Poverty Measurement Under Income Risk. Armutsmessung bei Einkommensrisiken

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Abstract

Poverty indices are usually calculated on the basis of (cross section) income data from the past. As past income is fixed and future income is uncertain such measurement does not reflect the ex ante risk of falling into poverty. This paper presents refinements of commonly used poverty measures to account for income risk. It is shown that the standard headcount ratio underestimates poverty in societies with moderate poverty if income is risky. The Foster, Greer and Thorbecke measure always underestimates poverty if income risk is neglected.
Original languageEnglish
Pages (from-to)337-350
JournalJahrbücher für Nationalökonomie und Statistik
Volume224
Issue number3
Publication statusPublished - 2004

Keywords

  • consumption
  • spells

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