Poverty index with time-varying consumption and income distributions

Amit K. Chattopadhyay, T. Krishna Kumar, and Sushanta K. Mallick
Phys. Rev. E 95, 032109 – Published 6 March 2017

Abstract

Starting from a stochastic agent-based model to represent market exchange in a developing economy, we study time variations of the probability density function of income with simultaneous variation of the consumption deprivation (CD), where CD represents the shortfall in consumption from the saturation level of an essential commodity, cereal. Together, these two models combine income-expenditure-based market dynamics with time variations in consumption due to income. In this new unified theoretical structure, exchange of trade in assets is only allowed when the income exceeds consumption-deprivation while CD itself is endogenously obtained from a separate kinetic model. Our results reveal that the nature of time variation of the CD function leads to a downward trend in the threshold level of consumption of basic necessities, suggesting a possible dietary transition in terms of lower saturation level of food-grain consumption, possibly through an improvement in the level of living. The new poverty index, defined as CD, is amenable to approximate probabilistic prediction within a short time horizon. A major achievement of this work is the intrinsic independence of the poverty index from an exogenous poverty line, making it more objective for policy formulation as opposed to existing poverty indices in the literature.

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  • Received 29 June 2016
  • Revised 22 November 2016

DOI:https://doi.org/10.1103/PhysRevE.95.032109

©2017 American Physical Society

Physics Subject Headings (PhySH)

Statistical Physics & ThermodynamicsGeneral PhysicsInterdisciplinary Physics

Authors & Affiliations

Amit K. Chattopadhyay*

  • Aston University, Mathematics, Birmingham B4 7ET, United Kingdom

T. Krishna Kumar

  • Rockville-Analytics, Rockville, Maryland 20850, USA

Sushanta K. Mallick

  • School of Business and Management, Queen Mary University of London, Mile End Road, London E1 4NS, United Kingdom

  • *Corresponding author: a.k.chattopadhyay@aston.ac.uk
  • tkkumar@gmail.com
  • s.k.mallick@qmul.ac.uk

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Issue

Vol. 95, Iss. 3 — March 2017

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