Ravallion, Martin2012-05-252012-05-252008-01https://hdl.handle.net/10986/6466The theory and evidence supporting a relativist approach to poverty measurement are critically reviewed. Various sources of welfare interdependence are identified, including the idea of "relative deprivation" as well other (positive and negative) welfare effects for poor people of belonging to a better-off group. An economic model combines informal risk sharing with the idea of a "positional good," and conditions are derived in which the relative deprivation effect dominates, implying a relative poverty measure. The paper then reviews the problems encountered in testing for welfare effects of relative deprivation and discusses the implications of micro evidence from Malawi. The results are consistent with the emphasis given to absolute level of living in development policy discussions. However, relative deprivation is still evident in the data from this poor but unequal country, and it is likely to become a more important factor as the country develops.CC BY 3.0 IGOABSOLUTE POVERTYABSOLUTE POVERTY LINEAGGREGATE POVERTYAGRICULTUREAVERAGE INCOMEBASIC NEEDSCITIZENSCONSUMER DEMANDCONSUMPTION AGGREGATECONSUMPTION EXPENDITURECONSUMPTION GROWTHCOST FUNCTIONSCROSS-COUNTRY COMPARISONSDECOMPOSABLE POVERTYDECOMPOSABLE POVERTY MEASURESDEMAND FUNCTIONSDEPENDENT VARIABLEDEVELOPED COUNTRIESDEVELOPING COUNTRIESDEVELOPMENT ECONOMICSDEVELOPMENT POLICIESDEVELOPMENT POLICYECONOMETRICSECONOMIC GROWTHECONOMIC INEQUALITYECONOMIC PERFORMANCEECONOMIC REVIEWECONOMIC STATUSECONOMIC STUDIESECONOMIC THEORIESECONOMICSELASTICITYEMPIRICAL ANALYSISEMPIRICAL APPROACHESEMPIRICAL EVIDENCEEMPIRICAL RESULTSEMPIRICAL STUDIESEMPIRICAL WORKEMPLOYMENT OPPORTUNITIESEXPECTED VALUEFOOD ITEMSFUNCTIONAL FORMSHOUSEHOLD HEADHOUSEHOLD INCOMEHOUSEHOLD LEVELHOUSEHOLD MEMBERSHOUSEHOLD SIZEHOUSEHOLD SURVEYHOUSINGINCOMEINCOME DISTRIBUTIONINCOME EFFECTINCOME ELASTICITYINCOME GAINSINCOME INEQUALITYINCOME LEVELINCOME POVERTYINCOMESINCREASING FUNCTIONINDIFFERENCE CURVESINDIVIDUAL WELFAREINEQUALITYINFORMAL INSURANCEINSURANCELIVING STANDARDSLOCAL COMMUNITIESLOG INCOMELOW INCOMESMARGINAL PROPENSITY TO CONSUMEMEAN CONSUMPTIONMEAN INCOMEMEASUREMENT ERRORMEASUREMENT ERRORSMEASUREMENT OF POVERTYMEASUREMENT PROBLEMSMEASURING POVERTYMORTALITYNEGATIVE COEFFICIENTNEGATIVE EXTERNALITIESNEGATIVE EXTERNALITYPACE OF URBANIZATIONPOLICY DISCUSSIONSPOLICY MAKINGPOLICY RESEARCHPOLICY RESEARCH WORKING PAPERPOLITICAL ECONOMYPOORPOOR AREAPOOR AREASPOOR COUNTRIESPOOR COUNTRYPOOR PEOPLEPOOR PEOPLESPOOR RURAL HOUSEHOLDSPOSITIVE EFFECTPOSITIVE EXTERNALITIESPOSITIVE EXTERNALITYPOVERTY ANALYSISPOVERTY COMPARISONSPOVERTY GAPPOVERTY GAP INDEXPOVERTY INCREASESPOVERTY INDICESPOVERTY LINEPOVERTY LINESPOVERTY MEASUREPOVERTY MEASUREMENTPOVERTY MEASURESPOVERTY PROFILEPOVERTY RATEPOVERTY REDUCTIONPRIVATE TRANSFERSPROGRESSPROPORTIONAL INCREASEPUBLIC ECONOMICSPUBLIC GOODPUBLIC GOODSPUBLIC KNOWLEDGEPURCHASING POWERQUALITY OF LIFEREAL INCOMERECIPROCITYRELATIVE EARNINGSRELATIVE INCOMERELATIVE POVERTYRELATIVE PRICESRESPECTRISK SHARINGRURALRURAL AREASRURAL ECONOMYSOCIAL ASSISTANCESOCIAL CAPITALSOCIAL FACTORSSOCIAL JUSTICESOCIAL SECURITYSPILLOVERURBAN AREASUTILITY FUNCTIONUTILITY VALUEVILLAGE ECONOMIESWAGESWEALTHWELFARE INDICATORWELFARE MEASURESWESTERN EUROPEWORKING CONDITIONSWorld Bank10.1596/1813-9450-4486