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Prices, unit values and local measurement units in rural surveys: an econometric approach with an application to poverty measurement in Ethiopia

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  • Bart Capéau

    ()

  • Stefan Dercon

    ()

Abstract

For many research problems in developing countries, some information on prices faced by households is required for the analysis, for example if subsistence consumption is a substantial part of consumption. These prices are not readily available from household surveys, nor is it straightforward to observe them. Furthermore, quantities consumed and produced are often in local units presenting further problems for the analysis. We provide an econometric approach to estimate prices and quantity conversion factors from household expenditure data. We use panel data from rural Ethiopia to illustrate the approach and to investigate the potential exogenous quality bias in the estimation of the prices. In an application, we show that the conclusions about poverty changes over time are significantly affected by using less appropriate strategies to convert local units and to value subsistence consumption. We find that mean unit values result in the overestimation of prices due to outliers and other sources of measurement error. Exogenous consumer price sources, often collected at larger markets outside the village, tend to be slightly lower than our estimates.

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Bibliographic Info

Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics in its series Public Economics Working Paper Series with number puvlmurs.

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Length: 44 pp.
Date of creation: 2004
Date of revision:
Publication status: Forthcoming in abbreviated form under the same title in Journal of African Economies.
Handle: RePEc:wpe:papers:puvlmurs

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Keywords: household surveys; unit values; subsistence consumption; local measurement units; poverty;

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References

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  1. Strauss, John, 1982. "Determinants of food consumption in rural Sierra Leone : Application of the quadratic expenditure system to the consumption-leisure component of a household-firm model," Journal of Development Economics, Elsevier, vol. 11(3), pages 327-353, December.
  2. Deaton, A., 1988. "Price Elasticities From Survey Data: Extensions And Indonesian Results," Papers 138, Princeton, Woodrow Wilson School - Development Studies.
  3. Deaton, A., 1988. "Quality, Quantity, And Spatial Variation Of Price," Papers 30, World Bank - Living Standards Measurement.
  4. Ravallion, Martin & Bidani, Benu, 1993. "How robust is a poverty profile?," Policy Research Working Paper Series 1223, The World Bank.
  5. Levin, Carol E., 1991. "Rural Household Data Collection in Developing Countries: Designing Instruments and Methods for Collecting Consumption and Expenditure Data," Working Papers 128151, Cornell University, Department of Applied Economics and Management.
  6. Christopher B. Barrett, 1996. "Market Analysis Methods: Are Our Enriched Toolkits Well Suited to Enlivened Markets?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 825-829.
  7. Glewwe, Paul, 1990. "The measurement of income inequality under inflation : Correction formulae for three inequality measures," Journal of Development Economics, Elsevier, vol. 32(1), pages 43-67, January.
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Citations

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Cited by:
  1. Meng, Xin & Gregory, Robert & Wan, Guanghua, 2006. "China Urban Poverty and its Contributing Factors, 1986-2000," Working Paper Series RP2006/133, World Institute for Development Economic Research (UNU-WIDER).
  2. 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.
  3. Florence Kondylis, 2005. "Agricultural returns and conflict: quasi-experimental evidence from a policy intervention programme in Rwanda," LSE Research Online Documents on Economics 19878, London School of Economics and Political Science, LSE Library.
  4. Florence Kondylis, 2007. "Agricultural Outputs and Conflict Displacement: Evidence from a Policy Intervention in Rwanda," HiCN Working Papers 28, Households in Conflict Network.
  5. Caeyers, Bet & Chalmers, Neil & De Weerdt, Joachim, 2012. "Improving consumption measurement and other survey data through CAPI: Evidence from a randomized experiment," Journal of Development Economics, Elsevier, vol. 98(1), pages 19-33.
  6. Vincent Leyaro & Oliver Morrissey & Trudy Owens, 2010. "Food prices, tax reforms and consumer Welfare in Tanzania 1991–2007," International Tax and Public Finance, Springer, vol. 17(4), pages 430-450, August.
  7. Ole Boysen, 2009. "Border Price Shocks, Spatial Price Variation, and their Impacts on Poverty in Uganda," The Institute for International Integration Studies Discussion Paper Series iiisdp306, IIIS.
  8. Ole Boysen, 2012. "A Food Demand System Estimation for Uganda," The Institute for International Integration Studies Discussion Paper Series iiisdp396, IIIS.
  9. De Weerdt, Joachim & Beegle, Kathleen & Friedman,, Jed & Gibson, John, 2014. "The challenge of measuring hunger," Policy Research Working Paper Series 6736, The World Bank.
  10. Gelaw, Fekadu, 2013. "Inefficiency and Incapability Gaps as Causes of Poverty: A Poverty Line-Augmented Efficiency Analysis Using Stochastic Distance Function," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 8(2), August.

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