Inter-country Comparisons of Poverty Based on a Capability Approach: An Empirical Exercise

Abstract

In previous work Reddy and Pogge have argued that inter-country comparisons of income poverty based on poverty lines uniformly re?ecting the costs of the basic requirements of human beings are superior to the existing money-metric approaches. In this exercise, we implement a uniform approach to poverty assess- ment based on basic human capabilities for three countries: Nicaragua, Tanzania and Vietnam. We compute standard errors of the resulting poverty estimates and compare the incidence of poverty across these three countries. The choice of approach affects both cardinal estimates and ordinal rankings of poverty across countries and over time. Meaningful and coherent inter-country poverty com- parisons can be advanced through international co-ordination in survey design and in the construction of income poverty lines that uniformly re?ect the costs of the basic requirements of human beings.