Well-Being and Poverty

Abstract

The assessment of well-being for poverty analysis is traditionally characterized according to two main approaches, which, following Ravallion (1994), we will term the welfarist and the non-welfarist approaches. The first approach tends to concentrate in practice mainly on comparisons of “economic wellbeing”, which we will also call “standard of living” or “income” (for short), As we will see, this approach has strong links with traditional economic theory, and it is also widely used by economists in the operations and research work of organizations such as the World Bank, the International Monetary Fund, and Ministries of Finance and Planning of both developed and developing countries. The second approach has historically been advocated mainly by social scientists other than economists and partly in reaction to the first approach. This second approach has nevertheless also been recently and increasingly advocated by economists and non-economists alike as a multidimensional complement to the unidimensional standard of living approach.