Measuring the impact of vulnerability on the number of poor: a new methodology with empirical illustrationsSatya Chakravarty, Nachiketa Chattopadhyay, Jacques Silber and Guanghua Wan Chapter 4 in The Asian ‘Poverty Miracle’, 2016, pp 84-117 from Edward Elgar Publishing Abstract: Given a poverty line, a person who is non-poor (poor) currently may not be treated as non-poor (poor) in a vulnerable situation. This chapter looks at the impact of vulnerability on the poverty line. The poverty line is adjusted in the presence of vulnerability such that the utility of a person at the current poverty line and that at the adjusted poverty line become identical. Using an additive model of vulnerability, it is shown that if the utility function obeys constant Arrow–Pratt absolute risk aversion, then the harmonized poverty line is a simple absolute augmentation of the current poverty line. On the other hand, under a multiplicative model of vulnerability with constant Arrow–Pratt relative risk aversion, the revised poverty line is a simple relative augmentation of the current poverty line. The chapter contains empirical illustrations which assume that constant relative risk aversion applies to countries involved in the Asia-Pacific region. Upward adjustment of the poverty line under increased vulnerability, as captured through the value of the risk aversion parameter, is also observed. Keywords: Asian Studies; Development Studies; Economics and Finance (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:elg:eechap:17203_4 Ordering information: This item can be ordered from Access Statistics for this chapter More chapters in Chapters from Edward Elgar Publishing |
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