Poverty and its many dimensions: The role of income as an indicator

Abstract

In this paper we analyse the choice of the dimension in which poverty is to be measured by reviewing some implications arising from the debate on the concept of welfare. By discussing Sen's capability approach, in particular, it is suggested that income or consumption are not necessarily the only indicators of interest in a poverty analysis. We then explore how comprehensive a picture of poverty can be gained by focusing on an income‐based measure, using Chilean data from 1992. We analyse the role of income both as having a direct impact on a set of indicators of well‐being and as proxying the relevant factors affecting them. In both cases the link is found to be weak. This suggests that poverty analysis is highly conditional on the indicators chosen and that the approach should be kept as broad as possible in order to capture more fully the multidimensional nature of such a complex phenomenon.