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The measurement of poverty with geographical and intertemporal price dispersion, Evidence from Rwanda

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  • Christophe Muller

    (Departamento de Fundamentos del Análisis Económico Universidad de Alicante, Campus de San Vicente)

Abstract

(english) It is not known to what extent welfare measures result from seasonal and geographical price differences rather than from differences in living standards across households. Using data from Rwanda in 1983, we show that the change in mean living standard indicators caused by local and seasonal price deflation is moderately significant at every quarter. By contrast, the differences in poverty measures caused by this deflation can be considerable, for chronic as well as transient or seasonal poverty indicators. Thus, poverty monitoring and anti-poverty targeting can be badly affected by inaccurate deflation of living standard data. Moreover, when measuring seasonal poverty, the deflation based on regional prices instead of local prices only partially corrects for spatial price dispersion. Using annual local prices instead of quarterly local prices only yields a partial deflation, which distorts the measure of poverty fluctuations across seasons and biases estimates of annual and chronic poverty. _________________________________ (français) On ne sait pas dans quelle mesure les indicateurs de bien-être social résultent de différences de prix plutôt que de différences saisonnières et géographiques de niveaux de vie entre ménages. A partir de données du Rwanda en 1983, nous montrons que le changement de la mesure du niveau de vie moyen causé par la déflation des prix est modéré bien que significatif à chaque trimestre, contrairement au changement des mesures de la pauvreté qui peut être considérable, que ce soit pour des indices de pauvreté chronique, transitoire ou saisonnière. Ainsi le suivi de la pauvreté et le ciblage anti-pauvreté peuvent être sévèrement affectés par une déflation imprécise des données de niveaux de vie. Pour la mesure de la pauvreté saisonnière, la déflation basée sur des indices de prix régionaux, au lieu d’indices de prix locaux corrige seulement partiellement la dispersion géographique des prix. De même, employer des prix locaux annuels au lieu de prix locaux trimestriels conduit à une déflation partielle qui non seulement distord la mesure des fluctuations de la pauvreté entre les saisons, mais fournit également des estimations biaisées des pauvretés chroniques et annuelles.

Suggested Citation

  • Christophe Muller, 2005. "The measurement of poverty with geographical and intertemporal price dispersion, Evidence from Rwanda," Working Papers DT/2005/16, DIAL (Développement, Institutions et Mondialisation).
  • Handle: RePEc:dia:wpaper:dt200516
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    References listed on IDEAS

    as
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    1. Christophe Muller, 2008. "The Measurement Of Poverty With Geographical And Intertemporal Price Dispersion: Evidence From Rwanda," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(1), pages 27-49, March.
    2. Gibson, John & Kim, Bonggeun, 2013. "Do the urban poor face higher food prices? Evidence from Vietnam," Food Policy, Elsevier, vol. 41(C), pages 193-203.
    3. Christophe Muller, 2007. "Anti-Poverty Transfers without Riots in Tunisia," Working Papers DT/2007/08, DIAL (Développement, Institutions et Mondialisation).
    4. Arab Yarmohamadi, Javad & Abounoori, Esmaiel & Salem, Ali Asghar, 2016. "The Effect of Regional Price Adjustment of Household Expenditures on Poverty Indices in Iran’s Urban Areas," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 11(2), pages 119-134, April.
    5. Gaddis,Isis, 2016. "Prices for poverty analysis in Africa," Policy Research Working Paper Series 7652, The World Bank.
    6. Mussa, Richard, 2014. "Food Price Heterogeneity and Income Inequality in Malawi: Is Inequality Underestimated?," MPRA Paper 56080, University Library of Munich, Germany.
    7. Carlos Maia & Servaas van der Berg, 2010. "When the remedy is worse than the disease: Adjusting survey income data for price differentials, with special reference to Mozambique," Working Papers 24/2010, Stellenbosch University, Department of Economics.
    8. repec:dau:papers:123456789/4381 is not listed on IDEAS
    9. Richard Mussa, 2015. "Do the Poor Pay More for Maize in Malawi?," Journal of International Development, John Wiley & Sons, Ltd., vol. 27(4), pages 546-563, 05-27.
    10. Arsène Kouadio & Vincent Monsan & Mamadou Gbongue, 2008. "Réformes de politique agricole et dynamique de la pauvreté alimentaire en Côte d'Ivoire/Agricultural Policy Reforms and Food Poverty Dynamics in Côte d'Ivoire," Working Papers PMMA 2008-07, PEP-PMMA.

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    More about this item

    Keywords

    Measurement and Analysis of Poverty; Income Distribution; Personal Income Distribution; Mesure du niveau de vie; Variation spatiales de prix; Mesure de la pauvreté; Politiques de lutte contre la pauvreté.;
    All these keywords.

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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