The Assessment of Absolute Poverty Lines Consistency in Provinces of Iran: The Revealed Preference Approach

In the presence of significant differences in the level of regional development, and where climatic zones are varying considerably and the relative food prices are different in the regions, determining one national poverty line for all the regions may not disclose regional disparities and does not provide a true picture of poverty in the country. In such circumstances, specific regional poverty lines are preferred and more appropriately reveal the reality of poverty in the country. The present study tries to test the suitability of the national poverty line in measuring the level of poverty in the provinces of Iran, using the revealed preference principles. To this end, provincial absolute poverty lines are estimated and tested for utility based consistency using revealed preference theory and data on food consumption patterns of Iranain households, generated by the National Nutrition and Food Technology Research Institute and Statistical Centre of Iran in 2012. Results indicate that most of the provinces, the estimated absolute poverty lines are not consistence. Consequently, the use of one national poverty line would not appropriately reflect the povertly lines in different provinces of Iran. This suggests that a separate poverty food basket is required to be specified for each of the provinces based on the available food items in each provinces, and a provincial poverty line has to be defined accordingly.