Are we confusing poverty with preferences?

Type Working Paper
Title Are we confusing poverty with preferences?
Publication (Day/Month/Year) 2015
Modifying the national poverty line to the context of
observed consumption patterns of the poor is becoming
popular. A context-specific poverty line would be more
consistent with preferences. This paper provides theoretical
and empirical evidence that the contrary holds and that the
national poverty line is more appropriate for comparing
living standards among the poor, at least under prevailing
conditions in Mozambique and Ghana. The problem
lies in the risk of downscaling the burden associated with
cheap-calorie diets and the low nonfood component of the
rural poor. The paper illustrates how observed behavior
may neither reveal preferences nor detect heterogeneous
preferences among the poor. Rather, the consumption pattern
is the upshot of the poverty condition itself. Poverty is
confused with preferences if observed cheap-calorie diets
are seen as a matter of taste, whereas in fact they reflect
a lack of means to consume a preferred diet of higher
quality, as food Engel curve estimates indicate. Likewise,
a smaller nonfood component is not a matter of a particular
distaste, but an adaptation to the fact that various
nonfood items (such as transport) and basic services (such
as electricity and health) are simply absent in rural areas

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