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A Statistical Model for Simple, Fast and Reliable Measurement of Poverty. A revised version of DP 415

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    Abstract

    The primus inter pares of the UN Millennium Development Goals is to reduce poverty. The only internationally accepted method of estimating poverty requires a measurement of total consumption based on a time and resource demanding household budget or integrated survey over 12 months. Rather than measuring poverty only, say every 5th year, a model is presented to predict poverty based upon a small set of household variables to be collected yearly between two 12 months household surveys. Information obtained from the light surveys may then be used to predict poverty rates. The key question is whether the inaccuracy in these predictions is acceptable. The standard errors presented are lower than the sampling errors to the poverty estimates based on the 12 months household surveys. Predictions based on this sample also indicate that the problem of misspecifications of models is not large. It is recommended to test these models at the country level and if the test results are comparable to those here, apply the approach presented.

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    File URL: http://www.ssb.no/a/publikasjoner/pdf/DP/dp415.pdf
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    Bibliographic Info

    Paper provided by Research Department of Statistics Norway in its series Discussion Papers with number 415.

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    Date of creation: Dec 2006
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    Handle: RePEc:ssb:dispap:415

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    Keywords: Stochastic model; Poverty measurement; Money metric poverty; Survey methods;

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    1. Fofack, Hippolyte, 2000. "Combining Light Monitoring Surveys with Integrated Surveys to Improve Targeting for Poverty Reduction: The Case of Ghana," World Bank Economic Review, World Bank Group, vol. 14(1), pages 195-219, January.
    2. Ravallion, M., 1992. "Poverty Comparisons - A Guide to Concepts and Methods," Papers 88, World Bank - Living Standards Measurement.
    3. Ravallion, M., 1998. "Poverty Lines in Theory and Practice," Papers 133, World Bank - Living Standards Measurement.
    4. 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.
    5. Ravallion, Martin & Bidani, Benu, 1993. "How robust is a poverty profile?," Policy Research Working Paper Series 1223, The World Bank.
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