Estimating the Poverty Lines in Iran Based on Household Scale

The effect of equivalence scale on poverty line has been considered as a predetermined parameter in all previous studies about the estimation of poverty lines in Iran. As household’s members can benefit from economies of scale in consumption، the cost of reaching to a given level of welfare does not increase one to one in household scale. So the effect of household scale on poverty line as a predetermined parameter creates bias. The main purpose of this study is to estimate the poverty line regarding the household scale. The utility function and the indirect household expenditures under consumption behavior approach are estimated based on income-expenditure data for 204464 Iranian urban households during2001-2007. Then poverty lines (in nominal and real units) per household scale (1to 10 members) are calculated based on indirect household expenditures.