Estimating Vulnerability to Poverty using Panel data: Evidence from Indonesia
Traditional poverty measures fail to indicate the degree of risk of becoming or remaining poor that households are confronted to. They can therefore be misleading in the context of implementing poverty reduction policies. In this paper I propose a method to estimate an index of ex ante vulnerability to poverty, defined as the probability of being poor in the (near) future given current observable characteristics, using panel data. This method relies on the estimation of the expected mean and variance of future consumption conditional on current consumption and observable characteristics. It generates a vulnerability index, or predicted probability of future poverty, which performs well in predicting future poverty, including out of sample. About 80% of households with a 2000 vulnerability index of 100% are actually poor in 2007. This approach provides information on the population groups that have a high probability of becoming or remaining poor in the future, whether currently poor or not. It is therefore useful to complement traditional poverty measures such as the poverty headcount, in particular for the design and planning of poverty reduction policies.
|Date of creation:||08 Jun 2015|
|Date of revision:|
|Note:||View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00936199v3|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Asep Suryahadi & Sudarno Sumarto, 2003. "Poverty and Vulnerability in Indonesia Before and After the Economic Crisis," Asian Economic Journal, East Asian Economic Association, vol. 17(1), pages 45-64, 03.
- Pradhan, Menno, et al, 2001. "Eating Like Which "Joneses?" An Iterative Solution to the Choice of a Poverty Line "Reference Group."," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(4), pages 473-87, December.
- Asep Suryahadi & Sudarno Sumarto & Lant Pritchett, 2003. "Evolution of Poverty During the Crisis in Indonesia," Asian Economic Journal, East Asian Economic Association, vol. 17(3), pages 221-241, 09.
- Firman Witoelar, 2005. "Inter-household Allocations within Extended Family: Evidence from the Indonesia Family Life Survey," Working Papers 912, Economic Growth Center, Yale University.
- Stefan Dercon & Pramila Krishnan, 2000. "Vulnerability, seasonality and poverty in Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 36(6), pages 25-53.
- John Strauss & Duncan Thomas & Firman Witoelar & Elizabeth Frankenberg & Bondan Sikoki & Cecep Sumantri & Wayan Suriastini, 2010.
"Cutting the costs of attrition: Results from the Indonesia Family Life Survey,"
- Thomas, Duncan & Witoelar, Firman & Frankenberg, Elizabeth & Sikoki, Bondan & Strauss, John & Sumantri, Cecep & Suriastini, Wayan, 2012. "Cutting the costs of attrition: Results from the Indonesia Family Life Survey," Journal of Development Economics, Elsevier, vol. 98(1), pages 108-123.
- Duncan Thomas & Elizabeth Frankenberg & James P. Smith, 2000.
"Lost But Not Forgotten: Attrition and Follow-up in the Indonesian Family Life Survey,"
00-03, RAND Corporation Publications Department.
- Duncan Thomas & Elizabeth Frankenberg & James P. Smith, 2001. "Lost but Not Forgotten: Attrition and Follow-up in the Indonesia Family Life Survey," Journal of Human Resources, University of Wisconsin Press, vol. 36(3), pages 556-592.
- Thomas, D. & Frankenberg, E. & Smith, J.P., 2000. "Lost But Not Forgotten Attribution and Follow-up in the Indonesian Family Life Survey," Papers 00-03, RAND - Labor and Population Program.
- Duncan Thomas & Elizabeth Frankenberg & James P. Smith, 2004. "Lost but Not Forgotten: Attrition and Follow-up in the Indonesia Family Life Survey," Labor and Demography 0408007, EconWPA.
- Martin Ravallion & Michael Lokshin, 2007. "Lasting Impacts of Indonesiaâ€™s Financial Crisis," Economic Development and Cultural Change, University of Chicago Press, vol. 56, pages 27-56.
- Bob Baulch & John Hoddinott, 2000. "Economic mobility and poverty dynamics in developing countries," Journal of Development Studies, Taylor & Francis Journals, vol. 36(6), pages 1-24.
- Pritchett, Lant & Suryahadi, Asep & Sumarto, Sudarno, 2000. "Quantifying vulnerability to poverty - a proposed measure, applied to Indonesia," Policy Research Working Paper Series 2437, The World Bank.
- Wenefrida Widyanti & Asep Suryahadi & Sudarno Sumarto & Athia Yumna, 2009. "The Relationship between Chronic Poverty and Household Dynamics : Evidence from Indonesia," Microeconomics Working Papers 22554, East Asian Bureau of Economic Research.
When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:halshs-00936199. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD)
If references are entirely missing, you can add them using this form.