Should Consumption Sub-Aggregates Be Used to Measure Poverty?
Frequent measurement of poverty is challenging, as measurement often relies on complex and expensive expenditure surveys that try to measure expenditures on a comprehensive consumption aggregate. This paper investigates the use of consumption...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/931591593607254270/Should-Consumption-Sub-Aggregates-Be-Used-to-Measure-Poverty http://hdl.handle.net/10986/34027 |
| Summary: | Frequent measurement of poverty is
challenging, as measurement often relies on complex and
expensive expenditure surveys that try to measure
expenditures on a comprehensive consumption aggregate. This
paper investigates the use of consumption
"sub-aggregates" instead. The use of consumption
sub-aggregates is theoretically justified if and only if all
the Engel curves are linear for any realization of prices.
This is very stringent. However, it may be possible to
empirically identify certain goods that happen to have
linear Engel curves given prevailing prices, and when the
effect of price changes is small, such a sub-aggregate might
work in practice. The paper constructs such linear
sub-aggregates using data from Rwanda, Tanzania, and Uganda.
The findings show that using sub-aggregates is ill-advised
in practice as well as in theory. This raises questions
about the consistency of the poverty-tracking efforts
currently applied across countries, since obtaining
exhaustive consumption measures remains an unmet challenge. |
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