surplus disposal in world markets an application to egyptian cotton in many countries agricultural exports are managed directly by governments a frequent problem encountered by policy makers involves the accumulation of unwanted surpluses caused by domestic price support programs unforeseen declines in world demand or unexpected shifts in the domestic supply demand balance this paper examines the intertemporal use of the world markets as a means to eliminate these surpluses the analytical results follow directly from the theory of storage they are applied to an analysis of the egyptian els cotton market where stock levels in the early 1980s became about six times as large as normal carryout estimation results suggest that optimal disposal plans may frequently involve selling surplus stocks in a single year

defining chronic poverty comparing different approaches in this study we discuss two methods commonly used in the literature to measure chronic poverty the permanent income approach where the chronically poor are those whose mean income over time is below the poverty line and the spells approach where the chronically poor are those households who are below the poverty line half of the time or more we check the differences between these two methods considering also several household characteristics the index we use is that of foster greer and thorbecke fgt with and when each method identifies the chronically poor which could be different individuals by each method and shows the percentage of the chronically poor while when the methods also take into account the depth of poverty our main goal is to show the differences between the two methods so that policymakers would have different perspectives on the problem of chronic poverty and could make decisions on this basis the results show that in the data used the permanent method and the spells

sickness and death economic consequences and coping strategies of the urban poor in bangladesh summary we investigate the economic consequences of sickness and death and the manner in which poor urban households in bangladesh respond to such events based on panel data we assess the effects of morbidity and mortality episodes on household income medical spending labor supply and consumption we find that despite maintaining household labor supply serious illness exerts a negative effect on income for the poor however the estimates do not reject consumption smoothing the most prominent responses to finance current needs are increasing household debt through borrowing and depleting productive assets both of which have detrimental effects on future consumption

ill health savings and portfolio choices in developing economies abstract this paper examines the effect of adult health on the savings and portfolio decisions of rural pakistani households it also tests whether such effects result because ill health affects income and the rates of return on specific assets by so doing it provides evidence on the sensitivity of savings to income changes and to interest rates i find that expectations of future ill health increase overall savings but reduce investments in productive assets thereby forging a link between health and poverty i also find that the number of males in a household condition the impact of the ill health of any given individual on savings outcomes

price formation in commodity markets this paper develops a theory consistent market model for storable commodities and illustrates its characterization of the data generating process for a set of major traded commodities the dynamics of the system incorporate recent advances in modelling techniques cointegrated variables in the demand functions are represented by the error correction mechanism ecm and expected prices in the stock demand relationship are generated by a rational expectations process the outside sample performance of the model is tested against the pure time series model used to formulate expected prices and is shown to have a smaller mean square error than that of the time series model thus the model provides comparatively efficient forecasts and unlike models constructed in their reduced form permits consideration of key behavioural relationships in commodity markets

credit market constraints consumption smoothing and the accumulation of durable production assets in low income countries investments in bullocks in india in this paper we formulate and estimate a finite horizon structural dynamic model of agricultural investment behavior that incorporates the major features of low income agricultural environments income uncertainty constraints on borrowing and rental markets and the use of investment assets to generate income and smooth consumption the model is fit to longitudinal indian household data on farm profits bullock stocks and pump sets the estimated structural parameters are used to assess the effects on the life cycle accumulation of bullocks agricultural profits and welfare associated with complete markets and bullock liquidity and with second best policies that provide assured sources of income to farmers and weather insurance

using the downside mean semideviation for measuring vulnerability to poverty abstract this paper introduces a new approach for measuring vulnerability to poverty using the standard downside mean semideviation as a risk parameter we identify vulnerability by comparing the uncertain outcomes of household well being with poverty line in a mean risk behavior framework

consumption vulnerability to risk in rural pakistan abstract as one of the dimensions of vulnerability this paper empirically investigates the inability of rural dwellers to cope with negative income shocks a variable coefficient regression model is applied to a two period household panel dataset collected in the north west frontier province pakistan an area with high incidence of income poverty and low human development the empirical model allows for a different ability to smooth consumption approximated by a linear function of households attributes and controls for the endogeneity of observed changes in income using qualitative information on subjective risk assessment estimation results show that the ability to cope with negative income shocks is lower for households that are aged landless and do not receive remittances regularly

measuring lifetime poverty abstract this paper presents an axiomatic framework for measuring lifetime poverty over multiple periods for an individual we argue that lifetime poverty is influenced by both the snapshot poverty of each period and the poverty level of the permanent lifetime consumption it is also influenced by how poverty spells are distributed over the lifetime we axiomatically characterize classes of lifetime poverty indices and derive dominance conditions of poverty orderings for both individual and societal lifetime poverty measurements

estimating households vulnerability to idiosyncratic and covariate shocks a novel method applied in madagascar households in developing countries are frequently hit by severe idiosyncratic and covariate shocks leading to high consumption volatility a household s currently observed poverty status might therefore not be a good indicator of the household s general vulnerability to poverty in the recent years there has been an emerging literature on the concept and empirical analysis of vulnerability but because of strong data requirements for vulnerability analysis and limited availability of panel and shock data for developing countries static poverty analysis still dominates empirical vulnerability studies in this paper we propose a simple method to empirically assess the impact of idiosyncratic and covariate shocks on households vulnerability which can be applied in a wide context as it relies on more commonly available cross sectional or short panel data we empirically illustrate our approach for madagascar we show that covariate shocks have a relatively higher impact on rural households whereas idiosyncratic shocks have a relatively higher impact on urban households vulnerability

estimating dynamic demand for cigarettes using panel data the effects of bootlegging taxation and advertising reconsidered abstracct a dynamic demand for cigarette consumption is estimated using pooled data of 46 states over the period 1963 to 1980 a price elasticity of 0 2 and an insignificant income elasticity is found using pooled estimation techniques the bootlegging effect is modeled explicitly using neighboring price the effect is found to be significant two major policy issues are analyzed in light of these new estimates 1 cigarette taxation is found to be an effective tool for generating revenues even though there may be spillover effects to neighboring states where bootlegging is significant 2 the effects of the fairness doctrine act and the advertising ban on cigarette consumption are re examined we find mild support for the effectiveness of subsidized anti smoking messages in reducing cigarette consumption and no support for the thesis that the ban on advertising helps to increase per capita consumption

persistent expected and innate poverty estimates for semi arid rural south india 1975 1984 this paper uses nine years of panel data on 170 rural households in southern india to calculate intertemporal measures of poverty these include measures of 1 expected poverty that identify households likely to remain poor on average during any year 2 innate poverty that identify households that are poor owning to deep rooted characteristics that cannot easily be changed in the short run and 3 persistent poverty that identify households whose incomes fall below a fixed poverty line over a number of years the poverty rates estimated for the sample with the three measures are 61 percent 48 percent and 22 percent respectively c 1993 academic press inc copyright 1993 by oxford university press

chronic poverty in the united states this paper proposes a method of measuring chronic and transitory poverty using an axiomatically sound additively decomposable index of aggregate poverty our approach is contrasted with alternative methods of measuring poverty persistence we use our method to measure chronic and transitory poverty in the united states during the 1980s and late 1970s and find that chronic poverty is a more serious problem than previously thought between the late 1970s and mid 1980s poverty not only increased it became more chronic and less transitory in nature this is true for the population as a whole and for some but not all of the subpopulations we considered the latter were defined according to race type of social unit and educational qualifications of the head of the social unit all empirical analyses are based on data from the panel study of income dynamics

are some groups more vulnerable to macroeconomic shocks than others hypothesis tests based on panel data from peru abstract which socio economic groups are most vulnerable to welfare declines during a macroeconomic shock after clarifying the difference between poverty and vulnerability this paper presents an analytical framework and applies it to panel data from peru major findings are 1 households with better educated heads are less vulnerable 2 female headed households are no more vulnerable than male headed households 3 households with more children are more vulnerable 4 transfer networks that assist the poor in relatively stable periods do not protect them during a major shock unless they originate from outside peru and 5 peru s social security program is targeted neither to vulnerable nor to poor households but other transfer programs are better targeted

slipping into and out of poverty the dynamics of spells this paper examines the dynamics of poverty previous analyses have examined either fluctuations in the male heads earnings or the frequency of poverty periods over a fixed time frame our approach depends on a definition of spells of poverty using this methodology we find that the majority of poor persons at any time are in the midst of a rather long spell of poverty the methodology also allows us to estimate that less than 40 percent of poverty spells begin because of a drop in the heads earnings while 60 percent of the spells end when the heads earnings increase thus researchers must focus on household formation decisions and on the behavior of secondary family members there has been a dramatic resurgence recently of discussion of the underclass the discussion is reminiscent of debates about poverty during the 1960s when the notions of a culture of poverty particularly as popularized by michael harrington s other america 1962 dominated both intellectual and policy thinking the idea of an underclass seems inconsistent however with much of the research on the dynamics of poverty during the 1970s that research using new longitudinal data seemed to show that the bulk of the poor were poor for only a few years the research also showed that the poor were a very heterogeneous group including a small minority of persistently poor the persistence of poverty is of interest both for understanding the phenomenon and for developing policy claims about dependency and separate life styles among the poor rest on assumptions about the long term nature of poverty questions

credit as insurance in agrarian economies abstract this paper examines consumption credit as an insurance mechanism in agrarian economies it explains the more rapid adoption of new technology in the green revolution by large farmers who had greater access to consumption credit the paper also demonstrates how the emergence and expansion of consumption credit markets by mitigating the need for hoarding in order to meet consumption contingencies enhances growth by encouraging investment

vulnerability and poverty dynamics in vietnam drawing upon the vietnam household living standards survey vhlss data that cover the whole of vietnam in 2002 and 2004 ex ante measures of vulnerability are constructed these are then compared with static indicators of poverty i e the headcount ratio in a particular year detailed analyses of the panel data show that i in general vulnerability in 2002 translates into poverty in 2004 ii vulnerability of the poor tends to perpetuate their poverty and iii sections of the nonpoor but vulnerable slip into poverty durable reduction in poverty is conditional on i accurate identification of the vulnerable ii their sources of vulnerability and iii design of social safety nets that would enable the vulnerable to reduce risks and cope better with rapid integration of markets with the larger global economy

informal insurance arrangements with limited commitment theory and evidence from village economies recent work on consumption allocations in village economies finds that idiosyncratic variation in consumption is systematically related to idiosyncratic variation in income thus rejecting the hypothesis of full risk pooling we attempt to explain these observations by adding limited commitment as an impediment to risk pooling we provide a general dynamic model and completely characterise efficient informal insurance arrangements constrained by limited commitment and test the model using data from three indian villages we find that the model can fully explain the dynamic response of consumption to income but that it fails to explain the distribution of consumption across households

the effectiveness of anti smoking legislation a review abstract this survey focuses on government efforts to curb the use of undesirable goods notably tobacco products we synthesize the economics literature and examine the effectiveness of government curbs on tobacco consumption through non price controls such as bans on cigarette advertising health warnings and workplace smoking bans and price measures or higher prices through higher taxes this literature review is unique in that we do not merely aim to provide a summary of the literature rather our main focus is to draw conclusions from the literature regarding the effectiveness of alternate policy measures across countries in checking smoking and to provide directions suggestions for extending the scope of government intervention to other tobacco products

aggregate cigarette demand and regional differences in china national educational level final consumption expenditure average propensity to cigarette consumption apcc and cigarette price are adopted to research the regional and national aggregate cigarette demand of china under the condition that the effects of anti smoking education in the chinese current educational system are not remarkable the theoretical model shows that cigarette demand will increase with the increase of national educational level empirical analysis points out that cigarette demand increases with the increase of educational level estimates also suggest that cigarette price consumption expenditure and apcc will affect cigarette demand significantly and that there are great differences for cigarette demand by region

measuring exposure to downside risk with an application to thailand and vietnam summary in this paper we propose a new measure of exposure to downside risk its reference point is the current standard of living of a household as opposed to other benchmarks such as the poverty line in the case of measures of vulnerability using panel data from thailand and vietnam we develop an empirical approach to quantify our measure more precisely we predict truly forward looking probabilities and deprivation indices of different states of the world and aggregate them to country specific measures of exposure to downside risk we scrutinize the correlates of these measures in the periods 2007 08 and 2008 09 using regressions with household fixed effects we examine vulnerability to poverty and hybrid vulnerability to poverty in an identical empirical framework this allows us to draw conclusions with respect to the value added of our new measure we find that the measure of exposure to downside risk indeed offers complimentary information that may be relevant from a policy perspective and recommend to incorporate its appraisal in holistic assessments of vulnerability and risk exposure

health shocks and natural resource management evidence from western kenya poverty and altered planning horizons brought on by the hiv aids epidemic can change individual discount rates altering incentives to conserve natural resources using longitudinal household survey data from western kenya we estimate the effects of health status on investments in soil quality as indicated by households agricultural land fallowing decisions we first show that this effect is theoretically ambiguous while health improvements lower discount rates and thus increase incentives to conserve natural resources they also increase labor productivity and make it more likely that households can engage in labor intensive resource extraction activities we find that household size and composition are predictors of whether the effect of health improvements on discount rates dominates the productivity effect or vice versa since households with more and younger members are better able to reallocate labor to cope with productivity shocks the discount rate effect dominates for these households and health improvements lead to greater levels of conservation in smaller families with less substitutable labor the productivity effect dominates and health improvements lead to greater environmental degradation

consumption and vulnerability among foragers and horticulturalists in the rainforest of honduras abstract it is often said that poor rural households in developing countries remain inadequately insured against shocks using panel data from tawahka amerindians in the honduran rainforest a horticultural foraging society we estimate the consumption smoothing ability and vulnerability to risks of 32 households in two villages with varying degrees of market openness the information was collected using cultural anthropology methods and key variables were estimated through direct observations and physical measures to reduce measurement errors results suggest that household consumption is directly affected by income shocks despite the practice of partial insurance and risk sharing within communities in a comparison between the villages we find evidence that households practice distinctly different consumption smoothing behaviors partly driven by their gap in economic development

vulnerability to poverty an empirical comparison of alternative measures this article compares empirically the several measures of individual vulnerability to poverty proposed in the literature in order to understand which is the best signal of poverty that can be used for policy purposes to this aim the receiver operating characteristic roc curve the pearson and spearman correlation coefficients are used as precision criteria the results show that two groups of indexes can be identified high and low performers and among the former that proposed by dutta et al 2011 is the most precise

the effect of prime age adult mortality on household composition and consumption in rural ethiopia abstract using panel data from ethiopia covering 1994 1997 we estimate the impact of prime age adult mortality on household composition household expenditures and dietary diversity we employed propensity score matching with a difference in difference estimator to control for endogeneity of mortality to the outcomes of interest households losing a productive adult did not replenish the lost labor regardless of economic status sex or status of the deceased adult with the exception of non poor households adult mortality resulted in increased dependency ratios but did not adversely affect households expenditure patterns total food and non food expenditures regardless of the sex and position of the deceased and the economic status of the households although food expenditures were protected a decline in dietary diversity especially among the poorest households reflected increased nutrition insecurity associated with adult mortality

data watch the panel study of income dynamics by collecting annual economic and demographic information from a large and representative sample of u s households for over a quarter century the panel study of income dynamics has compiled a remarkably useful set of microdata this article describes the psid and how its unique longitudinal and in some cases intergenerational features have been used for studies of intertemporal models of labor supply wages employment and job tenure consumption poverty dynamics extended family behavior and the intergenerational transmission of economic status

household consumption smoothing through ethnic ties evidence from cote d ivoire abstract this paper investigates the hypothesis that households in cote d ivoire take part in spatially diversified risk sharing arrangements with members of their own ethnic group empirical tests are presented using several estimation methods to deal with heteroscedasticity measurement error and extreme value problems to examine whether results are robust across estimation procedures the hypothesis of complete risk sharing within ethnic groups is rejected however there appears to be some partial insurance performed by individual households with other members of the same ethnic group particularly for the households residing in the regions least likely to have access to formal financial arrangements

poverty and the distribution of material hardship public concern with poverty derives in large part from the assumption that low income families cannot afford necessities yet official poverty statistics focus on measuring income not on measuring material hardship two surveys of chicago residents measure whether families could afford food housing and medical care a family s official income to needs ratio explained 24 percent of the variance in the amount of material hardship it reported adjustments for family size age health noncash benefits home ownership and access to credit explain another 15 percent variations in permanent income explain almost none of the remaining variance in hardship among families with the same official income toneeds ratio material hardship varies by age family size and composition

data gaps data incomparability and data imputation a review of poverty measurement methods for data scarce environments this paper reviews methods that have been employed to estimate poverty in contexts where household consumption data are unavailable or missing these contexts range from completely missing and partially missing consumption data in cross sectional household surveys to missing panel household data the paper focuses on methods that aim to compare trends and dynamic patterns of poverty outcomes over time it presents the various methods under a common framework with pedagogical discussion on the intuition empirical illustrations are provided using several rounds of household survey data from vietnam furthermore the paper provides a practical guide with detailed instructions on computer programs that can be used to implement the reviewed techniques

asset pricing in a generalized mean lower partial moment framework theory and evidence a new asset pricing model that generalizes earlier results in the downside risk literature is developed and empirically tested using a multivariate approach by specifying risk as deviations below any arbitrary target rate of return the generalized mean lower partial moment mlpm model overcomes the limited appeal of earlier formulations and moreover a large class of extant pricing models using alternative risk measures variance semivariance semideviation probability of loss etc becomes special cases of the new framework empirical tests indicate that the new model cannot be rejected against an unspecified alternative for a large set of target rates of return the traditional capm on the other hand is rejected as a well specified alternative the mlpm target rates inferred from market data appear to be related to equity market mean returns rather than to the riskfree rate the target rate that is implicit in the capm and explicit in earlier downside risk formulations the attractiveness of downside risk measures for decision making purposes has been noted in the financial economic literature for over a quarter of a century 1 risk from this perspective is measured in terms of deviations below some exogenously prespecified target rate of return and a formal analysis of these risk measures for various utility functions has been presented by bawa 1975 in terms of the lower partial moment lpm of the asset distributions the appeal of these risk measures has been based in part on their consistency with the way individuals actually perceive risk notwithstanding its intuitive appeal this area of research has been virtually neglected in recent years we believe that this disaffection with downside risk models tends from two sources first earlier models of this genre exogenously specify the target rate to equal the risk free interest rate in the absence of a satisfactory theory for explaining how investors establish their target rates this assumption as argued herein has been motivated more by technical reasons than economic considerations second empirical tests

experimental identification of asymmetric information evidence on crop insurance in the philippines abstract i study asymmetric information in crop insurance in the philippines using a two level randomized field experiment and incentivized preference elicitation in this first experimental study of moral hazard in non health insurance preventable damages double on randomly insured plots among farmers with high trust in the insurance provider farmers prefer insurance on plots that are at risk of floods and crop diseases a sign of classic adverse selection and plots that are far away from home a sign of selection on anticipated moral hazard behavior resulting in 72 higher payouts on preferred plots overcoming these challenges requires leveraging new technologies

using repeated cross sections to explore movements into and out of poverty movements in and out of poverty are of core interest to both policymakers and economists yet the panel data needed to analyze such movements are rare in this paper the authors build on the methodology used to construct poverty maps to show how repeated cross sections of household survey data can allow inferences to be made about movements in and out of poverty they illustrate that the method permits the estimation of bounds on mobility and provide non parametric and parametric approaches to obtaining these bounds they test how well the method works on data sets for vietnam and indonesia where we are able to compare our method to true panel estimates the results are sufficiently encouraging to offer the prospect of some limited basic insights into mobility and poverty duration in settings where historically it was judged that the data necessary for such analysis were unavailable

fertilizer use risk and off farm labor markets in the semi arid tropics of india a two period model is developed in which a risk averse farmer uses off farm labor to smooth consumption leading to greater use of fertilizer fertilizer demand is shown to increase with the depth of the off farm labor market controlling for exogenous weather risk farmers use more fertilizer the lower the unemployment rate and the higher the share of nonagricultural work in total off farm labor the results suggest that off farm labor markets and own farm production may be complementary in risky production environments so that policies which promote the depth of the off farm labor market in low income areas may also bolster farm productivity copyright 2003 oxford university press

household sectoral choice and effective demand for rural credit in india an analysis of the icrisat data from three indian villages raises concern about the extent of rationing mechanism inhibiting the spread of formal credit in rural india where a significant proportion of households do not have any outstanding loan or borrow from the informal sector only a limited dependent econometric analysis of the factors jointly determining household sectoral choice and effective demand for informal loan conditional on whether a formal loan is available suggests that compared to formal loan easy and adequate access and prompt recovery are significant determinants of the popularity and viability of informal rural credit among sample households also some households substitute labour income to ease the extent of credit thus rationing of the formal credit is not the only factor inhibiting the spread of formal credit in the study villages

vulnerability to multidimensional poverty peru 1998 2002 summary we approach multidimensional poverty from the viewpoint of a forward looking risk averse household we consider the fear to face hardship in any well being dimension as a relevant form of deprivation since peace of mind is also a component of overall well being we are thus concerned with vulnerability to multidimensional poverty as we discuss how such vulnerability should be measured we find that attention must be paid not only to how well being dimensions correlate over a given population but also to how they correlate over the states of the world data from peru illustrate

cigarette demand health scares and education in turkey the purpose of this paper is to examine the demand characteristics of cigarettes in turkey aggregate time series date for the 1960 88 period are used in estimation income and price elasticities of cigarette demand are obtained the effect of health warning is estimated to reduce cigarette consumption by about 8 since the inception of warnings in 1982 imports of cigarettes have been allowed since 1984 in addition to advertising of cigarettes in the non electronic media the effect of health warnings are found to be stronger than the opposing effect of advertising the results also suggest that public education about adverse health effects of smoking may be more effective in reducing consumption and less regressive on consumer incomes than raising the price of cigarettes

international trade constraints and commodity market models an application to the cotton market this paper presents a model that accounts explicitly for quantitative controls on international trade countries are classified into two groups depending upon whether or not their imports and exports are responsive to world prices with the result that all adjustment burdens are borne by a subset of the world market participants the model is tested with pooled time series cross section data for the cotton market m s odels of world commodity markets differentiate among market participants in a variety of ways single equation approaches make strong implicit assumptions about cross country similarities in consumer preferences and producer responsiveness while in other approaches world markets are disaggregated on the basis of time period income group or type of economic system the present paper develops a model that groups countries in terms of the presence or absence of controls on international trade as johnson and others have noted 1 quantitative controls on trade are prominent in the trade of many primary products with such restrictions domestic prices bear no necessary relationship to international prices and movements in world prices may be of limited relevance to explaining global consumer and producer behavior in the model in this paper countries are classified into two groups depending upon whether their consumers and producers are responsive to international prices the international market is then seen as one in which the burden of adjustment falls on the producers consumers and holders of stocks in the price responsive countries the estimation procedure uses a cross section time series data set in which country specific dummy variables allow for differential behavior among the various trade participants cotton is the focus of the paper as the cotton market is an especially good example of a market with quantitative restrictions cotton production is dominated by less developed countries ldcs and centrally planned economies cpes and exports are largely determined by the decisions of state trading monopolies i a trade constrained model the point of departure in developing the model is to group countries a priori according to whether their consumers producers and inventory holders are world price responsive r or non responsive n if x countries are fully insulated from world prices and z countries are responsive to world prices the global production utilization identity can be written as

economic shocks diversification and forest use in uganda we investigate household outcomes arising from economic shocks in rural uganda focusing on patterns of income diversification and forest use and the role of assets in shaping ex post response to shocks income poor households and those with below average landholdings are observed to have more diversified income portfolios than their cohorts households encountering above average losses tend to have more diversified income portfolios subsequent to the losses larger negative shocks are associated with greater use of the forest in subsequent periods especially among asset poor households findings suggest that development of better safety nets would reduce both vulnerability and forest pressure

stochastic dominance and expected utility survey and analysis while stochastic dominance has been employed in various forms as early as 1932 it has only been since 1969 1970 that the notion has been developed and extensively employed in the area of economics finance agriculture statistics marketing and operations research in this survey the first second and third order stochastic dominance rules are discussed with an emphasis on the development in the area since the 1980s

has children s poverty become more persistent iffood stamp benefits are counted as income there is little change in estimates ofpersistent povertyfor children between the late 1960s and early 1980s however the absence of change in persistent poverty masks a number of important changes in the demographic and statistical structure ofpersistent poverty these changes include increasing inequality in the distribution of permanent socioeconomic position greater dependence on social assistance and the more familiar demographic changes such as increased numbers of single parent families higher educational attainments of parents and decline in family size

expected poverty under risk induced welfare variability two of the most widely accepted stylised facts about agriculture in south asia sub saharan africa and elsewhere are that income is highly uncertain from one year to another and that deep and widespread poverty exists and yet there has been very little analysis of the joint problems of poverty and risk this paper offers a methodological approach to the issue of how risk affects poverty and applies it to household level data for dry areas of rural india the following questions are addressed under what conditions can one expect an increase in the riskiness of an income or consumption stream to increase poverty how should one measure the contribution of risk to poverty and what long term benefits in terms of reduced poverty can be expected from policies aimed at stabilising incomes of the poor such policies have been widely discussed in the indian subcontinent of late and their effect on rural

is transient poverty different evidence for rural china we define transient poverty as the component of time mean consumption poverty at household level that is directly attributable to variability in consumption this can be thought of as a measure of vulnerability to falling consumption the non transient component then depends solely on mean consumption over time and we call this chronic poverty using robust semi parametric methods and household panel data for rural china we test whether transient poverty is determined by a process that is similar to chronic poverty commonly identified causes of poverty in this setting have weak explanatory power for transient poverty and some of the factors determining transient poverty do not matter to chronic poverty or even have the opposite effect successful policy responses to chronic poverty may still leave considerable transient poverty

risk and insurance in village india comment the protection of poor households in high risk agrarian economies from shocks to their incomes has often been seen as a compelling motive for various forms of policy intervention including transfers of cash or food credit subsidies and public employment schemes for a survey see lipton and ravallion 1995 the desirability of such safety net policies clearly depends on how well pre existing risk sharing arrangements work while it is commonly thought that without effective policy intervention rural households are vulnerable to village wide shocks such as adverse prices or poor rains it is less clear to what extent risk sharing institutions within the village mitigate the effects of idiosyncratic income risk stemming for instance from ill health or localized crop damage 2 several recent papers have used household level data to implement tests of risk sharing that might inform such concerns 3 these tests are based on the proposition that with perfect risk sharing consumption at the household level should be insured against idiosyncratic risks and thus depend solely on the realization of the aggregate risk wilson 1968 diamond 1967 townsend 1994 tests this implication of perfect intra village risk sharing using longitudinal household data on consumptions and incomes for three villages in india he reports that the full insurance hypothesis provides a surprisingly good benchmark in that household consumptions co move and do not appear to be much influenced by contemporaneous own income our aim here is to examine the robustness of this potentially important finding we have two main concerns the first is that the specification townsend adopts potentially biases his test towards the null hypothesis of full insurance because it yields inconsistent estimates of the key test parameter under a plausible alternative we therefore estimate a different specification that generates consistent estimates under both the null and the alternative our second concern is that a particular form of measurement error in the consumption data townsend uses may have further biased his results toward the null hypothesis of full insurance to address this concern we use an instrumental variables procedure when we implement the test of consumption insurance with townsend s consumption data we also re estimate the test equations with a measure of consumption derived from the same underlying primary data by an alternate method finally townsend reports 1discussions with robert townsend stimulated our interest in this investigation the staff of the

chronic and transient poverty measurement and estimation with evidence from china abstract the paper contributes to the measurement of poverty and vulnerability in three ways first it proposes a new approach to separating poverty into chronic and transient components second it provides corrections for the statistical biases introduced when using a small number of periods to estimate the importance of vulnerability and transient poverty third it applies these tools to the measurement of chronic and transient poverty in china using a rich panel data set that extends over 17 years alternative measurement techniques are found to yield significantly different estimates of the relative importance of chronic and transient poverty the precision of the estimates is also considerably enhanced by simple statistical corrections

child farm labor the wealth paradox this article is motivated by the remarkable observation that children of land rich households are often more likely to be in work than the children of land poor households the vast majority of working children in developing economies are in agricultural work predominantly on farms operated by their families land is the most important store of wealth in agrarian societies and it is typically distributed very unequally these facts challenge the common presumption that child labor emerges from the poorest households this article suggests that this apparent paradox can be explained by failures of the markets for labor and land credit market failure will tend to weaken the force of this paradox these effects are modeled and estimates obtained using survey data from rural pakistan and ghana the main result is that the wealth paradox persists for girls in both countries whereas for boys it disappears after conditioning on other covariates

poverty in america 1970 1990 who did gain ground an application of stochastic dominance criteria employing simultaneous inequality tests in a partial panel atkinson 1987 proposed stochastic dominance criteria for analysing poverty which under certain conditions establish orderings of states for any poverty line and any poverty measure within given class refocusing debate on the nature of the income distribution of the poor employing new empirical techniques these criteria are implemented for the united states from 1970 to 1990 using the panel study of income dynamics results highlight the pivotal role of family size scale economies in consumption indicate different experiences for white versus non white groups and suggest that optimism over the progress of the poor is not warranted copyright 2003 john wiley sons ltd

full insurance in the presence of aggregate uncertainty this paper tests implications of full consumption insurance the object is to determine how much mileage can be obtained from a model with complete markets with such features as private information or liquidity constraints omitted the implication exploited is that individual consumption responds to aggregate risk but not to idiosyncratic risk the test involves regressing the change in household consumption onto the change in aggregate consumption and other right hand side variables such as the change in household income and change in employment status all variables other than the change in aggregate consumption are predicted to be insignificant in explaining the change in household consumption with observations on consumption and income for 10 695 households from the consumer expenditure survey the results are mixed the results for one specification exponential utility are mostly consistent with full consumption insurance the results for the other specification power utility are not

poverty measurement an index related to a theil measure of inequality a major problem that arises in measuring poverty is the adequate expression in a poverty index of the information from the incomes of individuals below the poverty line this article evaluates several poverty indexes on the basis of their ability to satisfy five properties desirable for a poverty index the only index that satisfies all five properties is one related to a theil measure of inequality simulations show that this index and an index related to the coefficient of variation provide appropriate ranks for the desirability of various algorithms for transferring income to the poor

toward a consumer economy in china implications of changing wage policies for u s cotton exports the effect of a chinese minimum wage increase on china s textile market as well as on the world cotton market is evaluated based on a nonlinear quadratic almost ideal demand system nqaids model of china s textile demand the results suggest that the income elasticity for textiles is around 0 6 in china and that apparel is less price responsive than home textiles and other textile products simulation results suggest that a minimum wage increase would raise chinese domestic textile consumption and lower chinese textile exports most of the decline in textile exports by china is offset by expansion in other countries domestic textile production and results in a slight increase in world cotton mill utilization and higher clothing prices

kalman filter and the demand for cigarettes kalman filter estimates of price income and advertising elasticities are presented an analysis of structural change in the demand for cigarettes in the us for the period 1929 86 is made estimated price and income elasticities are generally smaller and the advertising elasticity larger than estimates previously found cigarette demand is inelastic with respect to price and income and advertising elasticity is statistically insignificant for the most part furthermore both income and price elasticities decline over time while advertising elasticity tends to rise four time periods where structural change has occurred are identified the health scare reports and the fairness doctrine act have a significant impact on per capita cigarette consumption

issues in measuring and modeling poverty economists have relied heavily on household incomes or expenditures normalized for differences in household specific prices and demographics in their research and policy advice related to poverty and inequality recognizing the conceptual and empirical problems that confound such measures does not mean that they should be ignored instead it indicates the need for supplementary measures to capture the missing items implementing a genuinely multidimensional approach will often make the welfare rankings of social states more difficult but that fact points to the nonrobustness of low dimensional rankings this may have its own policy ramifications with the possibility of correspondence between policy instruments and welfare objectives the model types used to understand the poverty and inequity determination processes will be affected not only will there be more dependent variables to consider but variables will have potentially complex relationships these relationships will often be hard to empirically disentangle despite richer integrated and longitudinal data sets such data open rich and relevant agenda for research into the dynamics of poverty along multiple dimensions a simultaneous attack on these issues from all three fronts measurement modeling and data offers hope of establishing a credible empirical foundation for public action in fighting poverty

a simple test of consumption insurance are consumers effectively insured against idiosyncratic shocks to income or wealth either by formal institutions such as charities private insurance and government programs or by informal mechanisms such as gifts and loans from relatives friends and neighbors under full insurance consumption growth should be cross sectionally independent of idiosyncratic variables that are exogenous to consumers this proposition is tested by cross sectional regressions of consumption growth on a variety of exogenous variables full insurance is rejected for long illness and involuntary job loss but not for spells of unemployment loss of work due to strike and an involuntary move

vulnerability and chronic poverty in rural sichuan abstract chinese anti poverty policy stresses the long term structural nature of rural poverty this paper shows that poverty in rural sichuan during 1991 95 was both dynamic and persistent a new measure of chronic poverty is defined as a high vulnerability to being poor and compared with traditional interpretations of chronic poverty as low mean consumption households are highly vulnerable to falling into poverty even when their average consumption is some distance above the poverty line the determinants of low mean consumption and high vulnerability appear however to be similar suggesting that policies to increase mean consumption will also reduce vulnerability

risk financial markets and human capital in a developing country this paper explores the link between financial market incompleteness and human capital accumulation we examine how child school attendance responds to seasonal fluctuations in the income of agrarian households using panel data from rural india to pinpoint market imperfections we study responses to aggregate and idiosyncratic as well as to anticipated and unanticipated income shocks our main finding is that seasonal fluctuations in school attendance are a form of self insurance but one which does not result in a substantial loss of human capital on average

measuring the intensity of poverty among subpopulations applications to the united states this paper proposes an approach to measuring the intensity of poverty within a group relative to that of the population to which the group belongs a poverty intensity index is presented which is easy to interpret and satisfies a number of desirable properties the intensity of poverty among racial and residential groups in various geographical locations is measured using 1980 united states census data

identifying vulnerability to poverty a critical survey in the economic literature on poverty various methods have been proposed for measuring a phenomenon known as vulnerability however after more than a quarter century of research no consensus has been reached on how to identify such vulnerable individuals within a given population some misunderstandings have also arisen from the overlapping of other closely related concepts such as the expectation of being poor expected poverty multi period poverty and risk exposure this paper offers a detailed conceptual discussion on vulnerability to poverty and its related elements reviewing a wide range of identifying criteria provided in the literature it is found that according to the state of the art in this field of research two key elements stand out in identifying vulnerable individuals an expected well being below the poverty line and a relevant risk of falling into poverty due to downside deviation from a reference level of well being the traditional classification of vulnerability approaches has been updated into four groups i those that stress the element of exposure to risk ii those that emphasize the element of expected poverty iii those that define vulnerability through a utility gap and iv those that are supported by a mean risk dominance criterion

vulnerability seasonality and poverty in ethiopia most studies examining the dynamics of welfare have found large fluctuations in consumption over relatively short periods suggesting substantial short run movements in and out of poverty the consequence is that cross section poverty research may not be able to identify the poor in this study we explore this short run variability further we use a data set on a panel of 1450 households in different communities in rural ethiopia surveyed thrice over 18 months on average year to year poverty is very similar however we find high variability in consumption and poverty over the seasons and year by year econometric analysis suggests that consumption is affected by idiosyncratic and common shocks including rainfall and household specific crop failure while households respond to seasonal incentives related to changing labour demand and prices the results imply that a larger number of households are vulnerable to shocks than implied by the standard poverty statistics while some of the non poor in the

health scare excise taxes and advertising ban in the cigarette demand and supply the cigarette industry is a fascinating laboratory for industrial economists because of its concentrated market structure and history of conflicts over health and tax issues the industry has been the focal point of many economic studies most of the recent studies have concentrated on the demand side of the market for example bass schmalensee hamilton and fujii deal with the impact of advertising and the health scare on cigarette demand 4 15 10 8 barzel johnson and sumner ward assessed the importance of the excise tax or ad valorem tax on consumers cigarette demand 3 12 16 on the supply side vernon rives naylor developed an econometric model of the tobacco industry 20 which however is more concerned with the agricultural aspects of the product than the industry s market organization a careful review of the above studies suggests serious shortcomings which appear to limit their application to policy formulation or market analysis first the variables are introduced in an ad hoc fashion without reference to existing demand or supply theories second none of the above studies recognizes explicitly the interactions among the variables in the demand and the supply equations in the context of the determination of market equilibrium this paper has three objectives 1 to apply the standard neoclassical market theory to the cigarette industry 2 to identify the interactions between cigarette demand and supply using a simultaneous equations approach the first such attempt in a cigarette industry study and 3 to evaluate the effects of cigarette taxes advertising and health scare issues on the industry s output based on the empirical results obtained from the simultaneous equations analysis the judicious selection of explanatory variables careful data

chronic and transient poverty in rural china abstract this paper rectifies the poverty decomposition framework of rodgers and rodgers 1993 which violates the focus axiom of sen 1976 an empirical application of the rectified technique reveals that poverty in rural china was dominated by the chronic component

are the poor less well insured evidence on vulnerability to income risk in rural china the authors test how well consumption is insured against income risk in a panel of sampled households in rural china they estimate the risk insurance models by generalized method of moments treating income and household size as endogenous insurance exists for all wealth groups although the hypothesis of perfect insurance is universally rejected those in the poorest wealth decile are the least well insured with 40 percent of an income shock being passed on to current consumption by contrast consumption by the richest third of households is protected from almost 90 percent of an income shock the extent of insurance in a given wealth stratum varies little between poor and nonpoor areas

insuring consumption against illness one of the most sizable and least predictable shocks to economic opportunities in developing countries is major illness we investigate the extent to which families are able to insure consumption against major illness using a unique panel data set from indonesia that combines excellent measures of health status with consumption information we find that there are significant economic costs associated with major illness and that there is very imperfect insurance of consumption over illness episodes these estimates suggest that public disability insurance or subsidies for medical care may improve welfare by providing consumption insurance

on the measurement of poverty official statistics in the united states and the united kingdom show a rise in poverty between the 1970 s and the 1980 s but scepticism has been expressed with regard to these findings in particular the methods employed in the measurement of poverty have been the subject of criticism this paper re examines three basic issues in measuring poverty the choice of the poverty line the index of poverty and the relation between poverty and inequality one general theme running through the paper is that there is a diversity of judgments which enter the measurement of poverty and that it is necessary to recognize these explicitly in the procedures adopted there is likely to be disagreement about the choice of poverty line affecting both its level and its structure in this situation we may only be able to make comparisons and not to measure differences and the comparisons may lead only to a partial rather than a complete ordering the first section of the paper discusses the stochastic dominance conditions which allow such comparisons illustrating their application by reference to data for the united states the choice of poverty measure has been the subject of an extensive literature and a variety of measures have been proposed in the second section of the paper a different approach is suggested considering a class of measures satisfying certain general properties and seeking conditions under which all members of the class which includes many of those proposed give the same ranking those sceptical about measures of poverty often assert that poverty and inequality are being confounded the third section of the paper distinguishes four different viewpoints and relates them to theories of justice and views of social welfare

gaining ground poverty in the postwar united states official measures of poverty in the united states are compiled by the bureau of the census by comparing a household s income level to a prespecified threshold from a theoretical perspective it is more appropriate to evaluate the level of poverty using a consumption based measure of household welfare in this paper i evaluate the level of poverty using expenditure data from the consumer expenditure survey i find that consumption based poverty rates are much lower than those based on income the trend in the poverty rate in the united states is sensitive to the price index and equivalence scales used to adjust the poverty thresholds

are remittances a substitute for credit carrying the financial burden of health shocks in national and transnational households summary this paper tests for the assumption that remittances are a substitute for credit by comparing the response to health related shocks among national and transnational households using mexican household panel data while the occurrence of serious health shocks that required hospital treatment doubled the average debt burden of exposed households compared to the control group households with nuclear family members a parent child or spouse in the us did not increase their debts due to health shocks this finding is consistent with the view that remittances respond to households demand for financing emergencies and make them less reliant on debt financing

a censored system of cigarette and alcohol consumption many previous studies of us cigarette and alcohol consumption have focused on single equations however the addictive nature of consumption suggests that it is more appropriate to model these products as a system we propose a two step estimation procedure and apply the procedure to a system of equations for cigarette beer and wine consumption results differ from those derived from an existing two step procedure findings suggest that consumption of cigarettes beer and wine is responsive to income changes but the elasticities are rather small personal physiques education age race ethnicity health gender employment status and regions also play significant roles in consumption

economic policy distribution and poverty the nature of disagreements abstract the last 20 years have seen growing areas of agreement on poverty reduction strategies but disagreements on economic policy distribution and poverty seem to have intensified this paper tries to identify the underlying nature of these disagreements related to differences in perspective and framework between finance ministry and civil society tendencies it is argued that the deep divisions one sees can be located in differences in the level of aggregation adopted the time horizon considered and assumptions made on market structure and power mutual understanding could be advanced by further exploration of these differences and the adoption by both sides of the approach of dialogue rather than negotiation

structural change in the demand for meat economists have long thought that shocks in the economy sometimes lead to permanent changes in behavioral relationships hence supply or demand elasticities estimated from econometric models may change over time the source of such structural change may be technological adoption a shift in consumer preferences or an institutional change one way to handle this problem in linear models is to allow the parameters to change as the situation changes so that the model provides a local approximation of the behavioral relationship this approach is an attractive way to deal with structural change problems econometricians have extended the classical

individual well being in a dynamic perspective this paper explores the determinants of individual well being as measured by self reported levels of satisfaction with income making full use of the panel data nature of the german socio economic panel we provide empirical evidence for well being depending on absolute and on relative levels of income in a dynamic framework this finding holds after controlling for other influential factors in a multivariate setting the main novelty of the paper is the consideration of dynamic aspects individual s own history as well as the relative income performance with respect to the others living in the society under analysis do play a major role in the assessment of well being