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A family in Tarialan, Uvs Province, Mongolia, uses a solar panel to generate power for their 'ger', a traditional Mongolian tent. Tarialan, Mongolia. UN Photo/Eskinder Debebe.

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New Approaches to Measuring Poverty and Vulnerability

Project name/title
New Approaches to Measuring Poverty and Vulnerability
New Directions in Development Economics
This project will investigate issues concerning poverty and vulnerability in developing countries building on behavioural economics. The project seeks to derive poverty measures that are based on prospect theory, an alternative model to expected utility theory for decision-making under uncertainty. The new measure takes into account the reference point individuals use when evaluating their wellbeing and the possibility for loss aversion, which highlights the importance of downside risks. These measures are then implemented using panel and cross-section data from developing countries.
poverty measurement, vulnerability, behavioral economics, prospect theory

UNU-WIDER focal point:
Finn Tarp, Director

Project Assistant:
Anne Ruohonen