Identifying the vulnerable: Concepts and measurement

Abstract

Vulnerability to poverty, which broadly captures the susceptibility to becoming poor in the future, has become an integral part of any deprivation assessment. In this paper, we provide axiomatic foundations to much of the empirical literature on vulnerability measurement, which often relies on ad hoc rules to identify the vulnerable. Recognizing the formidable informational challenges in vulnerability measurement, we propose and axiomatically characterize a class of identification rules based on the future probability of falling into poverty. Additionally, we axiomatically characterize the Foster–Greer–Thorbecke class of vulnerability measures for those who are identified as vulnerable. Using this framework, we construct the societal vulnerability measure and demonstrate that societal vulnerability can be decomposed into vulnerabilities arising from the different shocks. Finally, we provide an empirical illustration of the identification and measurement rules proposed in this paper using real-world data from Bangladesh.