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Estimating income poverty in the presence of measurement error and missing data problems

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  • Nicoletti, Cheti
  • Peracchi, Franco
  • Foliano, Francesca

Abstract

Reliable measures of poverty are an essential statistical tool to evaluate public policies aimed at reducing poverty. In this paper we consider the reliability of income poverty measures based on survey data which are typically plagued by measurement error and missing data problems. Neglecting these problems can bias the estimated poverty rates. We show how to derive upper and lower bounds for the population poverty rate using only the sample evidence and an upper limit on the probability of misclassifying people into poor and non-poor. By using the European Community Household Panel, we compute bounds for the poverty rate in eleven European countries and study the sensitivity of poverty comparisons across countries to measurement errors and missing data problems.

Suggested Citation

  • Nicoletti, Cheti & Peracchi, Franco & Foliano, Francesca, 2007. "Estimating income poverty in the presence of measurement error and missing data problems," ISER Working Paper Series 2007-15, Institute for Social and Economic Research.
    • Handle: RePEc:ese:iserwp:2007-15
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    References listed on IDEAS

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    Cited by:

    1. Nic Baigrie & Katherine Eyal, 2014. "An Evaluation of the Determinants and Implications of Panel Attrition in the National Income Dynamics Survey (2008-2010)," South African Journal of Economics, Economic Society of South Africa, vol. 82(1), pages 39-65, March.
    2. Pudney, Stephen, 2011. "Perception and retrospection: The dynamic consistency of responses to survey questions on wellbeing," Journal of Public Economics, Elsevier, vol. 95(3), pages 300-310.

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