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Chronic Poverty and All That: The Measurement of Poverty over Time
Cesar
Calvo,
University of Oxford & Universidad de Piura
Stefan
Dercon,
CSAE, University of Oxford
WPS/2007-04
ABSTRACT:
We explore how to measure poverty over time, by focusing on trajectories of poverty rather than
poverty at a particular point in time. We consider welfare outcomes over a period in time, consisting of
a number of spells. We offer a characterization of desirable properties for measuring poverty across
these spells, as well as an explicit discussion of three issues. First, should there be scope for
compensation so that a poor spell can be compensated for by a non-poor spell? Second, is there scope
for discounting or should all spells be equally valued? Third, does the actual sequence of poor spells
matter, for example whether they are consecutive or not? We offer a number of measures that
implicitly offer different answers to these questions, in a world of certainty. Finally, we also offer an
extension towards a forward-looking measure of vulnerability, defined as the threat of poverty over
time, that incorporates risk. An application to data from Ethiopia shows that especially the assumption
of compensation results in different inference on poverty.
SUGGESTED CITATION:
Cesar Calvo and Stefan Dercon,
"Chronic Poverty and All That: The Measurement of Poverty over Time "
(March 1, 2007).
The Centre for the Study of African Economies Working Paper Series.
Working Paper 263.
http://www.bepress.com/csae/paper263
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