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Poverty Lines and Spatial Differences in the Cost of Living

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  • Amendola,Nicola
  • Belotti,Federico
  • Edo,María
  • Marco Ranzani
  • Giovanni Vecchi

Abstract

This paper proposes a new method for estimating a full-coverage spatial price index using data typically available in household budget surveys. The food component of the index is estimated at the household level using reported expenditures and quantities, while the nonfood component is derived indirectly as a ratio among subnational poverty lines. The paper extends the analytical framework described in Deaton and Zaidi (2002) and discusses the advantages of this new methodology.

Suggested Citation

  • Amendola,Nicola & Belotti,Federico & Edo,María & Marco Ranzani & Giovanni Vecchi, 2024. "Poverty Lines and Spatial Differences in the Cost of Living," Policy Research Working Paper Series 10978, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10978
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    References listed on IDEAS

    as
    1. Ingvild Almas, 2012. "International Income Inequality: Measuring PPP Bias by Estimating Engel Curves for Food," American Economic Review, American Economic Association, vol. 102(2), pages 1093-1117, April.
    2. Nicola Amendola & Giovanni Vecchi, 2022. "Durable goods and welfare measurement," Journal of Economic Surveys, Wiley Blackwell, vol. 36(4), pages 1179-1211, September.
    3. Ravallion, Martin, 2016. "The Economics of Poverty: History, Measurement, and Policy," OUP Catalogue, Oxford University Press, number 9780190212773, Decembrie.
    4. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, Enero.
    5. Dean Jolliffe & Gaurav Datt & Manohar Sharma, 2004. "Robust Poverty and Inequality Measurement in Egypt: Correcting for Spatial‐price Variation and Sample Design Effects," Review of Development Economics, Wiley Blackwell, vol. 8(4), pages 557-572, November.
    6. Wim Marivoet & Tom De Herdt, 2015. "Poverty Lines as Context Deflators: A Method to Account for Regional Diversity with Application to the Democratic Republic of Congo," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(2), pages 329-352, June.
    7. Blackorby, Charles & Donaldson, David, 1988. "Money metric utility: A harmless normalization?," Journal of Economic Theory, Elsevier, vol. 46(1), pages 120-129, October.
    8. Jean Olson Lanjouw & Peter Lanjouw, 2001. "How to Compare Apples And Oranges: Poverty Measurement Based on Different Definitions of Consumption," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(1), pages 25-42, March.
    9. Thomas, Vinod, 1980. "Spatial differences in the cost of living," Journal of Urban Economics, Elsevier, vol. 8(1), pages 108-122, July.
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