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Lights, Camera,... Income!: Estimating Poverty Using National Accounts, Survey Means, and Lights

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  • Maxim Pinkovskiy
  • Xavier Sala-i-Martin

Abstract

In this paper we try to understand whether national accounts GDP per capita or survey mean income or consumption better proxy for true income per capita. We propose a data-driven method to assess the relative quality of GDP per capita versus survey means by comparing the evolution of each series to the evolution of satellite-recorded nighttime lights. Our main assumption, which is robust to a variety of specification checks, is that the measurement error in nighttime lights is unrelated to the measurement errors in either national accounts or survey means. We obtain estimates of weights on national accounts and survey means in an optimal proxy for true income; these weights are very large for national accounts and very modest for survey means. We conclusively reject the null hypothesis that the optimal weight on surveys is greater than the optimal weight on national accounts, and we generally fail to reject the null hypothesis that the optimal weight on surveys is zero. Using the estimated optimal weights, we compute estimates of true income per capita and $1/day poverty rates for the developing world and its regions. We get poverty estimates that are substantially lower and fall substantially faster than those of Chen and Ravallion (2010) or of the survey-based poverty literature more generally.

Suggested Citation

  • Maxim Pinkovskiy & Xavier Sala-i-Martin, 2014. "Lights, Camera,... Income!: Estimating Poverty Using National Accounts, Survey Means, and Lights," NBER Working Papers 19831, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:19831
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Alberto Alesina & Stelios Michalopoulos & Elias Papaioannou, 2016. "Ethnic Inequality," Journal of Political Economy, University of Chicago Press, vol. 124(2), pages 428-488.
    2. John Gibson, 2016. "Poverty Measurement: We Know Less than Policy Makers Realize," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 3(3), pages 430-442, September.
    3. Klemens,Ben & Coppola,Andrea & Shron,Max, 2015. "Estimating local poverty measures using satellite images : a pilot application to Central America," Policy Research Working Paper Series 7329, The World Bank.
    4. Villa, Juan M., 2014. "Social transfers and growth: The missing evidence from luminosity data," WIDER Working Paper Series 090, World Institute for Development Economic Research (UNU-WIDER).
    5. Roger Fouquet & Stephen Broadberry, 2015. "Seven Centuries of European Economic Growth and Decline," Journal of Economic Perspectives, American Economic Association, vol. 29(4), pages 227-244, Fall.
    6. repec:bla:sajeco:v:85:y:2017:i:2:p:222-241 is not listed on IDEAS
    7. repec:bla:jecsur:v:31:y:2017:i:4:p:905-922 is not listed on IDEAS
    8. Bergs, Rolf, 2016. "Exploring the Spatial Economy by Night," MPRA Paper 69764, University Library of Munich, Germany, revised 28 Feb 2016.
    9. Mveyange Anthony & Skovsgaard Christian & Lesner Tine, 2015. "Does HIV/AIDS matter for economic growth in sub-Saharan Africa?," WIDER Working Paper Series 086, World Institute for Development Economic Research (UNU-WIDER).
    10. John Gibson & Chao Li, 2017. "The Erroneous Use Of China'S Population And Per Capita Data: A Structured Review And Critical Test," Journal of Economic Surveys, Wiley Blackwell, vol. 31(4), pages 905-922, September.
    11. Mveyange Anthony, 2015. "Night lights and regional income inequality in Africa," WIDER Working Paper Series 085, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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