A New Model for Constructing Poverty Lines

Nanak Kakwani
JEL codes: 
PIDS Discussion Paper Series

In this paper, we present a new model for constructing poverty lines. The model uses consumer theory to construct both food and non-food poverty thresholds. Although one cannot completely eliminate the value judgments inherent in the construction of poverty thresholds, this model helps to make the ad hoc assumptions that are generally made more justifiable. The model ensures that poverty line is consistent across regions. The methodology developed in the paper is used to illustrate the construction of poverty thresholds in Pakistan.