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A Statistical Model for Simple, Fast and Reliable Measurement of Poverty. A revised version of DP 415

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Abstract

The primus inter pares of the UN Millennium Development Goals is to reduce poverty. The only internationally accepted method of estimating poverty requires a measurement of total consumption based on a time and resource demanding household budget or integrated survey over 12 months. Rather than measuring poverty only, say every 5th year, a model is presented to predict poverty based upon a small set of household variables to be collected yearly between two 12 months household surveys. Information obtained from the light surveys may then be used to predict poverty rates. The key question is whether the inaccuracy in these predictions is acceptable. The standard errors presented are lower than the sampling errors to the poverty estimates based on the 12 months household surveys. Predictions based on this sample also indicate that the problem of misspecifications of models is not large. It is recommended to test these models at the country level and if the test results are comparable to those here, apply the approach presented.

Suggested Citation

  • Astrid Mathiassen, 2006. "A Statistical Model for Simple, Fast and Reliable Measurement of Poverty. A revised version of DP 415," Discussion Papers 415, Statistics Norway, Research Department.
  • Handle: RePEc:ssb:dispap:415
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    File URL: https://www.ssb.no/a/publikasjoner/pdf/DP/dp415.pdf
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    1. Chris Elbers & Jean O. Lanjouw & Peter Lanjouw, 2003. "Micro--Level Estimation of Poverty and Inequality," Econometrica, Econometric Society, vol. 71(1), pages 355-364, January.
    2. Ravallion, Martin & Bidani, Benu, 1994. "How Robust Is a Poverty Profile?," World Bank Economic Review, World Bank Group, vol. 8(1), pages 75-102, January.
    3. Ravallion, M., 1992. "Poverty Comparisons - A Guide to Concepts and Methods," Papers 88, World Bank - Living Standards Measurement.
    4. Ravallion, M., 1998. "Poverty Lines in Theory and Practice," Papers 133, World Bank - Living Standards Measurement.
    5. Fofack, Hippolyte, 2000. "Combining Light Monitoring Surveys with Integrated Surveys to Improve Targeting for Poverty Reduction: The Case of Ghana," World Bank Economic Review, World Bank Group, vol. 14(1), pages 195-219, January.
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    Keywords

    Stochastic model; Poverty measurement; Money metric poverty; Survey methods;

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C42 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Survey Methods
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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