Estimating Vulnerability to Poverty using Panel data: Evidence from Indonesia
AbstractTraditional poverty measures fail to indicate the degree of risk of becoming or remaining poor that households are confronted to. They can therefore be misleading in the context of implementing poverty reduction policies. In this paper I propose a method to estimate an index of ex ante vulnerability to poverty, defined as the probability of being poor in the (near) future given current observable characteristics, using panel data. This method relies on the estimation of the expected mean and variance of future consumption conditional on current consumption and observable characteristics. It generates a vulnerability index, or predicted probability of future poverty, which performs well in predicting future poverty, including out of sample. About 80% of households with a 2000 vulnerability index of 100% are actually poor in 2007. This approach provides information on the population groups that have a high probability of becoming or remaining poor in the future, whether currently poor or not. It is therefore useful to complement traditional poverty measures such as the poverty headcount, in particular for the design and planning of poverty reduction policies.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by HAL in its series Working Papers with number halshs-00936199.
Date of creation: 14 Mar 2014
Date of revision:
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00936199
Contact details of provider:
Web page: http://hal.archives-ouvertes.fr/
Poverty; vulnerability; Household consumption;
Other versions of this item:
- Adama BAH, 2013. "Estimating Vulnerability to Poverty using Panel data: Evidence from Indonesia," Working Papers 201325, CERDI.
- I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
- C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pradhan, Menno, et al, 2001. "Eating Like Which "Joneses?" An Iterative Solution to the Choice of a Poverty Line "Reference Group."," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(4), pages 473-87, December.
- John Strauss & Duncan Thomas & Firman Witoelar & Elizabeth Frankenberg & Bondan Sikoki & Cecep Sumantri & Wayan Suriastini, 2010.
"Cutting the costs of attrition: Results from the Indonesia Family Life Survey,"
- Thomas, Duncan & Witoelar, Firman & Frankenberg, Elizabeth & Sikoki, Bondan & Strauss, John & Sumantri, Cecep & Suriastini, Wayan, 2012. "Cutting the costs of attrition: Results from the Indonesia Family Life Survey," Journal of Development Economics, Elsevier, vol. 98(1), pages 108-123.
- Duncan Thomas & Elizabeth Frankenberg & James P. Smith, 2001.
"Lost but Not Forgotten: Attrition and Follow-up in the Indonesia Family Life Survey,"
Journal of Human Resources,
University of Wisconsin Press, vol. 36(3), pages 556-592.
- Duncan Thomas & Elizabeth Frankenberg & James P. Smith, 2000. "Lost But Not Forgotten: Attrition and Follow-up in the Indonesian Family Life Survey," Working Papers 00-03, RAND Corporation Publications Department.
- Duncan Thomas & Elizabeth Frankenberg & James P. Smith, 2004. "Lost but Not Forgotten: Attrition and Follow-up in the Indonesia Family Life Survey," Labor and Demography 0408007, EconWPA.
- Bob Baulch & John Hoddinott, 2000. "Economic mobility and poverty dynamics in developing countries," Journal of Development Studies, Taylor & Francis Journals, vol. 36(6), pages 1-24.
- Pritchett, Lant & Suryahadi, Asep & Sumarto, Sudarno, 2000. "Quantifying vulnerability to poverty - a proposed measure, applied to Indonesia," Policy Research Working Paper Series 2437, The World Bank.
- Wenefrida Widyanti & Asep Suryahadi & Sudarno Sumarto & Athia Yumna, 2009. "The Relationship between Chronic Poverty and Household Dynamics : Evidence from Indonesia," Microeconomics Working Papers 22554, East Asian Bureau of Economic Research.
- Firman Witoelar, 2005. "Inter-household Allocations within Extended Family: Evidence from the Indonesia Family Life Survey," Working Papers 912, Economic Growth Center, Yale University.
- Asep Suryahadi & Sudarno Sumarto & Lant Pritchett, 2003. "Evolution of Poverty During the Crisis in Indonesia," Asian Economic Journal, East Asian Economic Association, vol. 17(3), pages 221-241, 09.
- Asep Suryahadi & Sudarno Sumarto, 2003. "Poverty and Vulnerability in Indonesia Before and After the Economic Crisis," Asian Economic Journal, East Asian Economic Association, vol. 17(1), pages 45-64, 03.
- Stefan Dercon & Pramila Krishnan, 2000. "Vulnerability, seasonality and poverty in Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 36(6), pages 25-53.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD).
If references are entirely missing, you can add them using this form.