACH TO THE MEASUREMENT OF POVERTY

Abstract

This paper presents a method for specifying and measuring poverty defined as relative deprivation. We base our measure of an individual's poverty on the distance between his/her consumption experience relative to the norm. Consumption experience is defined in terms of events and the modal frequency of an event in the community defines the norm. Aggregation over events is made to capture the objective as well as subjective nature of deprivation. Our measure is related to that proposed by Townsend and econometric estimation is carried out using the Townsend data. Income is found to be neither the sole nor the most important indicator of deprivation.

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