IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/9388.html
   My bibliography  Save this paper

How Useful is CPI Price Data for Spatial Price Adjustment in Poverty Measurement? : A Case from Ghana

Author

Listed:
  • Chen,Xiaomeng
  • Mungai,Rose
  • Nakamura,Shohei
  • Pearson,Thomas Patrick
  • Wambile,Ayago Esmubancha
  • Yoshida,Nobuo

Abstract

Measuring and comparing the levels of household welfare and poverty in a country require cost-of-living differences across regions to be properly adjusted. In measuring the spatial cost of living, the recent literature underscores the importance of detailed product quality information in the price data. Taking advantage of the price data availability in Ghana, this case study explores the Consumer Price Index price data as a source for spatial price measurement. It applies the country product dummy method to the Consumer Price Index price data and compares the results with other methods based on different price data. The empirical analysis indicates a potential bias in estimating spatial prices stemming from the lack of product quality information and, therefore, suggests the potential usefulness of the Consumer Price Index price data for spatial price adjustment in poverty analysis in low- and middle-income countries.

Suggested Citation

  • Chen,Xiaomeng & Mungai,Rose & Nakamura,Shohei & Pearson,Thomas Patrick & Wambile,Ayago Esmubancha & Yoshida,Nobuo, 2020. "How Useful is CPI Price Data for Spatial Price Adjustment in Poverty Measurement? : A Case from Ghana," Policy Research Working Paper Series 9388, The World Bank.
    • Handle: RePEc:wbk:wbrwps:9388
    as

    Download full text from publisher

    File URL: http://documents.worldbank.org/curated/en/851571599590950719/pdf/How-Useful-is-CPI-Price-Data-for-Spatial-Price-Adjustment-in-Poverty-Measurement-A-Case-from-Ghana.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Francisco H. G. Ferreira & Shaohua Chen & Andrew Dabalen & Yuri Dikhanov & Nada Hamadeh & Dean Jolliffe & Ambar Narayan & Espen Beer Prydz & Ana Revenga & Prem Sangraula & Umar Serajuddin & Nobuo Yosh, 2016. "A global count of the extreme poor in 2012: data issues, methodology and initial results," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(2), pages 141-172, June.
    2. Ingvild Almas, 2012. "International Income Inequality: Measuring PPP Bias by Estimating Engel Curves for Food," American Economic Review, American Economic Association, vol. 102(2), pages 1093-1117, April.
    3. Ravallion, Martin & van de Walle, Dominique, 1991. "Urban-rural cost-of-living differentials in a developing economy," Journal of Urban Economics, Elsevier, vol. 29(1), pages 113-127, January.
    4. Majumder, Amita & Ray, Ranjan & Sinha, Kompal, 2015. "Spatial Comparisons Of Prices And Expenditure In A Heterogeneous Country: Methodology With Application To India," Macroeconomic Dynamics, Cambridge University Press, vol. 19(5), pages 931-989, July.
    5. Ingvild Almås & Anders Kjelsrud & Rohini Somanathan, 2019. "A Behavior‐Based Approach to the Estimation of Poverty in India," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(1), pages 182-224, January.
    6. Carlos Felipe Balcázar & Lidia Ceriani & Sergio Olivieri & Marco Ranzani, 2017. "Rent‐Imputation for Welfare Measurement: A Review of Methodologies and Empirical Findings," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(4), pages 881-898, December.
    7. Emi Nakamura & Jón Steinsson & Miao Liu, 2016. "Are Chinese Growth and Inflation Too Smooth? Evidence from Engel Curves," American Economic Journal: Macroeconomics, American Economic Association, vol. 8(3), pages 113-144, July.
    8. Dikhanov, Yuri & Palanyandy, Chellam & Capilit, Eileen, 2011. "Subnational Purchasing Power Parities toward Integration of International Comparison Program and Consumer Price Index: The Case of the Philippines," ADB Economics Working Paper Series 290, Asian Development Bank.
    9. Balk,Bert M., 2012. "Price and Quantity Index Numbers," Cambridge Books, Cambridge University Press, number 9781107404960.
    10. Ingvild Almås & Tim Beatty & Thomas Crossley, 2018. "Lost in translation: What do Engel curves tell us about the cost of living?," IFS Working Papers W18/04, Institute for Fiscal Studies.
    11. Robert Summers, 1973. "International Price Comparisons Based Upon Incomplete Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 19(1), pages 1-16, March.
    12. D.S. Prasada Rao, 2004. "The Country-Product-Dummy Method: A Stochastic Approach to the Computation of Purchasing Power Parities in the ICP," CEPA Working Papers Series WP032004, School of Economics, University of Queensland, Australia.
    13. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "The Economic Theory of Index Numbers and the Measurement of Input, Output, and Productivity," Econometrica, Econometric Society, vol. 50(6), pages 1393-1414, November.
    14. Robert J. Hill & Iqbal A. Syed, 2015. "Improving International Comparisons of Prices at Basic Heading Level: An Application to the Asia-Pacific Region," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(3), pages 515-539, September.
    15. Deaton, Angus, 1988. "Quality, Quantity, and Spatial Variation of Price," American Economic Review, American Economic Association, vol. 78(3), pages 418-430, June.
    16. Francien Berry & Brian Graf & Mr. Michael Stanger & Mari Ylä-Jarkko, 2019. "Price Statistics Compilation in 196 Economies: The Relevance for Policy Analysis," IMF Working Papers 2019/163, International Monetary Fund.
    17. Dean Jolliffe & Gaurav Datt & Manohar Sharma, 2004. "Robust Poverty and Inequality Measurement in Egypt: Correcting for Spatial‐price Variation and Sample Design Effects," Review of Development Economics, Wiley Blackwell, vol. 8(4), pages 557-572, November.
    18. Wim Marivoet & Tom De Herdt, 2015. "Poverty Lines as Context Deflators: A Method to Account for Regional Diversity with Application to the Democratic Republic of Congo," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(2), pages 329-352, June.
    19. Bettina H. Aten, 2017. "Regional Price Parities and Real Regional Income for the United States," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 131(1), pages 123-143, March.
    20. Weinand, Sebastian & von Auer, Ludwig, 2019. "Anatomy of regional price differentials: Evidence from micro price data," Discussion Papers 04/2019, Deutsche Bundesbank.
    21. Ravallion, Martin & Bidani, Benu, 1994. "How Robust Is a Poverty Profile?," The World Bank Economic Review, World Bank, vol. 8(1), pages 75-102, January.
    22. Gibson, John & Stillman, Steven & Le, Trinh, 2008. "CPI bias and real living standards in Russia during the transition," Journal of Development Economics, Elsevier, vol. 87(1), pages 140-160, August.
    23. John Gibson & Trinh Le & Bonggeun Kim, 2017. "Prices, Engel Curves, and Time-Space Deflation: Impacts on Poverty and Inequality in Vietnam," The World Bank Economic Review, World Bank, vol. 31(2), pages 504-530.
    24. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
    25. Gibson, John & Kim, Bonggeun, 2015. "Hicksian separability does not hold over space: Implications for the design of household surveys and price questionnaires," Journal of Development Economics, Elsevier, vol. 114(C), pages 34-40.
    26. Ingvild Almas & Ashild Johnsen, 2018. "The cost of a growth miracle - reassessing price and poverty trends in China," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 30, pages 239-264, October.
    27. John Gibson & Trinh Le, 2018. "Improved Modelling of Spatial Cost of Living Differences in Developing Countries: A Comparison of Expert Knowledge and Traditional Price Surveys," Working Papers in Economics 18/08, University of Waikato.
    Full references (including those not matched with items on IDEAS)

    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. Menggen Chen & Yan Wang & D. S. Prasada Rao, 2020. "Measuring the spatial price differences in China with regional price parity methods," The World Economy, Wiley Blackwell, vol. 43(4), pages 1103-1146, April.
    2. Andrew Dabalen & Isis Gaddis & Nga Thi Viet Nguyen, 2020. "CPI Bias and its Implications for Poverty Reduction in Africa," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 18(1), pages 13-44, March.
    3. Laureti, Tiziana & Prasada Rao, D.S., 2018. "Measuring Spatial Price Level Differences within a Country: Current status and Future Developments /Medición de las diferencias de nivel de precios espaciales dentro de un país: Estado actual y evoluc," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 36, pages 119-148, Enero.
    4. Amita Majumder & Ranjan Ray, 2020. "National and subnational purchasing power parity: a review," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 47(2), pages 103-124, June.
    5. Gibson, John & Le, Trinh, 2019. "Using local expert knowledge to measure prices: Evidence from a survey experiment in Vietnam," MPRA Paper 92533, University Library of Munich, Germany.
    6. Alicia Gómez-Tello & Alfonso Díez-Minguela & Julio Martinez-Galarraga & Daniel A. Tirado, 2019. "Regional prices in early twentieth-century Spain: a country-product-dummy approach," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 13(2), pages 245-276, May.
    7. Ingvild Almås & Timothy K.M. Beatty & Thomas F. Crossley, 2018. "Lost in Translation: What do Engel Curves Tell us about the Cost of Living?," CESifo Working Paper Series 6886, CESifo.
    8. Ingvild Almas & Ashild Johnsen, 2018. "The cost of a growth miracle - reassessing price and poverty trends in China," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 30, pages 239-264, October.
    9. Amita Majumder & Ranjan Ray & Sattwik Santra, 2016. "Global and Country Poverty Rates, Welfare Rankings of the Regions and Purchasing Power Parities: How Robust Are the Results?," Monash Economics Working Papers 11-16, Monash University, Department of Economics.
    10. José‐María Montero & Tiziana Laureti & Román Mínguez & Gema Fernández‐Avilés, 2020. "A Stochastic Model with Penalized Coefficients for Spatial Price Comparisons: An Application to Regional Price Indexes in Italy," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(3), pages 512-533, September.
    11. Majumder,Amita & Ray,Ranjan & Santra,Sattwik, 2015. "Preferences, purchasing power parity, and inequality : analytical framework, propositions, and empirical evidence," Policy Research Working Paper Series 7395, The World Bank.
    12. Luigi Biggeri & Tiziana Laureti & Federico Polidoro, 2017. "Computing Sub-national PPPs with CPI Data: An Empirical Analysis on Italian Data Using Country Product Dummy Models," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 131(1), pages 93-121, March.
    13. Diewert, W. Erwin & Fox, Kevin J., 2017. "Substitution Bias in Multilateral Methods for CPI Construction using Scanner Data," Microeconomics.ca working papers erwin_diewert-2017-3, Vancouver School of Economics, revised 23 Mar 2017.
    14. Diewert, Erwin, 2009. "Cost of Living Indexes and Exact Index Numbers," Economics working papers erwin_diewert-2009-6, Vancouver School of Economics, revised 13 Feb 2009.
    15. Robert J. Hill & Iqbal A. Syed, 2012. "Accounting for Unrepresentative Products and Urban-Rural Price Differences in International Comparisons of Real Income: An Application to the Asia-Pacific Region," Graz Economics Papers 2012-07, University of Graz, Department of Economics.
    16. Gaddis,Isis, 2016. "Prices for poverty analysis in Africa," Policy Research Working Paper Series 7652, The World Bank.
    17. von Auer, Ludwig & Weinand, Sebastian, 2022. "A nonlinear generalization of the country-product-dummy method," Discussion Papers 45/2022, Deutsche Bundesbank.
    18. John Gibson & Trinh Le, 2018. "Improved Modelling of Spatial Cost of Living Differences in Developing Countries: A Comparison of Expert Knowledge and Traditional Price Surveys," Working Papers in Economics 18/08, University of Waikato.
    19. Jed Friedman, 2003. "How Responsive is Poverty to Growth? A Regional Analysis of Poverty, Inequality, and Growth in Indonesia, 1984-99," WIDER Working Paper Series DP2003-57, World Institute for Development Economic Research (UNU-WIDER).
    20. Sebastian Weinand, 2022. "Measuring spatial price differentials at the basic heading level: a comparison of stochastic index number methods," AStA Advances in Statistical Analysis, Springer;German Statistical Society, vol. 106(1), pages 117-143, March.

    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:wbk:wbrwps:9388. 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: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.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.