Identifying vulnerability to poverty: A critical survey.

What is it about?

In 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.

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Why is it important?

Previous studies have already reviewed various approaches to vulnerability in the context of research on poverty (Hoddinott and Quisumbing, 2003; Hoogeveen et al., 2004; Ligon and Schechter, 2004; Gaiha and Imai, 2009; Klasen and Povel, 2013). Unlike these works, we focus exclusively on the identification problem and offer a more complete survey of the defining criteria, which are implicit in the currently proposed measurement. To advance in clarifying the concept of vulnerability to poverty is of great relevance for public policy, international cooperation aimed at development and applied economic research. Overcoming the existing confusion and ambiguity regarding this concern could make this concept more practically useful in policy interventions targeting poverty reduction. Extending the analysis from the concepts of effective poverty towards a broader scope of vulnerability to poverty will allow distinctions to be made between those who are poor, those who are expected to be poor and those who are at risk of becoming poor. The certainty of public decisions on overcoming poverty depends on the accurate assessment of these circumstances, which directly relates to the identification problem of vulnerability addressed in this paper.

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