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Working Paper Abstract

142. "A Path-Dependent Poverty Measure"
          by Lidia Ceriani

The paper provides the axiomatic characterization of a new poverty measure, the
path-dependent poverty index. This is a two period index taking into account not
only individuals current and past deprivation levels, but also the relative position
with respect to their previous income status. Given two populations with the same
distribution of incomes, path-dependent poverty is higher for the population
where all individuals experienced an income fall. Not only they are poor, they also
feel the pain for their loss. The new index is illustrated with an application to EU
countries.

Keywords: Intertemporal Poverty Measurement, Distribution, Axioms, Prospect
Theory

JEL Classification: I32, D31, D63, D71, D81

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