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By Martin Ravallion

A poverty line is helping concentration the eye of governments and civil society at the residing stipulations of the terrible. This paper deals a serious assessment of different ways to surroundings poverty strains. In reviewing the equipment present in perform, the paper attempts to throw gentle on, and pass a way towards resolving, ongoing debates approximately poverty dimension, emphasizing these debates which might seem to have maximum touching on coverage discussions.

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Example text

Clearly then, the method of drawing the line matters to assessments of how much economic growth reduces poverty. To give another example, the ranking of regions or other socio-economic groupings in terms of poverty can inform policy choices, such as decisions as to which regions should be targeted first in attempts to reduce poverty. There are cost of living differences between regions, and other factors such as access to non-market goods, that one would want to incorporate in the structure of poverty lines.

The alternative methods found in practice for dealing with such problems can give radically different results; for example, one study for Indonesia found virtually zero correlation between the regional poverty profiles produced by the two most common methods used for drawing poverty lines (Ravallion and Bidani, 1994). What principles might usefully guide methods of setting poverty lines in practice? One wants the method of measurement to be consistent with the purpose of measurement. I shall argue that when that purpose is to monitor progress in reducing poverty in terms of a given measure of welfare, or to target limited public resources to better reduce aggregate poverty, then the poverty lines used should have constant value in terms of that welfare measure.

Page 9 participate fully in the society around them, than as an abstract concept of "utility". Let cz be the value of the capabilities needed to escape poverty. The poverty level of utility in equation (1) can then be obtained as: Having found uz we can proceed as in the last section. To make the above framework more concrete, consider nutrition-based poverty lines. Objective methods of setting poverty lines have often identified activity levels for maintaining bodily functions at rest and for supporting work.

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