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As a part of the Living Standards Measurement Study, this paper presents a critical overview of alternative approaches towards setting poverty lines, which: a) define the minimum level of living standards before being considered " poor "; and, b) make comparisons among these minimum levels, for families of different size and/or composition in different locations and time. The paper argues that economists have emphasized the second role, while generally ignoring the first. Experience suggests that the poverty measures obtained, and the inference for policy derived, are affected by the choice made in setting poverty lines. In critically reviewing the methods found in practice, the paper aims to analyze, and attempts to resolve, ongoing debates about poverty measurements, highlighting the issues bearing the most on policy discussions. The paper discusses two methods within objective poverty lines: food-energy intake, and the cost of basic needs. Subjective poverty lines are discussed in the context of minimum income question, used in many developed countries, while pointing out its pitfalls in the context of developing countries. The paper concludes with a discussion of poverty lines found in practice, as opposed to the theoretical ones mentioned above.

Publisher: World Bank

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