Changes in the Perception of the Poverty Line During the Depression in Russia, 1993-96

Abstract

Economic transition in Russia was accompanied by a precipitous decline in real income for most of the population. This article analyzes how the decline affected people's perception of the minimum level of income needed to make ends meet. Individual-level data collected from repeated surveys between March 1993 and September 1996 reveal that the elasticity of subjective minimum income with respect to actual median income was 1.5 or that people's subjective estimate of the minimum income for an adult Russian fell about 1.7 percent each month. This sharp reduction in the face of a decrease in real income meant that the percentage of the population who felt that they were poor declined, even though poverty remained at a very high level (more than 60 percent of the population) throughout the period. This self-perception is in marked contrast to an "objective " measure of poverty: the percentage of the population whose income was less than a given real poverty line rose.

Russian Roller Coaster: Expenditure Inequality and Instability in Russia, 1994–98

“…There is hardly an agreement on which value of theta one should use. Milanovic and Jovanovic (1999) estimate the theta to be 0.62, close to the value of 0.5 reported by Frijters and van Praag (1998) and 0.42 reported by Ravallion and Lokshin (1999). The analysis was repeated for per capita household expenditure (theta equal to one), and the results did not differ in any significant way.…”

Social identity and perceived income adequacy

“…An obvious way to define perceived income adequacy is to view it as a subjective poverty line, a minimum amount of income needed for living. Milanovic and Jovanovic () examine how the precipitous decline in actual incomes in Russia affected people’s perceptions of this subjective minimum. They find a decline in the percentage of the population who felt they were poor.…”

Does Development Make You Happy? Subjective Wellbeing And Economic Growth In Developing Countries

“…10 Between March 1993 and September 1996, real incomes fell somewhere in the region of 14 or 20%. Yet the number of people who said that they categorized themselves as poor fell from around 80% to below 60% over that period (Milanovic and Jovanovic, 1999).…”