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Prices, local measurement units and subsistence consumption in rural surveys: An econometric approach with an application to Ethiopia

Author

Listed:
  • Bart Capéau
  • Stefan Dercon

Abstract

For many research problems in developing countries, some information on prices faced by households is required for the analysis, but these prices are not readily available from household surveys, nor is it straightforward to observe them, especially if subsistence consumption is a substantial part of consumption. Furthermore, quantities consumed and produced are often in local units presenting further problems for the analysis. Building on Deaton’s (1987) seminal work, 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 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.

Suggested Citation

  • Bart Capéau & Stefan Dercon, 1998. "Prices, local measurement units and subsistence consumption in rural surveys: An econometric approach with an application to Ethiopia," CSAE Working Paper Series 1998-10, Centre for the Study of African Economies, University of Oxford.
  • Handle: RePEc:csa:wpaper:1998-10
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    File URL: http://www.csae.ox.ac.uk/materials/papers/9810text.pdf
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    Cited by:

    1. Vincent Leyaro & Oliver Morrissey & Trudy Owens, "undated". "Food Price Changes and Consumer Welfare in Tanzania 1991 – 2007," Discussion Papers 10/01, University of Nottingham, CREDIT.

    More about this item

    Keywords

    household surveys; unit values; subsistence consumption; local measurement units;

    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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