Engel Curves, Spending Diversity and Welfare Measurement

There is a growing momentum to base the poverty line on total consumption expenditure as it is a better measure of welfare. This chapter explores three related approaches to measuring household welfare that together represent an alternative ‘inductive’ measuring approach. We focus on measuring levels of consumption deprivation based on the saturation of Engel Curves. We review empirical measures used to track the household diversification process and the quality of the consumption basket