January 1997 Poverty rates calculated on the basis of different definitions of consumption may reveal substantial biases, but under certain conditions robust comparisons are possible. Nonfood spending is often thought to be especially poorly measured, but the more comprehensive is the measure of consumption spending, the better it is as a measure of welfare. Comparisons of poverty rates are only rarely based on identical underlying definitions of welfare. The authors examine the sensitivity of poverty rates calculated from alternative definitions of consumption. They consider what theory can say about the direction of bias in comparisons and show that under certain conditions robust comparisons are possible. Data from Ecuador, El Salvador, and Pakistan show that the magnitude of biases can be substantial. Their robustness result is used as a baseline to explore the tradeoffs involved in aggregating noisy expenditure components. Although nonfood expenditures are often thought to be especially poorly measured, the authors' data indicate that the more comprehensive is the measure of consumption spending, the better it is as a measure of welfare. This paper - a product of the Poverty and Human Resources Division, Policy Research Department - is part of a larger effort in the department to improve the reliability and comparability of poverty measures.

Poverty rates calculated on the basis of different definitions of consumption may reveal substantial biases, but under certain conditions robust comparisons are possible. Nonfood spending is often thought to be especially poorly measured, but the more comprehensive is the measure of consumption spending, the better it is as a measure of welfare.Comparisons of poverty rates are only rarely based on identical underlying definitions of welfare. The authors examine the sensitivity of poverty rates calculated from alternative definitions of consumption. They consider what theory can say about the direction of bias in comparisons and show that under certain conditions robust comparisons are possible.Data from Ecuador, El Salvador, and Pakistan show that the magnitude of biases can be substantial.Their robustness result is used as a baseline to explore the tradeoffs involved in aggregating noisy expenditure components. Although nonfood expenditures are often thought to be especially poorly measured, the authors' data indicate that the more comprehensive is the measure of consumption spending, the better it is as a measure of welfare.This paper - a product of the Poverty and Human Resources Division, Policy Research Department - is part of a larger effort in the department to improve the reliability and comparability of poverty measures.

First published in 1994. Routledge is an imprint of Taylor & Francis, an informa company.

Cross country poverty comparisons on unit records have, rarely, involved both developing and developed countries. The present study attempts to fill this gap by comparing poverty across fourteen nations with diverse economic and demographic characteristics and at vastly different stages of economic development. The study contains evidence on (a) cross country variation in the equivalence scales estimated in the presence of both household size economies and adult/child relativities, (b) impact of demographic adjustment of the poverty line, that incorporate household size and composition changes, on the poverty rates, and (c) sensitivity of the poverty estimates and their rankings to the "equivalence elasticity". The study finds that country rankings based on per capita GNP bear very little resemblance with that based on the aggregate poverty rates. The latter hide substantial variation in the poverty estimates across different household types.