Small area estimation-based prediction methods to track poverty : validation and applications
AbstractTracking 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.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 5683.
Date of creation: 01 Jun 2011
Date of revision:
Rural Poverty Reduction; Regional Economic Development; Debt Markets; Achieving Shared Growth;
Other versions of this item:
- Luc Christiaensen & Peter Lanjouw & Jill Luoto & David Stifel, 2012. "Small area estimation-based prediction methods to track poverty: validation and applications," Journal of Economic Inequality, Springer, vol. 10(2), pages 267-297, June.
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-07-02 (All new papers)
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