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Arguments for a Better World: Essays in Honor of Amartya SenVolume I: Ethics, Welfare, and Measurement$
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Kaushik Basu and Ravi Kanbur

Print publication date: 2008

Print ISBN-13: 9780199239115

Published to Oxford Scholarship Online: May 2009

DOI: 10.1093/acprof:oso/9780199239115.001.0001

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On the Welfarist Rationale for Relative Poverty Lines *

On the Welfarist Rationale for Relative Poverty Lines *

Chapter:
(p.375) Chapter 20 On the Welfarist Rationale for Relative Poverty Lines*
Source:
Arguments for a Better World: Essays in Honor of Amartya Sen
Author(s):

Martin Ravallion

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199239115.003.0021

This chapter reviews the theory and evidence supporting a relativist approach to poverty measurement. It identifies various sources of welfare interdependence, including the idea of ‘relative deprivation’ as well as 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 chapter then reviews the problems encountered in testing for relative deprivation effects and presents some micro evidence from Malawi. While the results are consistent with the emphasis given to absolute level of living in development policy discussions, relative deprivation is evident in this poor but unequal country, and it is likely to become more important as the country develops.

Keywords:   relative deprivation, interdependence, absolute poverty, relative poverty, Malawi

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