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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


  • Bart Capéau
  • Stefan Dercon


For many research problems in developing countries, some information on prices faced by households is required, for example if subsistence consumption is a substantial part of consumption. These prices are not readily available from household surveys, and at times they are not easily observed, for example if markets are thin and systematic price information can only be observed from markets some distance away from communities. 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, using data from rural Ethiopia to illustrate the approach. In an application, we show that the conclusions about poverty changes over time are significantly affected by using alternative strategies to convert local units and to value subsistence consumption. We find in our case 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 give slightly lower values than our estimates. Copyright 2006, Oxford University Press.

Suggested Citation

  • Bart Capéau & Stefan Dercon, 2006. "Prices, Unit Values and Local Measurement Units in Rural Surveys: an Econometric Approach with an Application to Poverty Measurement in Ethiopia," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 15(2), pages 181-211, June.
  • Handle: RePEc:oup:jafrec:v:15:y:2006:i:2:p:181-211

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    References listed on IDEAS

    1. Deaton, Angus, 1990. "Price elasticities from survey data : Extensions and Indonesian results," Journal of Econometrics, Elsevier, vol. 44(3), pages 281-309, June.
    2. Deaton, Angus, 1988. "Quality, Quantity, and Spatial Variation of Price," American Economic Review, American Economic Association, vol. 78(3), pages 418-430, June.
    3. 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.
    4. Ravallion, Martin & Bidani, Benu, 1994. "How Robust Is a Poverty Profile?," World Bank Economic Review, World Bank Group, vol. 8(1), pages 75-102, January.
    5. 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.
    6. 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.
    7. 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.
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    Cited by:

    1. Ole Boysen, 2016. "Food Demand Characteristics in Uganda: Estimation and Policy Relevance," South African Journal of Economics, Economic Society of South Africa, vol. 84(2), pages 260-293, June.
    2. Joachim De Weerdt & Kathleen Beegle & Jed Friedman & John Gibson, 2016. "The Challenge of Measuring Hunger through Survey," Economic Development and Cultural Change, University of Chicago Press, vol. 64(4), pages 727-758.
    3. 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.
    4. De Weerdt, Joachim & Beegle, Kathleen & Friedman,, Jed & Gibson, John, 2014. "The challenge of measuring hunger," Policy Research Working Paper Series 6736, The World Bank.
    5. Florence Kondylis, 2008. "Agricultural Outputs and Conflict Displacement: Evidence from a Policy Intervention in Rwanda," Economic Development and Cultural Change, University of Chicago Press, vol. 57(1), pages 31-66, October.
    6. Matthias Kalkuhl & Lukas Kornher & Marta Kozicka & Pierre Boulanger & Maximo Torero, 2013. "Conceptual framework on price volatility and its impact on food and nutrition security in the short term," FOODSECURE Working papers 15, LEI Wageningen UR.
    7. 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.
    8. Meng, Xin & Gregory, Robert & Wan, Guanghua, 2006. "China Urban Poverty and its Contributing Factors, 1986-2000," WIDER Working Paper Series 133, World Institute for Development Economic Research (UNU-WIDER).
    9. Vincent Leyaro & Oliver Morrissey & Trudy Owens, 2010. "Food prices, tax reforms and consumer Welfare in Tanzania 1991–2007," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 17(4), pages 430-450, August.
    10. Kondylis, Florence, 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.
    11. 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.
    12. François Gardes & Noël Thiombiano, 2017. "The value of time and expenditures of rural households in Burkina Faso: a domestic production framework," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01535172, HAL.
    13. François Gardes & Noël Thiombiano, 2017. "The value of time and expenditures of rural households in Burkina Faso: a domestic production framework," Documents de travail du Centre d'Economie de la Sorbonne 17027, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    14. 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.
    15. van den Boom,Bart & Halsema,Alex & Molini,Vasco, 2015. "Are we confusing poverty with preferences ?," Policy Research Working Paper Series 7247, The World Bank.

    More about this item

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis


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