The cost-of-living-based method of measuring poverty stipulates a consumption bundle that is adequate for living needs, and measures the cost estimates of groups compared in a poverty profile. This approach has been followed by both developed and developing nations. The cost-of-living measure is mainly anchored to the cost of acquiring living materials, consistent with a comfortable quality of life in the specific context. A way of doing this is to find an average cost of products and services (including food and nonfood) consumed by a given category of people (X) over a controlled time that includes people who utilize the stipulated living needs. This can be interpreted as estimation of the utility-consistent poverty threshold.

Using this method, poverty is calculated by the cost of basic necessities, ...