Social Indicators Research

, Volume 128, Issue 3, pp 957–979 | Cite as

Is Poverty Stochastic or Structural in Nature? Evidence from Rural India

  • Swati Dutta
  • Lakshmi Kumar


The rationale of this study is to bring in a new area of poverty measurement based on household’s access to basic assets from across Indian States. The major drawback of the average income based measure of poverty is that it is unable to distinguish between the structural and stochastic nature of poverty. This paper applies the asset based framework to poverty to distinguish the relationship between structural and stochastic poverty. The paper has used data from the India Human Development Survey 2005. The results indicate the importance of asset formation for long term poverty reduction. There is a need for targeting pointed policies towards the identified structural poor and stochastic non-poor as they are the most vulnerable and need asset building.


Asset poverty Income poverty Structural poor Stochastic poor 

JEL Classification

I32 I38 C21 C24 R11 R58 


  1. Adato, M., Michael, C., & Julian, M. (2006). Exploring poverty traps and social exclusion in South Africa using qualitative and quantitative data. Journal of Development Studies, 42(2), 226–247.CrossRefGoogle Scholar
  2. Atkinson, A. B., Rainwater, L., Smeeding, T. M. (1995). Income Distribution in OECD Countries, OECD Social Policy Studies, No. 18, Paris.Google Scholar
  3. Baulch, B., & Hoddinott, J. (2000). Economic mobility and poverty dynamics in developing countries. Journal of Development Studies, 36(6), 1–24.CrossRefGoogle Scholar
  4. Bossert, W., Chakravarty, S. R., D’ Ambrosio, C. (2009). Multidimensional poverty and material deprivation, ECINEQ 2009-129 September 2009. URL:
  5. Calvo, C. (2008). Vulnerability to multidimensional poverty: Peru, 1998–2002. World Development, 36(6), 1011–1020.CrossRefGoogle Scholar
  6. Carter, M. R., & Barrett, C. (2006). The economics of poverty traps and persistent poverty: An asset based approach. Journal of Development Studies, 42(1), 178–199.CrossRefGoogle Scholar
  7. Carter, M. R., & May, J. (1999). Poverty, livelihood and class in rural South Africa. World Development, 27(1), 1–20.CrossRefGoogle Scholar
  8. Carter, M. R., & May, J. (2001). One kind of freedom: the dynamics of poverty in post-apartheid South Africa. World Development, 29(12), 1987–2006.CrossRefGoogle Scholar
  9. Chowa, G. N., & Sherraden, M. (2009). Wealth Effects of an Asset-Building Intervention among Rural Households in Sub-Saharan Africa, CSD Working Papers No.09-57. URL:
  10. Christiaensen, L., & Subbarao, K. (2005). Toward an understanding of household vulnerability in rural Kenya. Journal of African Economies, 14(4), 520–558.CrossRefGoogle Scholar
  11. Dandekar, V. M., & Rath, N. (1971). Poverty in India, Indian School of Political EconomyGoogle Scholar
  12. Deaton, A. (2003). Prices and poverty in India, 1987–2000. Economic and Political Weekly, 38(4), 362–368.Google Scholar
  13. Dercon, S. & Calvo, S. (2007). Chronic Poverty and All That: The Measurement of Poverty Over Time, The Centre for the Study of African Economies Working Paper Series, Working Paper 263. Oxford: University of OxfordGoogle Scholar
  14. Duclos, J. Y., Sahn, D. E., & Younger, S. D. (2006). Robust multidimensional poverty comparison. The Economic Journal, 116(514), 943–968.CrossRefGoogle Scholar
  15. Echevin, D. (2013). Measuring vulnerability to asset-poverty in Sub-Saharan Africa. World Development, 46(2013), 211–222.CrossRefGoogle Scholar
  16. Expert Group. (1993). Report of the expert group on estimation of proportion and number of poor. New Delhi: Planning Commission Government of India.Google Scholar
  17. Fan, S., Hazell, P., & Sukhadeo, T. (1999). Linkages between government spending, growth and poverty in rural India, Research Report No 110. Washington, DC: International Food Policy Research Institute.Google Scholar
  18. Filmer, D., & Pritchett, L. H. (2001). Estimating wealth effects without expenditure data or tears: An application to educational enrollments in states of India. Demography, 38(1), 115–132.Google Scholar
  19. Foster, J., Greer, J., & Thorbecke, E. (1984). A class of decomposable poverty measure. Econometrica, 52(3), 761–766.CrossRefGoogle Scholar
  20. Foundation, Ford. (2004). Building assets to reduce poverty and injustice. New York: Ford Foundation.Google Scholar
  21. Gaiha, R., & Deolaiker, A. B. (1993). Persistent, expected and innate poverty: Estimates for semi arid rural South India. Cambridge Journal of Economics, 17(4), 409–421.Google Scholar
  22. Gang, I. N., Sen, K., & Yun, M. (2008). Poverty in rural India: Caste and tribe. Review of Income and Wealth, 54(1), 50–70.CrossRefGoogle Scholar
  23. Grant, U (2005). Health and Poverty Linkages: Perspectives of the chronically poor, Background Paper for the Chronic Poverty Report 2008–09Google Scholar
  24. Haveman, R., & Wolff, E. N. (2005). Who are the asset poor? Levels, trends, and composition, 1983–1998. In M. Sherraden (Ed.), Inclusion in the American dream: Assets, poverty and public policy (pp. 61–86). New York, NY: Oxford University Press.Google Scholar
  25. Himanshu, H. (2006). Agrarian crisis and wage labour: A regional perspective. Indian Journal of Labour Economics, 49(2), 827–846.Google Scholar
  26. Hoddinott, J. (2003). Pathways from poverty in sub-Saharan Africa, International Food Policy Research Institute Working Paper.Google Scholar
  27. Hulme, D., & Andrew, S. (2003). Conceptualizing chronic poverty. World Development, 31(3), 403–423.CrossRefGoogle Scholar
  28. Jayadev, A., Motiram, S., & Vakulabharanam, V. (2007a). Patterns of wealth disparities in India during the era of liberalization. Economic and Political Weekly, 42(39), 3853–3863.Google Scholar
  29. Jayadev, A., Motiram, S., & Vakulabharanam, V. (2007b). Imagined problems in computing wealth inequalities. Economic and Political Weekly, 42(51), 69–71.Google Scholar
  30. Kristiansen, S. (2004). Social networks and business success: The role of sub-cultures in an African context. American Journal of Economic Sociology, 63(5), 1149–1171.CrossRefGoogle Scholar
  31. Kurosaki, T. (2006). Consumption vulnerability to risk in rural Pakistan. Journal of Development Studies, 42(1), 70–89.CrossRefGoogle Scholar
  32. Kurosaki,T. (2007). Targeting the Vulnerable and Choice of Vulnerability measures: Review and Application to Pakistan. Mimeo. Tokyo: Hitotsubashi University, Japan.Google Scholar
  33. Lipton, M., & Ravallion, M. (1995). Poverty and policy. In J. Behrman & T. N. Srinivasan (Eds.), Handbook of development economics, Vol. 3B (pp. 2551–2658). New York: Elsevier North-Holland.Google Scholar
  34. Liverpool, S. L., & Nelson, A. W. (2010).Asset versus consumption poverty and poverty dynamics in the presence of multiple equilibria in rural Ethiopia, IFPRI Discussion Paper 00971.Google Scholar
  35. Mathie, A. & Cunningham, G. (2003). Who Is Driving Development? Reflection on the Transformative Potential of Asset-Based Community Development. Occasional Paper Series 5. Antigonish, Nova Scotia: Coady International Institute, Francis Xavier UniversityGoogle Scholar
  36. Meenakshi, J. V., Ray, R., & Gupta, S. (2000). Estimates of poverty for SC, ST and female-headed households. Economic and Political Weekly, 35(31), 2748–2754.Google Scholar
  37. Mishra, S., & Reddy, D. N. (2011). Persistence of crisis in Indian agriculture: Need for technological and institutional alternatives. In D. M. Nachane (Ed.), India development report 2011 (pp. 48–58). New Delhi: Oxford University Press.Google Scholar
  38. Moser, C. O. (1998). The asset vulnerability framework: Reassessing urban poverty reduction strategies. World Development, 26(1), 1–19.CrossRefGoogle Scholar
  39. Naschold, F. (2009). Poor stays poo: Household asset poverty traps in rural semi-arid India’, Selected Paper prepared for presentation at the Agricultural & Applied Economics Association 2009 AAEA & ACCI Joint Annual Meeting, Milwaukee, Wisconsin, July 26–29, 2009.Google Scholar
  40. National Sample Survey (1998). Household Assets and Liabilities in India (as on June 30, 1991), February.Google Scholar
  41. National Sample Survey (2005). Household Assets and Liabilities in India (as on June 30, 2002), NovemberGoogle Scholar
  42. Oliver, Melvin L., & Thomas, M. S. (1990). Wealth of a nation: A reassessment of asset inequality in America shows at least one-third of households are asset poor. American Journal of Economics and Sociology, 49(2), 129–151.CrossRefGoogle Scholar
  43. Planning Commission. (2009). Report of the expert group to review the methodology for estimation of poverty. New Delhi: Planning Commission.Google Scholar
  44. Pryer, J. (1993). The impact of adult ill-health on household income and nutrition in Khulna, Bangladesh. Environment and Urbanisation, 5(2), 35–49.CrossRefGoogle Scholar
  45. Rodgers, J. R., & Rodgers, J. L. (2010). Chronic and transitory poverty over the life. Cycle, 13(2), 117–136.Google Scholar
  46. Sahn, D. E., & Stifel, D. C. (2000). Poverty comparisons over time and across countries in Africa. World Development, 28(12), 2123–2155.CrossRefGoogle Scholar
  47. Salami, L. A., & Atiman, K. (2013). an analytical study of determinants of poverty level among households in Adamawa North District Nigeria. Mediterranean Journal of Social Sciences MCSER Publishing, Rome-Italy, 4(6), 73–80.Google Scholar
  48. Sen, A. K. (1992). Inequality re-examined. Cambridge, MA: Harvard University Press.Google Scholar
  49. Shapiro, T. M. (2004). The hidden cost of being African American: How wealth perpetuates inequality. New York, NY: Oxford University Press.Google Scholar
  50. Srivastava, A. & Mohanty, S. (2011). Poverty Among Elderly in India. URL:
  51. Streeten, P. (1981). First things first: Meeting basic human needs in developing countries. New York: Oxford University Press.Google Scholar
  52. Subramanian, S. & Jayaraj, D. (2006). The Distribution of Household Wealth in India, UNU WIDER Research Paper No 116Google Scholar
  53. Sundaram, K. & Tendulkar, S. D. (2003). Poverty among Social and Economic Groups In India in the Nineteen Nineties, Working Paper No. 118, Centre for Development Economics, Delhi School of Economics.Google Scholar
  54. Swaminathan, M. (2010). The new poverty line: A methodology deeply flawed. Indian Journal of Human Development, 4(1), 121–125.Google Scholar
  55. Townsend, P. (1979). Poverty in the united kingdom. Harmondsworth: Penguin.Google Scholar
  56. Vaidyanathan, A. (1974). Some aspects of inequalities in living standards in rural India’ poverty and income distribution (pp. 215–241). Calcutta: Statistical publishing Society.Google Scholar
  57. Yunju, N., Huang, J., & Sherraden, M. (2008). Asset definition. In S.-M. McKernan & M. Sherraden (Eds.), Asset building and low-income families. Washington, DC: Urban Institute Press.Google Scholar
  58. Zuwarimwe, J., & Kirsten, J. (2011). Social networks and rural non-farm enterprise development and implication for poverty reduction among rural households in Zimbabwe. Journal of Geography and Regional Planning, 4(6), 344–354.Google Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2015

Authors and Affiliations

  1. 1.Senior Research Associate at Institute for Human DevelopmentNew DelhiIndia
  2. 2.Associate Professor at Institute for Financial Management and ResearchChennaiIndia

Personalised recommendations