Towards an Asset-based Indicator of Poverty

Abstract

In the debate on the measurement of poverty in India, which has sometimes bordered on the acrimonious, there has been near unanimity on the use of consumption expenditure as the primary basis for determining the poverty line. This article points to the many limitations of using consumption as the sole indicator of poverty, including ignoring the role of non-market state support. As an alternative, it offers assets as a more reliable indicator of the condition of poverty. Recognizing that poverty is more than just the lower end of the inequality of income, it builds a measure that is more sensitive to deprivation. This measure allows for a focus on differences between the poor and those who face absolute deprivation. The article goes on to demonstrate that the relationship between this indicator and other measures of non-market state support can be used to evaluate anti-poverty measures.