Figure 1 shows the cumulative density function for per capita expenditures in Bulgaria in1995, 1997, and 2001. The story that it tells is well known: between 1995 and 1997, living standards declined sharply. No matter where we set the poverty line in terms of expenditures per capita, there were many more Bulgarians living below that line in 1997 than in 1995. Forexample, at a poverty line of 83.8 Lev (2001 prices), 13 percent of Bulgarians were poor in 1995,but 56 percent were poor in 1997. Figure 1 also shows a substantial improvement in living standards between 1997 and 2001. But that recovery is incomplete: in general, living standards had not recovered to their 1995 levels by 2001. At the same poverty line of 83.8 Lev, 21 percent of Bulgarians were poor in 2001