Welfare poverty measurement

This paper proposes an approach to poverty measurement based on the interpretation of poverty as a welfare loss, along the lines laid in Chakravarty [Chakravarty, S. R. 1983. “Ethically Flexible Measures of Poverty.” Canadian Journal of Economics 16: 74–85]. A multidimensional poverty index is derived here from a social welfare function and a vector of poverty thresholds, following the aggregate achievement approach. Poverty is measured as the relative welfare loss due to the insufficient welfare of those agents whose achievements do not reach the minimum established. Using standard social welfare functions, we derive a welfare poverty measure that combines rather explicitly the different aspects of poverty measurement (incidence, intensity and inequality). We include an empirical application to the measurement of between-country poverty, based on the three dimensions that conform the Human Development Index.

Villar, A. (2023). «Welfare poverty measurement». Journal of Human Development and Capabilities 24, n.º 2: 147-162.