Publication: A Welfarist Theory Unifying Monetary and Non-Monetary Poverty Measurement
Loading...
Date
2022-06
ISSN
Published
2022-06
Author(s)
Editor(s)
Abstract
Multidimensional poverty measures are increasingly used in practice even though they face strong criticism and generate longlasting debates. These contentions primarily find their origin in the divergence between standard poverty identification practices and a welfarist definition of the poor. This paper fills this gap by constructing a poverty measurement theory that (i) adopts a welfarist definition of the poor, (ii) acknowledges that the relevant welfare function is only partially known and (iii) encompasses both market and non-market dimensions of well-being. The theory shows that standard identification practices are not flexible enough in order to properly account for the multidimensional nature of well-being. This nature implies that an individual is poor when she experiences an extremely low outcome in some dimension or/and when she cumulates moderately low outcomes in several dimensions. The paper proposes a simple refinement that better reflects this insight. The paper uses the theory in order to provide answers to several longlasting debates. The theory provides a conceptual foundation from which practitioners may derive guidance for the many choices they face.
Link to Data Set
Citation
“Decerf, Benoit. 2022. A Welfarist Theory Unifying Monetary and Non-Monetary Poverty Measurement. © World Bank. http://hdl.handle.net/10986/37520 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.Publication Global Poverty Revisited Using 2021 PPPs and New Data on Consumption(Washington, DC: World Bank, 2025-06-05)Recent improvements in survey methodologies have increased measured consumption in many low- and lower-middle-income countries that now collect a more comprehensive measure of household consumption. Faced with such methodological changes, countries have frequently revised upward their national poverty lines to make them appropriate for the new measures of consumption. This in turn affects the World Bank’s global poverty lines when they are periodically revised. The international poverty line, which is based on the typical poverty line in low-income countries, increases by around 40 percent to $3.00 when the more recent national poverty lines as well as the 2021 purchasing power parities are incorporated. The net impact of the changes in international prices, the poverty line, and new survey data (including new data for India) is an increase in global extreme poverty by some 125 million people in 2022, and a significant shift of poverty away from South Asia and toward Sub-Saharan Africa. The changes at higher poverty lines, which are more relevant to middle-income countries, are mixed.Publication Geopolitical Fragmentation and Friendshoring(Washington, DC: World Bank, 2025-06-26)This paper examines the relationship between geopolitical fragmentation and friendshoring of foreign investments over time, countries, and sectors. The analysis uses comprehensive data on foreign direct investments covering greenfield projects, mergers and acquisitions, and stocks of affiliates, as well as data on four alternative measures of geopolitical distance between countries. The gravity estimations suggest that, first, geopolitical differences have a negative effect on foreign investments and the magnitude has heightened in the post-pandemic period compared to a decade ago. Second, it is primarily the companies from advanced Western economies whose foreign investment decisions are increasingly shaped by friendshoring forces. Finally, the paper shows that friendshoring is not only confined to strategic industries, implying that allocations of foreign direct investments may not solely reflect national security or resilience considerations.Publication Soaring Food Prices Threaten Recent Economic Gains in the EU(Washington, DC: World Bank, 2025-07-02)The surge in food prices following the 2021 economic rebound has become a significant concern for households, particularly low-income ones, in Bulgaria, Croatia, Poland, and Romania. Food price inflation, which surpasses general inflation rates, risks worsening poverty and food insecurity in these countries. This paper explores the distributional impacts of rising food prices and the effectiveness of government response measures. Low-income households, who allocate a larger share of their income to food, are disproportionately affected and are struggling to cope with unexpected expenses, leading to increased difficulties in accessing proper nutrition. Simulations indicate that rising food prices contribute to higher poverty rates and greater income inequality, especially among vulnerable populations. They also suggest that the main poverty-targeted social assistance schemes offer critical support for the extreme poor, but expanding both coverage and benefits is vital to shield all at-risk individuals. Targeted policies that balance immediate relief with long-term resilience-building are essential to addressing the challenges posed by escalating food prices.Publication Disentangling the Key Economic Channels through Which Infrastructure Affects Jobs(Washington, DC: World Bank, 2025-04-03)This paper takes stock of the literature on infrastructure and jobs published since the early 2000s, using a conceptual framework to identify the key channels through which different types of infrastructure impact jobs. Where relevant, it highlights the different approaches and findings in the cases of energy, digital, and transport infrastructure. Overall, the literature review provides strong evidence of infrastructure’s positive impact on employment, particularly for women. In the case of electricity, this impact arises from freeing time that would otherwise be spent on household tasks. Similarly, digital infrastructure, particularly mobile phone coverage, has demonstrated positive labor market effects, often driven by private sector investments rather than large public expenditures, which are typically required for other large-scale infrastructure projects. The evidence on structural transformation is also positive, with some notable exceptions, such as studies that find no significant impact on structural transformation in rural India in the cases of electricity and roads. Even with better market connections, remote areas may continue to lack economic opportunities, due to the absence of agglomeration economies and complementary inputs such as human capital. Accordingly, reducing transport costs alone may not be sufficient to drive economic transformation in rural areas. The spatial dimension of transformation is particularly relevant for transport, both internationally—by enhancing trade integration—and within countries, where economic development tends to drive firms and jobs toward urban centers, benefitting from economies scale and network effects. Turning to organizational transformation, evidence on skill bias in developing countries is more mixed than in developed countries and may vary considerably by context. Further research, especially on the possible reasons explaining the differences between developed and developing economies, is needed.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Normative Indicators Combining Poverty and Mortality(World Bank, Washington, DC, 2022-05)This paper surveys the small branch of welfare economics that studies indicators combining poverty and mortality. The paper distinguishes two reasons for constructing such indicators. The first reason is to perform multidimensional well-being comparisons. For this purpose, mortality has (negative) intrinsic value. The key question relates to the trade-off that the indicator makes between poverty and mortality, that is, between the quality and quantity of life. A lifecycle utility approach suggests expressing this trade-off as the number of years spent in poverty that is deemed equivalent to one year lost to mortality. The second reason is to investigate the instrumental role that selective mortality—the fact that the poor tend to die earlier—has on the evolution of poverty measures. Then, the key question is how to define the counterfactual situation against which the instrumental impact of mortality is assessed.Publication Integrating Mortality into Poverty Measurement through the Poverty Adjusted Life Expectancy Index(World Bank, Washington, DC, 2022-07)Poverty measures typically do not account for mortality, resulting in counter-intuitive evaluations. The reason is that they (i) suffer from a mortality paradox and (ii) do not attribute intrinsic value to the lifespan. The paper proposes the first poverty index that always attributes a positive value to lifespan and does not suffer from the mortality paradox. This index, called the poverty-adjusted life expectancy, follows an expected lifecycle utility approach a la Harsanyi and is based on a single normative parameter that transparently captures the trade-off between poverty and mortality. This indicator can be straightforwardly generalized to account for unequal lifespans. Empirically, we show that accounting for mortality substantially changes cross-country comparisons and trends. The paper also quantifies the fraction of these comparisons that are robust to the choice of the normative parameter.Publication Reconceptualizing Global Multidimensional Poverty Measurement, with Illustration on Nigerian Data(Washington, DC: World Bank, 2023-10-03)Multidimensional poverty measures can in theory make well-being comparisons that are less biased than those solely based on monetary poverty. However, global multidimensional poverty measures suffer in practice from limitations that have led to credible criticisms. This paper presents the case for multidimensional poverty measures, two criticisms against their current implementations, as well as recently proposed solutions to improve on these criticisms. The paper develops a method for implementing these solutions in practice. The resulting well-being indicator is used to compare well-being across Nigerian states in 2019. This empirical illustration suggests that these solutions may substantially affect well-being comparisons. The paper also quantifies the potential bias inherent to comparing well-being solely based on monetary poverty. The results find substantially different well-being comparisons between the proposed well-being indicator and monetary poverty even though monetary poverty was (i) high in Nigeria in 2019 and (ii) very heterogeneously distributed across Nigerian states; and (iii) is integrated as one component of the proposed well-being indicator. The paper aims to improve global multidimensional poverty measures by making them more consistent with preference theory and by incorporating the direct impact of mortality, which deprives individuals of the most important functioning.Publication Multidimensional Well-Being Measurement Practices(Washington, DC: World Bank, 2024-06-12)Multidimensional well-being indicators have the potential to reduce the “bias” associated to monetary indicators. However, they face stringent data constraints. This paper studies the construction of indicators that strike a balance between (i) reliability in approximating conceptually sound well-being comparisons and (ii) simplicity of application and communication. The recommendations focus on global multidimensional poverty measures. The paper identifies three potential sources of improvements: “wasting” less data, better filtering the data, and further developing multidimensional analysis. Less information would be “wasted” by avoiding needlessly dichotomizing all the variables, using the available mortality data, and combining variables from separate surveys. To filter the data better, “equal weights” could be replaced by weights selected from external information on preferences. When the data permit, the unit of analysis should be switched from household level to individual level. Finally, multidimensional indicators should be used to help move beyond a suboptimal “dimension-by-dimension” approach to policy making.Publication Planning, Monitoring, and Evaluation : Methods and Tools for Poverty and Inequality Reduction Programs(World Bank, Washington, DC, 2013-01)As the author enter the second decade of the twenty-first century, governments, international organizations, nongovernmental organizations (NGOs), philanthropic organizations, and civil society groups worldwide are actively focusing on evidence-based policy and increased accountability to stakeholders (results agenda).The widespread implementation of the Results Agenda has generated a plethora of books, guides, academic papers, trainings, and case studies, which has enabled an ongoing maturation process in the field. Consequently, specialists are now better equipped to understand what works under which circumstances. Broadly speaking there are two interrelated questions which must be answered when assessing the sustainability of a government results agenda. First, is the institutional design and practice of government conducive to evidence-based policy making? Second, are the overarching monitoring and evaluation (M&E) methods and specific tools used appropriate for garnering the evidence demanded by government? These series of notes aim to make a small contribution to the latter question by summarizing and highlighting a selection of PM&E methods and the tools that governments and international organizations around the world have developed to put these into practice in their own contexts. The central goal of this initiative is to prompt a process of learning, reflection and action by providing practical information to those whose leadership role requires them to understand PM&E methods and their potential for enhancing evidence-based policy making.
Users also downloaded
Showing related downloaded files
Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication World Development Report 1994(New York: Oxford University Press, 1994)World Development Report 1994, the seventeenth in this annual series, examines the link between infrastructure and development and explores ways in which developing countries can improve both the provision and the quality of infrastructure services. In recent decades, developing countries have made substantial investments in infrastructure, achieving dramatic gains for households and producers by expanding their access to services such as safe water, sanitation, electric power, telecommunications, and transport. Even more infrastructure investment and expansion are needed in order to extend the reach of services - especially to people living in rural areas and to the poor. But as this report shows, the quantity of investment cannot be the exclusive focus of policy. Improving the quality of infrastructure service also is vital. Both quantity and quality improvements are essential to modernize and diversify production, help countries compete internationally, and accommodate rapid urbanization. The report identifies the basic cause of poor past performance as inadequate institutional incentives for improving the provision of infrastructure. To promote more efficient and responsive service delivery, incentives need to be changed through commercial management, competition, and user involvement. Several trends are helping to improve the performance of infrastructure. First, innovation in technology and in the regulatory management of markets makes more diversity possible in the supply of services. Second, an evaluation of the role of government is leading to a shift from direct government provision of services to increasing private sector provision and recent experience in many countries with public-private partnerships is highlighting new ways to increase efficiency and expand services. Third, increased concern about social and environmental sustainability has heightened public interest in infrastructure design and performance. This report includes the World Development Indicators, which offer selected social and economic statistics for 132 countries.Publication World Development Report 2006(Washington, DC, 2005)This year’s Word Development Report (WDR), the twenty-eighth, looks at the role of equity in the development process. It defines equity in terms of two basic principles. The first is equal opportunities: that a person’s chances in life should be determined by his or her talents and efforts, rather than by pre-determined circumstances such as race, gender, social or family background. The second principle is the avoidance of extreme deprivation in outcomes, particularly in health, education and consumption levels. This principle thus includes the objective of poverty reduction. The report’s main message is that, in the long run, the pursuit of equity and the pursuit of economic prosperity are complementary. In addition to detailed chapters exploring these and related issues, the Report contains selected data from the World Development Indicators 2005‹an appendix of economic and social data for over 200 countries. This Report offers practical insights for policymakers, executives, scholars, and all those with an interest in economic development.Publication Argentina Country Climate and Development Report(World Bank, Washington, DC, 2022-11)The Argentina Country Climate and Development Report (CCDR) explores opportunities and identifies trade-offs for aligning Argentina’s growth and poverty reduction policies with its commitments on, and its ability to withstand, climate change. It assesses how the country can: reduce its vulnerability to climate shocks through targeted public and private investments and adequation of social protection. The report also shows how Argentina can seize the benefits of a global decarbonization path to sustain a more robust economic growth through further development of Argentina’s potential for renewable energy, energy efficiency actions, the lithium value chain, as well as climate-smart agriculture (and land use) options. Given Argentina’s context, this CCDR focuses on win-win policies and investments, which have large co-benefits or can contribute to raising the country’s growth while helping to adapt the economy, also considering how human capital actions can accompany a just transition.Publication World Development Report 2011(World Bank, 2011)The 2011 World development report looks across disciplines and experiences drawn from around the world to offer some ideas and practical recommendations on how to move beyond conflict and fragility and secure development. The key messages are important for all countries-low, middle, and high income-as well as for regional and global institutions: first, institutional legitimacy is the key to stability. When state institutions do not adequately protect citizens, guard against corruption, or provide access to justice; when markets do not provide job opportunities; or when communities have lost social cohesion-the likelihood of violent conflict increases. Second, investing in citizen security, justice, and jobs is essential to reducing violence. But there are major structural gaps in our collective capabilities to support these areas. Third, confronting this challenge effectively means that institutions need to change. International agencies and partners from other countries must adapt procedures so they can respond with agility and speed, a longer-term perspective, and greater staying power. Fourth, need to adopt a layered approach. Some problems can be addressed at the country level, but others need to be addressed at a regional level, such as developing markets that integrate insecure areas and pooling resources for building capacity Fifth, in adopting these approaches, need to be aware that the global landscape is changing. Regional institutions and middle income countries are playing a larger role. This means should pay more attention to south-south and south-north exchanges, and to the recent transition experiences of middle income countries.