IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/10348.html
   My bibliography  Save this paper

Improving Estimates of Mean Welfare and Uncertainty in Developing Countries

Author

Listed:
  • Merfeld,Joshua David
  • Newhouse,David Locke

Abstract

Reliable estimates of economic welfare for small areas are valuable inputs into the designand evaluation of development policies. This paper compares the accuracy of point estimates and confidence intervals forsmall area estimates of wealth and poverty derived from four different prediction methods: linear mixed models, Cubistregression, extreme gradient boosting, and boosted regression forests. The evaluation draws samples fromunit-level household census data from four developing countries, combines them with publicly and globallyavailable geospatial indicators to generate small area estimates, and evaluates these estimates against aggregatescalculated using the full census. Predictions of wealth are evaluated in four countries and poverty in one. All threemachine learning methods outperform the traditional linear mixed model, with extreme gradient boosting and boostedregression forests generally outperforming the other alternatives. The proposed residual bootstrap procedurereliably estimates confidence intervals for the machine learning estimators, with estimated coverage rates acrosssimulations falling between 94 and 97 percent. These results demonstrate that predictions obtained using tree-basedgradient boosting with a random effect block bootstrap generate more accurate point and uncertainty estimates thanprevailing methods for generating small area welfare estimates.

Suggested Citation

  • Merfeld,Joshua David & Newhouse,David Locke, 2023. "Improving Estimates of Mean Welfare and Uncertainty in Developing Countries," Policy Research Working Paper Series 10348, The World Bank.
  • Handle: RePEc:wbk:wbrwps:10348
    as

    Download full text from publisher

    File URL: http://documents.worldbank.org/curated/en/099413503082334933/pdf/IDU0ddd4b90a0930204352095e1087657f2c9ec9.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Tomoki Fujii & Roy van der Weide, 2020. "Is Predicted Data a Viable Alternative to Real Data?," The World Bank Economic Review, World Bank, vol. 34(2), pages 485-508.
    2. Patrick Krennmair & Timo Schmid, 2022. "Flexible domain prediction using mixed effects random forests," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 71(5), pages 1865-1894, November.
    3. Elbers, Chris & Fujii, Tomoki & Lanjouw, Peter & Ozler, Berk & Yin, Wesley, 2007. "Poverty alleviation through geographic targeting: How much does disaggregation help?," Journal of Development Economics, Elsevier, vol. 83(1), pages 198-213, May.
    4. Emily Aiken & Guadalupe Bedoya & Joshua Blumenstock & Aidan Coville, 2022. "Program Targeting with Machine Learning and Mobile Phone Data: Evidence from an Anti-Poverty Intervention in Afghanistan," Papers 2206.11400, arXiv.org.
    5. repec:wbk:wbrwps:10252 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. van der Weide, Roy & Blankespoor, Brian & Elbers, Chris & Lanjouw, Peter, 2024. "How accurate is a poverty map based on remote sensing data? An application to Malawi," Journal of Development Economics, Elsevier, vol. 171(C).
    2. Isabella S. Smythe & Joshua E. Blumenstock, 2022. "Geographic microtargeting of social assistance with high-resolution poverty maps," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 119(32), pages 2120025119-, August.
    3. Claudio A. Agostini & Philip H. Brown, 2010. "Local Distributional Effects Of Government Cash Transfers In Chile," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(2), pages 366-388, June.
    4. Tomoki Fujii, 2013. "Geographic decomposition of inequality in health and wealth: evidence from Cambodia," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 11(3), pages 373-392, September.
    5. van der Weide, Roy, 2014. "GLS estimation and empirical bayes prediction for linear mixed models with Heteroskedasticity and sampling weights : a background study for the POVMAP project," Policy Research Working Paper Series 7028, The World Bank.
    6. Marina Mastrorillo & Antonio Scognamillo & Camille Ginet & Rebecca Pietrelli & Marco D’Errico & Adriana Ignaciuk, 2024. "Is the self-reliance strategy sustainable? Evidence from assistance programmes to refugees in Uganda," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 16(6), pages 1587-1617, December.
    7. Graw, Valerie & Husmann, Christine Ladenburger, 2012. "Mapping Marginality Hotspots – Geographical Targeting for Poverty Reduction," Working Papers 147917, University of Bonn, Center for Development Research (ZEF).
    8. Arouri, Mohamed & Nguyen, Cuong & Youssef, Adel Ben, 2015. "Natural Disasters, Household Welfare, and Resilience: Evidence from Rural Vietnam," World Development, Elsevier, vol. 70(C), pages 59-77.
    9. Dang,Hai-Anh H. & Lanjouw,Peter F., 2013. "Measuring poverty dynamics with synthetic panels based on cross-sections," Policy Research Working Paper Series 6504, The World Bank.
    10. Emily Aiken & Suzanne Bellue & Dean Karlan & Christopher R. Udry & Joshua Blumenstock, 2021. "Machine Learning and Mobile Phone Data Can Improve the Targeting of Humanitarian Assistance," NBER Working Papers 29070, National Bureau of Economic Research, Inc.
    11. Salim, Mir M., 2013. "Revealed objective functions of Microfinance Institutions: Evidence from Bangladesh," Journal of Development Economics, Elsevier, vol. 104(C), pages 34-55.
    12. Silvio Daidone & Benjamin Davis & Sudhanshu Handa & Paul Winters, 2019. "The Household and Individual-Level Productive Impacts of Cash Transfer Programs in Sub-Saharan Africa," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 101(5), pages 1401-1431.
    13. Yadira Diaz, Francisco Alejandro Espinoza, Yvonni Markaki, and Lina Maria Sanchez-Cespedes, 2015. "Targeting Grenada’s Most Deprived Population: A Multidimensional Living Conditions Assessment," OPHI Working Papers ophiwp092.pdf, Queen Elizabeth House, University of Oxford.
    14. Coleman, Simeon, 2012. "Where Does the Axe Fall? Inflation Dynamics and Poverty Rates: Regional and Sectoral Evidence for Ghana," World Development, Elsevier, vol. 40(12), pages 2454-2467.
    15. Krishna, Anirudh, 2007. "For Reducing Poverty Faster: Target Reasons Before People," World Development, Elsevier, vol. 35(11), pages 1947-1960, November.
    16. Lisa Cameron & Manisha Shah, 2014. "Can Mistargeting Destroy Social Capital and Stimulate Crime? Evidence from a Cash Transfer Program in Indonesia," Economic Development and Cultural Change, University of Chicago Press, vol. 62(2), pages 381-415.
    17. Dang, Hai-Anh & Lanjouw, Peter & Luoto, Jill & McKenzie, David, 2014. "Using repeated cross-sections to explore movements into and out of poverty," Journal of Development Economics, Elsevier, vol. 107(C), pages 112-128.
    18. Corey Sparks & Joey Campbell, 2014. "An Application of Bayesian Methods to Small Area Poverty Rate Estimates," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 33(3), pages 455-477, June.
    19. Bas van der Klaauw & Sandra Vriend, 2015. "A Nonparametric Method for Predicting Survival Probabilities," Tinbergen Institute Discussion Papers 15-126/V, Tinbergen Institute.
    20. Caroline Krafft & Ragui Assaad & Hanan Nazier & Racha Ramadan & Atiyeh Vahidmanesh & Sami Zouari, 2019. "Estimating poverty and inequality in the absence of consumption data: an application to the Middle East and North Africa," Middle East Development Journal, Taylor & Francis Journals, vol. 11(1), pages 1-29, January.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:10348. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.