Poverty index with time-varying consumption and income distributions

Abstract

Starting from a stochastic agent-based model to represent market exchange in a developing economy, we study time variations of the probability density function of income with simultaneous variation of the consumption deprivation (CD), where CD represents the shortfall in consumption from the saturation level of an essential commodity, cereal. Together, these two models combine income-expenditure-based market dynamics with time variations in consumption due to income. In this new unified theoretical structure, exchange of trade in assets is only allowed when the income exceeds consumption-deprivation while CD itself is endogenously obtained from a separate kinetic model. Our results reveal that the nature of time variation of the CD function leads to a downward trend in the threshold level of consumption of basic necessities, suggesting a possible dietary transition in terms of lower saturation level of food-grain consumption, possibly through an improvement in the level of living. The new poverty index, defined as CD, is amenable to approximate probabilistic prediction within a short time horizon. A major achievement of this work is the intrinsic independence of the poverty index from an exogenous poverty line, making it more objective for policy formulation as opposed to existing poverty indices in the literature.

Publication DOI: https://doi.org/10.1103/PhysRevE.95.032109
Divisions: College of Engineering & Physical Sciences > Systems analytics research institute (SARI)
Uncontrolled Keywords: Statistical and Nonlinear Physics,Statistics and Probability,Condensed Matter Physics
Publication ISSN: 1550-2376
Last Modified: 11 Mar 2024 08:17
Date Deposited: 07 Mar 2017 14:55
Full Text Link:
Related URLs: http://www.scop ... tnerID=8YFLogxK (Scopus URL)
PURE Output Type: Article
Published Date: 2017-03-06
Accepted Date: 2017-02-14
Submitted Date: 2016-06-29
Authors: Chattopadhyay, Amit K (ORCID Profile 0000-0001-5499-6008)
Kumar, T Krishna
Mallick, Sushanta K

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