Assessing Deprivation with Ordinal Variables: Depth Sensitivity and Poverty Aversion

Abstract

The challenges associated with poverty measurement within an axiomatic framework, especially with cardinal variables, have received due attention during the last four decades. However, there is a dearth of literature studying how to meaningfully assess poverty with ordinal variables, capturing the depth of deprivations. In this paper, we first propose a class of additively decomposable ordinal poverty measures and provide an axiomatic characterisation using a set of basic foundational properties. Then, in a novel effort, we introduce a set of properties operationalising prioritarianism in the form of different degrees of poverty aversion in the ordinal context, and characterise relevant subclasses. We demonstrate the efficacy of our methods using an empirical illustration studying sanitation deprivation in Bangladesh. We further develop related stochastic dominance conditions for all our characterised classes and subclasses of measures. Finally, we elucidate how our ordinal measurement framework is related to the burgeoning literature on multidimensional poverty measurement.

Assessing Deprivation with an Ordinal Variable: Theory and Application to Sanitation Deprivation in Bangladesh

“…Poverty alleviation is a gradual process, where it is imperative to ensure that the poorest of the poor are not left behind. Although all poverty measures in Equation (2.1) are sensitive to 7 For an alternative version of the axiomatic characterisation of the measures in class P using anonymity and population principle alongside the aforementioned properties, see Seth and Yalonetzky (2018).…”