Changes in the perception of the poverty line during the depression in Russia, 1993-96

Economic transition in Russia was accompanied by a precipitous decline in r eal income for most of the population. This article analyzes how the declin e affected people's perception of the minimum level of income needed to mak e ends meet. Individual-level data collected from repeated surveys between March 1993 and September 1996 reveal that the elasticity of subjective mini mum income with respect to actual median income was 1.5 or that people's su bjective estimate of the minimum income for an adult Russian fell about 1.7 percent each month. This sharp reduction in the face of a decrease in real income meant that the percentage of the population who felt that they were poor declined, even though poverty remained at a very high level (more tha n 60 percent of the population) throughout the period. This self-perception is in marked contrast to an "objective " measure of poverty: the percentag e of the population whose income was less than a given real poverty line ro se.