Small Area Estimation-Based Prediction Methods to Track Poverty : 
Validation and Applications

Luoto, Jill; Christiaensen, Luc; Stifel, David; Lanjouw, Peter

Small Area Estimation-Based Prediction Methods to Track Poverty : Validation and Applications

Autores

Descripción

Tracking poverty is predicated on the availability of comparable consumption data and reliable price deflators. However, regular series of strictly comparable data are only rarely available. Price deflators are also often missing or disputed. In response, poverty prediction methods that track consumption correlates as opposed to consumption itself have been developed. These methods typically assume that the estimated relation between consumption and its predictors is stable over time -- an assumption that cannot usually be tested directly. This study analyzes the performance of poverty prediction models based on small area estimation techniques. Predicted poverty estimates are compared with directly observed levels in two country settings where data comparability over time is not a problem. Prediction models that employ either non-staple food or non-food expenditures or a full set of assets as predictors are found to yield poverty estimates that match observed poverty well. This offers some support to the use of such methods to approximate the evolution of poverty. Two further country examples illustrate how an application of the method employing models based on household assets can help to adjudicate between alternative price deflators.

Palabras clave

ABSOLUTE TERMS, ABSOLUTE VALUE, ARREARS, ASSET CLASS, ASSET CLASSES, ASSET HOLDINGS, BANK POLICY, CHANGES IN POVERTY, CONSUMER DURABLES, CONSUMPTION DATA, CONSUMPTION EXPENDITURES, CONSUMPTION MEASURE, CONSUMPTION PRICE, CONSUMPTION SMOOTHING, COUNTRY LEVEL, DECLINE IN POVERTY, DEPENDENT VARIABLE, DEVALUATION, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICY, DEVELOPMENT RESEARCH, DROP IN POVERTY, DURABLES, ECONOMIC GROWTH, ERROR TERM, ERROR TERMS, ESTIMATION TECHNIQUES, EXPLANATORY VARIABLES, FINANCIAL CRISIS, FINANCIAL MARKETS, FOOD CONSUMPTION, FOOD EXPENDITURE, FOOD EXPENDITURES, FOOD ITEMS, HOUSEHOLD BUDGET, HOUSEHOLD CONSUMPTION, HOUSEHOLD DEMOGRAPHICS, HOUSEHOLD HEAD, HOUSEHOLD INCOME, HOUSEHOLD SURVEY, HOUSEHOLD SURVEYS, HOUSEHOLD WELFARE, HOUSING, HUMAN DEVELOPMENT, HUMAN DEVELOPMENT REPORT, INCIDENCE OF POVERTY, INCOME, INCOME ELASTICITY, INCOME POVERTY, INCOME SHOCKS, INEQUALITY, INFLATION, INFLATION INDICES, INTERNATIONAL BANK, INTERNATIONAL DEVELOPMENT, LIVING STANDARDS, MEASURING POVERTY, MEAT, MODEL SPECIFICATIONS, NATIONAL POVERTY, NATIONAL POVERTY LINE, NUTRITIONAL STATUS, PENSIONS, PER CAPITA CONSUMPTION, PHYSICAL ASSETS, POINT ESTIMATES, POLICY RESEARCH, POOR, POOR AREA, POOR AREA DEVELOPMENT PROGRAM, POOR PEOPLE, POVERTY ANALYSIS, POVERTY CHANGE, POVERTY CHANGES, POVERTY COMPARISONS, POVERTY DEBATE, POVERTY DECLINE, POVERTY DYNAMICS, POVERTY ESTIMATES, POVERTY GAP, POVERTY HEAD, POVERTY INCIDENCE, POVERTY INCIDENCE ACROSS PROVINCES, POVERTY INDICATORS, POVERTY LEVELS, POVERTY LINES, POVERTY MAPPING, POVERTY MAPS, POVERTY MEASURE, POVERTY MEASUREMENT, POVERTY MEASURES, POVERTY RATE, POVERTY RATES, POVERTY REDUCTION, QUALITY OF LIFE, REDUCTION IN POVERTY, REGIONAL LEVELS, REGIONAL LOCATION, REGIONAL PERSPECTIVE, RETURNS, RURAL, RURAL AREAS, RURAL DISTRICTS, RURAL HOUSEHOLD, RURAL HOUSEHOLDS, RURAL VILLAGES, SMALLHOLDER FARMERS, STOCKS, STRUCTURAL TRANSFORMATION, TRANSITION ECONOMIES, TRANSITORY INCOME, URBAN AREAS, URBAN POVERTY, VEGETABLES, WELFARE INDICATOR, WELFARE INDICATORS, WELFARE MEASURE, WELFARE MONITORING