Revisiting Non-Food Expenditures: Rethinking Poverty Lines and Welfare in the Age of Environmental and Health Externalities

Haer & Sarjiyanto (2023) highlight the paradoxical impact of ‘bad’ consumption (e.g., cigarettes) on poverty and welfare, while Nelson et al. (2023) discuss the regressive effects of environmental taxes. This idea proposes a new poverty and welfare metric that discounts or penalizes non-food expenditures linked to negative health or environmental outcomes—rather than treating all consumption equally. By explicitly integrating these ‘externalities’ into the calculation of poverty lines or welfare aggregates, we can better align measurement with public health and sustainability goals. This would be a significant departure from the cost-of-basic-needs or consumption-aggregate approaches (Moatsos, 2024; Oliveira et al., 2016), offering a more holistic and policy-relevant definition of well-being.

References:

1. Analyzing poverty levels and welfare: Does cigarette consumption and spending on regional functions have an impact?. Jamhul Haer, Sarjiyanto Sarjiyanto (2023). Jurnal Perspektif Pembiayaan dan Pembangunan Daerah.
2. Social sustainability in the decarbonized welfare state: Social policy as a buffer against poverty related to environmental taxes. Kenneth Nelson, A. Lindh, Pär Dalén (2023). Global Social Policy.
3. Construction of a Consumption Aggregate Based on Information from POF 2008‐2009 and Its Use in the Measurement of Welfare, Poverty, Inequality and Vulnerability of Families. L. Oliveira, Debora F. De Souza, Luciana A. Dos Santos, Marta Antunes, Nícia C. H. Brendolin, Viviane C. C. Quintaes (2016).
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