Identification Precision of Vulnerability to Poverty Indexes: Does Information Quantity Matter?


Vulnerability to poverty has been proposed in the literature as an ex ante measure of poverty risk useful for the identification of those who may fall into poverty in the future (Zhang and Guanghua 2008). This paper complements the existing literature on vulnerability measures, by investigating empirically how indexes precision varies according to the quantity of information available, in order to understand which is the best predictor of poverty conditional on data at hand. Using the British Household Panel Survey, we show that information quantity affects differently the predictive power of indexes.

This is a preview of subscription content, log in to check access.

Fig. 1
Fig. 2
Fig. 3
Fig. 4


  1. 1.

    The values used in the empirical analysis for the additional parameters are the following: for CD rel \(\alpha = 0.5\), CD abs \(\beta = 0.5\), for DFM we use \(\alpha = 0.5\) and \(\gamma = 2\).

  2. 2.

    In his consumption generating function, Chaudhuri (2003) assumes that the elements of \(X_{h,t}\) are contemporaneously uncorrelated with \(e_{h,t}\) but allows for potential correlation between \(X_{h,t}\) and lagged consumption shocks. If this is the case, the standard within-estimator cannot be used, that is the reason why Chaudhuri (2003) uses first differences of consumption and instruments the changes in the predetermined variables using lagged changes and levels of the same variables. In this case, if income is used rather than consumption, the correlation between \(X_{h,t}\) and lagged shocks should not be an issue.

  3. 3.

    We recall that, differently from all the other vulnerability indexes, the cross-sectional approach (Chaudhuri 2003) exploits only the information available in 2004.

  4. 4.

    In Table 4, 5 and 6, high-performers indexes are reported in italics.

  5. 5.

    Results do not change whether we consider different information sets.


  1. Amemiya, T. (1977). The maximum likelihood estimator and the non-linear three stage least squares estimator in the general nonlinear simultaneous equation model. Econometrica, 45, 955–968.

    Article  Google Scholar 

  2. Atkinson, A. B. (1995). On targeting social security: Theory and western experience with family benefits. In D. Van de Walle & K. Nead (Eds.), Public spending and the poor: Theory and evidence (pp. 25–68). Washington, D.C.: The Johns Hopkins University Press for the World Bank.

  3. Azam, M., & Imai, K. (2009). Vulnerability and poverty in Bangladesh. Discussion Paper Series 0905, the University of Manchester, The School of Economics.

  4. Bandyopadhyay, S., & Cowell, F. (2007). Modelling vulnerability in the UK. LSE STICERD Research Paper 89.

  5. Calvo, C., & Dercon, S. (2005). Measuring individual vulnerability. Economics Series Working Papers 229, University of Oxford, Department of Economics.

  6. Celidoni, M. (2013). Vulnerability to poverty: An empirical comparison of alternative measures. Applied Economics, 45, 1493–1506.

    Article  Google Scholar 

  7. Celidoni, M. (2014). Decomposing vulnerability to poverty. Review of Income and Wealth (forthcoming).

  8. Chaudhuri, S. (2003). Assessing household vulnerability to poverty: Concepts, empirical methods and illustrative examples. Mimeo, Columbia University.

  9. Chaudhuri, S., Jalan, J., & Suryahadi, A. (2002). Assessing household vulnerability to poverty from cross-sectional data: A methodology and estimates from Indonesia. Discussion paper 0102-52, Columbia University, Department of Economics.

  10. Christiaensen, L., & Boisvert, R. (2000). On measuring household food vulnerability: Case evidence from northern Mali. Working papers. Department of Agricultural, Resource and Managerial Economics, Cornell University, NY.

  11. Dercon, S. (2001). Assessing vulnerability to poverty. Mimeo, Jesus College, Oxford and Centre for the Study of African Economies (CSAE), Department of Economics, Oxford University.

  12. Dercon, S. (2006). Vulnerability: A micro perspective. QEH working papers 149, 2006.

  13. Dutta, I., Foster, J., & Mishra, A. (2011). On measuring vulnerability to poverty. Social Choice and Welfare, 37, 743–761.

    Article  Google Scholar 

  14. Foster, J., Greer, J., & Thorbecke, E. (1984). A class of decomposable poverty measures. Econometrica, 52, 761–766.

    Article  Google Scholar 

  15. Gaiha, R., & Imai, K. (2008). Measuring vulnerability and poverty: Estimates for rural India. Working paper 2008/40. World Institute for Development Economic Research (UNU-WIDER).

  16. Gaiha, R., Imai, K., & Kang, W. (2011). Vulnerability and poverty dynamics in Vietnam. Applied Economics, 43, 3603–3618.

    Article  Google Scholar 

  17. Gerry, C., & Li, C. (2010). Consumption smoothing and vulnerability in Russia. Applied Economics, 42, 1995–2007.

    Article  Google Scholar 

  18. Hoddinott, J., & Quisumbing, A. R. (2003). Methods for microeconometric risk and vulnerability assessments. Social Protection Discussion Paper Series 0324, The World Bank.

  19. Imai K., Wang, X., & Kang, W. (2009). Poverty and vulnerability in rural China: Effects of taxation. Discussion Paper Series 0913, The University of Manchester, The School of Economics.

  20. Jalan J., & Ravaillon, M. (1998). Determinants of transient and chronic poverty: Evidence from rural China. Working paper no. 1936, World Bank Policy Research.

  21. Jamal, H. (2009). Assessing vulnerability to poverty: Evidence from Pakistan. Research report no. 80, Social Policy and Development Centre (SPDC).

  22. Jenkins, S. (2007). New directions in the analysis of inequality and poverty. Technical report, IZA discussion papers 2814.

  23. Jha, R., Dang, T., & Sharma, K. (2009). Vulnerability to poverty in Fiji. International Journal of Applied Econometrics and Quantitative Studies, 6, 51–68.

    Google Scholar 

  24. Kamanou, G., & Morduch, J. (2002). Measuring vulnerability to poverty. Working paper 2002/58, World Institute for Development Economic Research (UNU-WIDER).

  25. Ligon, E., & Schechter, L. (2003). Measuring vulnerability. Economic Journal, 113, C95–C102.

    Article  Google Scholar 

  26. Madden, D. (2011) Health and income poverty in Ireland, 20032006. Journal of Economic Inequality, 9, 23–33.

  27. Morduch, J. (2000). Between the state and the market: Can informal insurance patch the safety net? World Bank Research Observer, 14, 187–207.

  28. Muller, C., & Bibi, S. (2010). Refining targeting against poverty evidence from Tunisia. Oxford Bulleting of Economics and Statistics, 72, 381–410.

    Article  Google Scholar 

  29. OECD. (2011). Divided we stand: Why inequality keeps rising. Technical report, OECD, The Organisation for Economic Co-operation and Development.

  30. Osberg, L. (1998). Economic insecurity. SPRC Discussion paper 88, University of New South Wales, Social Policy Research Centre.

  31. Osberg, L. (2010). Measuring economic insecurity and vulnerability as part of economic well-being: Concepts and context. In IARIW 31st general conference. St. Gallen, Switzerland.

  32. Pritchett, L., Suryahadi, A., & Sumarto, S. (2000). Quantifying vulnerability to poverty: A proposed measure applied to Indonesia. Working paper WPS 2437, The World Bank.

  33. Skoufias, E., & Quisumbing, A. R. (2003). Consumption insurance and vulnerability to poverty: A synthesis of the evidence from Bangladesh, Ethiopia, Mali, Mexico and Russia. FCND Discussion paper 155, International Food Policy Research Institute.

  34. The World Bank (2011). Measuring vulnerability. Available at,,contentMDK:20238993~menuPK:492141~pagePK:148956~piPK:216618~theSitePK:430367,00.html. Accessed 10 Feb 2011.

  35. Zhang, Y., & Guanghua, W. (2008). Can we predict vulnerability to poverty? WIDER research paper 2008/82.

Download references

Author information



Corresponding author

Correspondence to Martina Celidoni.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Celidoni, M., Procidano, I. Identification Precision of Vulnerability to Poverty Indexes: Does Information Quantity Matter?. Soc Indic Res 121, 93–113 (2015).

Download citation


  • Poverty
  • Risk
  • Vulnerability
  • Receiver operating characteristic (ROC) curve