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Working Paper

Are We Confusing Poverty with Preferences?

SANITATION POVERTY THRESHOLD EXPENSIVE ITEMS LIVING STANDARDS UTILITY CONSISTENCY RURAL POVERTY THRESHOLD HOUSEHOLD SIZE POVERTY LINE EXPENSIVE FOOD EXPENSIVE CALORIES RURAL LINE RELATIVE PRICE FOOD CONSUMPTION BALANCED DIET INCOME SCHOOLING NATIONAL POVERTY LINE ADMINISTRATIVE REGIONS NON-FOOD COMPONENT ECONOMIC REVIEW DEVELOPING COUNTRIES NONFOOD ITEMS FOOD QUALITY CASSAVA HOUSING POLITICAL ECONOMY WELFARE FUNCTION POORER REGIONS REGIONAL DIVERSITY NATIONAL POVERTY TOMATOES POOR PEOPLE CORRELATION COEFFICIENT INTERNATIONAL POVERTY LINES PRICE VECTOR FOOD CONSUMPTION PER CAPITA RURAL POOR SCALAR ADJUSTMENT NON-FOOD PRICES REGION POVERTY REDUCTION RURAL FOOD MAIZE UTILITY-CONSISTENT POVERTY LINE CEREALS RURAL HOUSEHOLD FOOD BASKET MEASURING POVERTY RURAL HOUSEHOLDS DEVELOPMENT ECONOMICS FOOD POVERTY LINE HOUSEHOLD HEAD POOR HOUSEHOLD FOOD PRICE INTERNATIONAL POVERTY COMPARISONS ACCESS TO SAFE DRINKING WATER POVERTY INCIDENCE FOOD POVERTY LINES FOOD REQUIREMENTS WELFARE LEVEL POVERTY STATUS VEGETABLES CASH INCOME HOUSEHOLD SURVEYS POVERTY RANKINGS CONSISTENT POVERTY RELATIVE PRICES WELFARE INDICATORS URBAN POVERTY LINE POVERTY PROFILES HOUSEHOLD MEMBERS FOOD BUNDLES FOOD PRODUCTS NONFOOD COMPONENT POVERTY PROFILE BASIC FOODS HOUSEHOLD HEADS INDIFFERENCE CURVE UTILITY-CONSISTENT POVERTY FOOD ITEMS RURAL GAP RURAL POVERTY LINE POVERTY LINES STAPLE FOODS CONSUMPTION BEEF HUMAN ENERGY POVERTY COMPARISONS CASE STUDY SPECIFIC POVERTY LINE FOOD POVERTY POVERTY MEASUREMENT BASIC NEEDS LIVING STANDARDS SURVEY FOOD COMPONENT RURAL AREA EQUIVALENCE SCALES POLICY MAKERS PARTICULAR POVERTY LINE DEVELOPMENT ISSUES UTILITY FUNCTION RURAL POVERTY URBAN AREAS HOUSEHOLD FOOD EXPENDITURE MALNUTRITION RURAL NUTRITION FOOD UTILITY LEVEL FOOD DEMAND SOCIAL WELFARE EXPENDITURE LEVEL PROTEINS GEOGRAPHIC AREAS TARGETING ECONOMIC DEVELOPMENT DEMAND FOR FOOD RURAL DIMENSION CONSISTENT POVERTY LINES FOOD SHARE REGIONS DRINKING WATER EXTREME POVERTY CONSUMPTION PATTERNS RURAL AREAS POVERTY MEAT FOOD BUNDLE HOUSEHOLD CONSUMPTION FOOD AVAILABILITY RICE HOUSEHOLD NEEDS HOUSEHOLD EXPENDITURES HOUSEHOLD WELFARE NON-FOOD EXPENDITURE OVERALL POVERTY LINE POLICY RESEARCH STARVATION POVERTY RATE REDUCTION OF POVERTY POOR POVERTY ASSESSMENT CONSUMPTION PER CAPITA FOOD PRICES POVERTY BASKETS OFFICIAL POVERTY POLICY ANALYSIS POVERTY ASSESSMENTS FOODS FOOD ITEM YAM RURAL HEADCOUNT POOR HOUSEHOLDS
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World Bank, Washington, DC
Africa | Ghana | Mozambique
2015-05-07T21:23:27Z | 2015-05-07T21:23:27Z | 2015-04

Modifying the national poverty line to the context of observed consumption patterns of the poor is becoming popular. A context-specific poverty line would be more consistent with preferences. This paper provides theoretical and empirical evidence that the contrary holds and that the national poverty line is more appropriate for comparing living standards among the poor, at least under prevailing conditions in Mozambique and Ghana. The problem lies in the risk of downscaling the burden associated with cheap-calorie diets and the low nonfood component of the rural poor. The paper illustrates how observed behavior may neither reveal preferences nor detect heterogeneous preferences among the poor. Rather, the consumption pattern is the upshot of the poverty condition itself. Poverty is confused with preferences if observed cheap-calorie diets are seen as a matter of taste, whereas in fact they reflect a lack of means to consume a preferred diet of higher quality, as food Engel curve estimates indicate. Likewise, a smaller nonfood component is not a matter of a particular distaste, but an adaptation to the fact that various nonfood items (such as transport) and basic services (such as electricity and health) are simply absent in rural areas.

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