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Small area estimation-based prediction methods to track poverty: validation and applications

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Author Info

  • Luc Christiaensen

    ()

  • Peter Lanjouw

    ()

  • Jill Luoto

    ()

  • David Stifel

Abstract

Tracking poverty is predicated on the availability of comparable consumption data and reliable price deflators. However, regular series of strictly comparable data are only rarely available. Price deflators are also often missing or disputed. In response, poverty prediction methods that track consumption correlates as opposed to consumption itself have been developed. These methods typically assume that the estimated relation between consumption and its predictors is stable over time -- an assumption that cannot usually be tested directly. This study analyzes the performance of poverty prediction models based on small area estimation techniques. Predicted poverty estimates are compared with directly observed levels in two country settings where data comparability over time is not a problem. Prediction models that employ either non-staple food or non-food expenditures or a full set of assets as predictors are found to yield poverty estimates that match observed poverty well. This offers some support to the use of such methods to approximate the evolution of poverty. Two further country examples illustrate how an application of the method employing models based on household assets can help to adjudicate between alternative price deflators.

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/10.1007/s10888-011-9209-9
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Bibliographic Info

Article provided by Springer in its journal The Journal of Economic Inequality.

Volume (Year): 10 (2012)
Issue (Month): 2 (June)
Pages: 267-297

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Handle: RePEc:kap:jecinq:v:10:y:2012:i:2:p:267-297

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Web page: http://springerlink.metapress.com/link.asp?id=111137

Related research

Keywords: Consumption prediction; Price deflator; Poverty dynamics; Small area estimation; China; Kenya; Russia; Vietnam; D12; D63; I32;

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References

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  1. Gibson, John & Huang, Jikun & Rozelle, Scott, 2001. "Improving Estimates Of Inequality And Poverty From Urban China'S Household Income And Expenditure Survey," Working Papers 11989, University of California, Davis, Department of Agricultural and Resource Economics.
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  7. Lanjouw, Jean Olson & Lanjouw, Peter, 2001. "How to Compare Apples and Oranges: Poverty Measurement Based on Different Definitions of Consumption," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(1), pages 25-42, March.
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  11. Chris Elbers & Jean O. Lanjouw & Peter Lanjouw, 2003. "Micro--Level Estimation of Poverty and Inequality," Econometrica, Econometric Society, vol. 71(1), pages 355-364, January.
  12. Astrid Mathiassen, 2009. "A model based approach for predicting annual poverty rates without expenditure data," Journal of Economic Inequality, Springer, vol. 7(2), pages 117-135, June.
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Cited by:
  1. Douidich, Mohamed & Ezzrari, Abdeljaouad & Van der Weide, Roy & Verme, Paolo, 2013. "Estimating quarterly poverty rates using labor force surveys : a primer," Policy Research Working Paper Series 6466, The World Bank.
  2. Hassine, Nadia Belhaj, 2014. "Economic inequality in the Arab region," Policy Research Working Paper Series 6911, The World Bank.

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