A Welfarist Theory Unifying Monetary and Non-Monetary Poverty Measurement

Multidimensional poverty measures are increasingly used in practice even though they face strong criticism and generate longlasting debates. These contentions primarily find their origin in the divergence between standard poverty identification practices and a welfarist definition of the poor. This paper fills this gap by constructing a poverty measurement theory that (i) adopts a welfarist definition of the poor, (ii) acknowledges that the relevant welfare function is only partially known and (iii) encompasses both market and non-market dimensions of well-being. The theory shows that standard identification practices are not flexible enough in order to properly account for the multidimensional nature of well-being. This nature implies that an individual is poor when she experiences an extremely low outcome in some dimension or/and when she cumulates moderately low outcomes in several dimensions. The paper proposes a simple refinement that better reflects this insight. The paper uses the theory in order to provide answers to several longlasting debates. The theory provides a conceptual foundation from which practitioners may derive guidance for the many choices they face