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The measurement of poverty with geographical and intertemporal price dispersion, Evidence from Rwanda

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  • Christophe Muller

    ()
    (Departamento de Fundamentos del Análisis Económico Universidad de Alicante, Campus de San Vicente)

Abstract

(english) It is not known to what extent welfare measures result from seasonal and geographical price differences rather than from differences in living standards across households. Using data from Rwanda in 1983, we show that the change in mean living standard indicators caused by local and seasonal price deflation is moderately significant at every quarter. By contrast, the differences in poverty measures caused by this deflation can be considerable, for chronic as well as transient or seasonal poverty indicators. Thus, poverty monitoring and anti-poverty targeting can be badly affected by inaccurate deflation of living standard data. Moreover, when measuring seasonal poverty, the deflation based on regional prices instead of local prices only partially corrects for spatial price dispersion. Using annual local prices instead of quarterly local prices only yields a partial deflation, which distorts the measure of poverty fluctuations across seasons and biases estimates of annual and chronic poverty. _________________________________ (français) On ne sait pas dans quelle mesure les indicateurs de bien-être social résultent de différences de prix plutôt que de différences saisonnières et géographiques de niveaux de vie entre ménages. A partir de données du Rwanda en 1983, nous montrons que le changement de la mesure du niveau de vie moyen causé par la déflation des prix est modéré bien que significatif à chaque trimestre, contrairement au changement des mesures de la pauvreté qui peut être considérable, que ce soit pour des indices de pauvreté chronique, transitoire ou saisonnière. Ainsi le suivi de la pauvreté et le ciblage anti-pauvreté peuvent être sévèrement affectés par une déflation imprécise des données de niveaux de vie. Pour la mesure de la pauvreté saisonnière, la déflation basée sur des indices de prix régionaux, au lieu d’indices de prix locaux corrige seulement partiellement la dispersion géographique des prix. De même, employer des prix locaux annuels au lieu de prix locaux trimestriels conduit à une déflation partielle qui non seulement distord la mesure des fluctuations de la pauvreté entre les saisons, mais fournit également des estimations biaisées des pauvretés chroniques et annuelles.

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Bibliographic Info

Paper provided by DIAL (Développement, Institutions et Mondialisation) in its series Working Papers with number DT/2005/16.

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Length: 23 pages
Date of creation: Dec 2005
Date of revision:
Handle: RePEc:dia:wpaper:dt200516

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Keywords: Measurement and Analysis of Poverty; Income Distribution; Personal Income Distribution; Mesure du niveau de vie; Variation spatiales de prix; Mesure de la pauvreté; Politiques de lutte contre la pauvreté.;

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  1. Tang, D.P. & Wang, P., 1993. "On Relative Price Variability and Hyperinflation," Papers 5-93-5, Pennsylvania State - Department of Economics.
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Citations

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Cited by:
  1. John Gibson & Bonggeun Kim, 2012. "Do the Urban Poor Face Higher Food Prices? Evidence from Vietnam," Working Papers in Economics 12/16, University of Waikato, Department of Economics.
  2. Christophe Muller, 2008. "Anti-Poverty Transfers without Riots in Tunisia," Working Papers. Serie AD 2008-08, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  3. Carlos Maia & Servaas van der Berg, 2010. "When the remedy is worse than the disease: Adjusting survey income data for price differentials, with special reference to Mozambique," Working Papers 24/2010, Stellenbosch University, Department of Economics.
  4. Arsène Kouadio & Vincent Monsan & Mamadou Gbongue, 2008. "Réformes de politique agricole et dynamique de la pauvreté alimentaire en Côte d'Ivoire/Agricultural Policy Reforms and Food Poverty Dynamics in Côte d'Ivoire," Working Papers PMMA 2008-07, PEP-PMMA.
  5. Christophe Muller, 2008. "The Measurement Of Poverty With Geographical And Intertemporal Price Dispersion: Evidence From Rwanda," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(1), pages 27-49, 03.

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