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Household welfare measurement and the pricing of basic services

Author

Listed:
  • Jesko Hentschel

    (World Bank, Washington, DC, USA)

  • Peter Lanjouw

Abstract

Employing total consumption as a household-level welfare indicator with which to measure poverty has often been criticized because it is felt that such an indicator does not account for differing access to, and cost of, publicly provided services. This paper discusses when and how adjustments can be made to expenditures derived from household surveys so as to reflect the consumption of basic services. Markets which are subsidized, rationed and subject to increasing marginal tariff pricing are examined and simple adjustment methods are discussed. Using Ecuador to illustrate the methods, the paper shows that incorporating adjustments in markets for basic services can significantly alter poverty estimates. Including such adjustments into a comprehensive measure of welfare can therefore be important and can also contribute to the wider acceptance and use of consumption as a welfare indicator guiding public policy development. Copyright © 2000 John Wiley & Sons, Ltd.

Suggested Citation

  • Jesko Hentschel & Peter Lanjouw, 2000. "Household welfare measurement and the pricing of basic services," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(1), pages 13-27.
    • Handle: RePEc:wly:jintdv:v:12:y:2000:i:1:p:13-27
    DOI: 10.1002/(SICI)1099-1328(200001)12:1<13::AID-JID568>3.0.CO;2-3
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    References listed on IDEAS

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    1. Martin Ravallion & Gaurav Datt, 1995. "Is Targeting Through a Work Requirement Efficient? Some Evidence for Rural India," Monash Economics Working Papers archive-41, Monash University, Department of Economics.
    2. Hentschel, J. & Lanjouw, P., 1996. "Constructing an Indicator of Consumption for the Analysis of Poverty. Principles and Illustrations with Reference to Ecuador," Papers 127, World Bank - Living Standards Measurement.
    3. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762.
    4. Hope, Einar & Singh, Balbir, 1995. "Energy price increases in developing countries : case studies of Colombia, Ghana, Indonesia, Malaysia, Turkey, and Zimbabwe," Policy Research Working Paper Series 1442, The World Bank.
    5. Lanjouw, Jean Olson & Lanjouw, Peter, 1997. "Poverty comparisons with non-compatible data: theory and illustrations," Policy Research Working Paper Series 1709, The World Bank.
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    Cited by:

    1. repec:ilo:ilowps:385551 is not listed on IDEAS
    2. Kamakura, Wagner A. & Mazzon, Jose A., 2013. "Socioeconomic status and consumption in an emerging economy," International Journal of Research in Marketing, Elsevier, vol. 30(1), pages 4-18.
    3. Deichman, Uwe & Lall, Somik V. & Suri, Ajay & Rajoria, Pragya, 2003. "Information-based instruments for improved urban management," Policy Research Working Paper Series 3002, The World Bank.
    4. Deichmann, Uwe & Lall, Somik V., 2007. "Citizen Feedback and Delivery of Urban Services," World Development, Elsevier, vol. 35(4), pages 649-662, April.
    5. Frank-Borge Wietzke, 2015. "Who Is Poorest? An Asset-based Analysis of Multidimensional Wellbeing," Development Policy Review, Overseas Development Institute, vol. 33(1), pages 33-59, January.
    6. Omar Ben Haman, 2019. "Conditional and Unconditional Cash Transfer Programs: The Recent Experiences around the World Abstract: Cash transfer programs have become the most popular government welfare paradigm for many develop," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 3(1), pages 210-219, January.
    7. Vishal Narayan & Vithala R. Rao & K. Sudhir, 2015. "Early Adoption of Modern Grocery Retail in an Emerging Market: Evidence from India," Marketing Science, INFORMS, vol. 34(6), pages 825-842, November.
    8. Jan Priebe, 2014. "Official Poverty Measurement in Indonesia since 1984: A Methodological Review," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 50(2), pages 185-205, August.
    9. Irina Klytchnikova & Michael Lokshin, 2009. "Measuring Welfare Gains from Better Quality Infrastructure," Journal of Infrastructure Development, India Development Foundation, vol. 1(2), pages 87-109, December.
    10. Anker, Richard,, 2006. "A new methodology for estimating internationally comparable poverty lines and living wage rates," ILO Working Papers 993855513402676, International Labour Organization.
    11. Deichmann, Uwe & Lall, Somik V., 2003. "Are you satisfied? citizen feedback and delivery of urban services," Policy Research Working Paper Series 3070, The World Bank.
    12. van den Boom,Bart & Halsema,Alex & Molini,Vasco, 2015. "Are we confusing poverty with preferences ?," Policy Research Working Paper Series 7247, The World Bank.

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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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