The persistence of subjective poverty in urban Ethiopia

Using data spanning 15 years, we study subjective and consumption poverty in urban Ethiopia. Despite rapid economic growth and declining consumption poverty, subjective poverty remains largely unchanged.

We find that households with a history of poverty continue to perceive themselves as poor even if their material consumption improves. The relative economic position of households is a strong determinant of subjective poverty. Having some type of employment makes households less likely to perceive themselves as poor, even if they remain in objective poverty. We argue that any analysis to measure the impact of growth on welfare should also encompass subjective measures.