IDENTIFYING VULNERABILITY TO POVERTY: A CRITICAL SURVEY

Abstract

AbstractIn the economic literature on poverty, various methods have been proposed for measuring a phenomenon known as ‘vulnerability’. However, after more than a quarter century of research, no consensus has been reached on how to identify such vulnerable individuals within a given population. Some misunderstandings have also arisen from the overlapping of other closely related concepts, such as the expectation of being poor, expected poverty, multi‐period poverty and risk exposure. This paper offers a detailed conceptual discussion on vulnerability to poverty and its related elements, reviewing a wide range of identifying criteria provided in the literature. It is found that according to the state of the art in this field of research, two key elements stand out in identifying vulnerable individuals: an expected well‐being below the poverty line and a relevant risk of falling into poverty due to downside deviation from a reference level of well‐being. The traditional classification of vulnerability approaches has been updated into four groups: (i) those that stress the element of exposure to risk; (ii) those that emphasize the element of expected poverty; (iii) those that define vulnerability through a utility gap and (iv) those that are supported by a mean‐risk dominance criterion.