IDEAS home Printed from https://ideas.repec.org/p/tin/wpaper/20010092.html
   My bibliography  Save this paper

Welfare Analysis with a Proxy Consumption Measure – Evidence from a Repeated Experiment in Indonesia

Author

Listed:
  • Menno Pradhan

    (World Bank, Washington, and Vrije Universiteit Amsterdam)

Abstract

This discussion paper resulted in an article in Fiscal Studies (2009). Volume 30, issue 3/4, pages 391-417. Every three years, Indonesia fields simultaneously two nationwide surveys which collect consumption data. Onecollects consumption using 23 questions, the other using 320 questions. Based on a repeated experiment inwhich the two questionnaires were randomly assigned across households, I examine the consequences of using ahigher level of aggregation in questioning. A mapping of distribution functions reveals the combined effect ofsystematic differences in measurement and measurement error. Using a pseudo cross-section approach, Ieliminate the effect of measurement error and find that using a high level of aggregation yields a lowerconsumption measure, and that the fraction of underestimation increases as consumption rises. A one percentincrease in average consumption increases the fraction by which consumption is underestimated by about .4percent point. Next, I examine the consequences of using the short consumption questionnaire in welfareanalysis. Higher relative measurement error in the consumption measure derived from the short questionnaireresults in higher poverty estimates even if the poverty line is adjusted to take account of the systematicunderestimation. Small differences are found for analysis that is based on the rank the individual holds in theconsumption distribution. In gradient analysis, it seems impossible to devise a simple correction factor for thehigher consumption elasticities that follow when the short questionnaire is used.

Suggested Citation

  • Menno Pradhan, 2001. "Welfare Analysis with a Proxy Consumption Measure – Evidence from a Repeated Experiment in Indonesia," Tinbergen Institute Discussion Papers 01-092/2, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20010092
    as

    Download full text from publisher

    File URL: https://papers.tinbergen.nl/01092.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Chaudhuri, Shubham & Ravallion, Martin, 1994. "How well do static indicators identify the chronically poor?," Journal of Public Economics, Elsevier, vol. 53(3), pages 367-394, March.
    2. Deaton, A. & Zaidi, S., 1999. "Guidelines for Constructing Consumption Aggregates for Welfare Analysis," Papers 192, Princeton, Woodrow Wilson School - Development Studies.
    3. Menno Pradhan & Asep Suryahadi & Sudarno Sumarto & Lant Pritchett, "undated". "Measurements of Poverty in Indonesia: 1996, 1999, and Beyond," Working Papers 422, Publications Department.
    4. Mark Montgomery & Michele Gragnolati & Kathleen Burke & Edmundo Paredes, 2000. "Measuring living standards with proxy variables," Demography, Springer;Population Association of America (PAA), vol. 37(2), pages 155-174, May.
    5. Blundell,R. W. & Preston,Ian & Walker,Ian (ed.), 1994. "The Measurement of Household Welfare," Cambridge Books, Cambridge University Press, number 9780521451956.
    6. repec:pri:rpdevs:deaton_zaidi_consumption is not listed on IDEAS
    7. Abuzar Asra, 1999. "Urban-Rural Differences in Costs of Living and Their Impact on Poverty Measures," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 35(3), pages 51-69.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Martin Browning & Thomas F. Crossley & Guglielmo Weber, 2003. "Asking consumption questions in general purpose surveys," Economic Journal, Royal Economic Society, vol. 113(491), pages 540-567, November.
    2. Pritchett, Lant & Sumarto, Sudarno & Suryahadi, Asep, 2001. "Targeted Programs in an Economic Crisis: Empirical Findings from Indonesia’s Experience," MPRA Paper 58727, University Library of Munich, Germany.
    3. Joachim Winter, 2004. "Response bias in survey-based measures of household consumption," Economics Bulletin, AccessEcon, vol. 3(9), pages 1-12.
    4. Martin Browning & Thomas Crossley, 2009. "Are Two Cheap, Noisy Measures Better Than One Expensive, Accurate One?," American Economic Review, American Economic Association, vol. 99(2), pages 99-103, May.
    5. David Stifel & Luc Christiaensen, 2007. "Tracking Poverty Over Time in the Absence of Comparable Consumption Data," The World Bank Economic Review, World Bank, vol. 21(2), pages 317-341, June.
    6. David Sahn, 2012. "Health Inequality across Populations of Individuals," African Development Review, African Development Bank, vol. 24(4), pages 316-326.
    7. John Gibson & Kathleen Beegle & Joachim De Weerdt & Jed Friedman, 2015. "What does Variation in Survey Design Reveal about the Nature of Measurement Errors in Household Consumption?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 77(3), pages 466-474, June.
    8. Robert Cull & Kinnon Scott, 2010. "Measuring Household Usage of Financial Services: Does it Matter How or Whom You Ask?," The World Bank Economic Review, World Bank, vol. 24(2), pages 199-233, April.
    9. Beegle, Kathleen & De Weerdt, Joachim & Friedman, Jed & Gibson, John, 2012. "Methods of household consumption measurement through surveys: Experimental results from Tanzania," Journal of Development Economics, Elsevier, vol. 98(1), pages 3-18.
    10. Winter, Joachim, 0000. "Design effects in survey-based measures of household consumption," Sonderforschungsbereich 504 Publications 02-34, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    11. David E. Sahn & Stephen D. Younger, 2009. "Measuring intra‐household health inequality: explorations using the body mass index," Health Economics, John Wiley & Sons, Ltd., vol. 18(S1), pages 13-36, April.
    12. Bredl, Sebastian, 2009. "Migration, remittances and educational outcomes: The case of Haiti," Discussion Papers 44, Justus Liebig University Giessen, Center for international Development and Environmental Research (ZEU).
    13. Roopali Goyanka & Charu C. Garg & Sheela Prasad, 2019. "Impoverishment Due to Out-of-pocket Health Expenditures: Measurement and Comparison Across Different Surveys in India," Indian Journal of Human Development, , vol. 13(2), pages 121-134, August.
    14. Luisa Natali & Marta Moratti, 2012. "Measuring Household Welfare: Short versus long consumption modules," Papers inwopa671, Innocenti Working Papers.
    15. Fiedler, John L. & Mwangi, Dena M., 2016. "Improving household consumption and expenditure surveys’ food consumption metrics: Developing a strategic approach to the unfinished agenda:," IFPRI discussion papers 1570, International Food Policy Research Institute (IFPRI).
    16. repec:ebl:ecbull:v:3:y:2004:i:9:p:1-12 is not listed on IDEAS
    17. Paul Glewwe, 2007. "Measurement Error Bias in Estimates of Income and Income Growth among the Poor: Analytical Results and a Correction Formula," Economic Development and Cultural Change, University of Chicago Press, vol. 56(1), pages 163-189, October.
    18. Farfán, Gabriela & Genoni, María Eugenia & Vakis, Renos, 2017. "You are what (and where) you eat: Capturing food away from home in welfare measures," Food Policy, Elsevier, vol. 72(C), pages 146-156.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Muhammad Nashihin, 2009. "An examination of methods to estimate poverty line in Indonesia," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 1(3), pages 161-175, April.
    2. Faustin Habyarimana & Shaun Ramroop, 2015. "Determinants of Poverty of Households: Semi parametric Analysis of Demographic and Health Survey Data from Rwanda," Journal of Economics and Behavioral Studies, AMH International, vol. 7(3), pages 47-55.
    3. Daniel Suryadarma & Rima Prama Artha & Asep Suryahadi & Sudarno Sumarto, "undated". "A Reassessment of Inequality and Its Role in Poverty Reduction in Indonesia," Working Papers 364, Publications Department.
    4. Emmanuel Skoufias, 2001. "Changes in regional inequality and social welfare in Indonesia from 1996 to 1999," Journal of International Development, John Wiley & Sons, Ltd., vol. 13(1), pages 73-91.
    5. Emmanuel Skoufias & David P. Coady, 2007. "Are the Welfare Losses from Imperfect Targeting Important?," Economica, London School of Economics and Political Science, vol. 74(296), pages 756-776, November.
    6. Magnus Lindelow, 2006. "Sometimes more equal than others: how health inequalities depend on the choice of welfare indicator," Health Economics, John Wiley & Sons, Ltd., vol. 15(3), pages 263-279, March.
    7. Deon Filmer & Kinnon Scott, 2012. "Assessing Asset Indices," Demography, Springer;Population Association of America (PAA), vol. 49(1), pages 359-392, February.
    8. Lindelow, Magnus, 2004. "Sometimes more equal than others : how health inequalities depend on the choice of welfare indicator," Policy Research Working Paper Series 3329, The World Bank.
    9. Emmanuel Skoufias & Asep Suryahadi, 2000. "Changes in Household Welfare, Poverty and Inequality During the Crisis," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 36(2), pages 97-114.
    10. Deon Filmer & Lant Pritchett, 2001. "Estimating Wealth Effects Without Expenditure Data—Or Tears: An Application To Educational Enrollments In States Of India," Demography, Springer;Population Association of America (PAA), vol. 38(1), pages 115-132, February.
    11. Kathleen Beegle & Rajeev Dehejia & Roberta Gatti, 2003. "Child Labor, Crop Shocks, and Credit Constraints," NBER Working Papers 10088, National Bureau of Economic Research, Inc.
    12. John A. Maluccio, 2009. "Household targeting in practice: The Nicaraguan Red de Protección Social," Journal of International Development, John Wiley & Sons, Ltd., vol. 21(1), pages 1-23.
    13. Hentschel, Jesko & Lanjouw, Jean Olson & Lanjouw, Peter & Poggi, Javier, 1998. "Combining census and survey data to study spatial dimensions of poverty," Policy Research Working Paper Series 1928, The World Bank.
    14. Ravi Prakash & Abhishek Singh, 2014. "Who Marries Whom? Changing Mate Selection Preferences in Urban India and Emerging Implications on Social Institutions," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 33(2), pages 205-227, April.
    15. Çakır, Mustafa Yavuz & Kabundi, Alain, 2013. "Trade shocks from BRIC to South Africa: A global VAR analysis," Economic Modelling, Elsevier, vol. 32(C), pages 190-202.
    16. Pritchett, Lant & Sumarto, Sudarno & Suryahadi, Asep, 2001. "Targeted Programs in an Economic Crisis: Empirical Findings from Indonesia’s Experience," MPRA Paper 58727, University Library of Munich, Germany.
    17. Maertens, Miet & Verhofstadt, Ellen, 2013. "Horticultural exports, female wage employment and primary school enrolment: Theory and evidence from Senegal," Food Policy, Elsevier, vol. 43(C), pages 118-131.
    18. Barik, Debasis & Desai, Sonalde & Vanneman, Reeve, 2018. "Economic Status and Adult Mortality in India: Is the Relationship Sensitive to Choice of Indicators?," World Development, Elsevier, vol. 103(C), pages 176-187.
    19. Smoluk, H. J. & VanderLinden, David, 2004. "Catching up with the Americans," Review of Financial Economics, Elsevier, vol. 13(3), pages 211-229.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tin:wpaper:20010092. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tinbergen Office +31 (0)10-4088900 (email available below). General contact details of provider: https://edirc.repec.org/data/tinbenl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.