Identifying the Poor: A Comparison of Income and Expenditure Indicators Using the 1985 Family Expenditure Survey.

The typical approach to classifying an individual as poor is to compare a scalar measure of his welfare with a specified poverty line. Income is the most commonly employed welfare measure, although expenditure is occasionally used. This paper compares the performance of the two indicators using the 1985 Family Expenditure Survey. The criterion used is average distance between those identified as poor by one indicator and the rankings assigned by the alternative indicator. On this basis, expenditure is superior. Copyright 1995 by Blackwell Publishing Ltd