Small area estimation-based prediction methods to track poverty: Validation and applications

Luc Christiaensen, Peter Lanjouw, Jill Luoto, David Stifel

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

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-assumptions that cannot usually be tested directly. This study analyzes the performance of poverty prediction models based on small area estimation (SAE) 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.

LanguageEnglish
Pages267-297
Number of pages31
JournalJournal of Economic Inequality
Volume10
Issue number2
DOIs
Publication statusPublished - Jun 2012

Fingerprint

poverty
assets
estimation procedure
Poverty
Small area estimation
Prediction
expenditures
food
performance
Deflators
time
Predictors
Assets
Prediction model

Keywords

  • China
  • Consumption prediction
  • Kenya
  • Poverty dynamics
  • Price deflator
  • Russia
  • Small area estimation
  • Vietnam

Cite this

Christiaensen, Luc ; Lanjouw, Peter ; Luoto, Jill ; Stifel, David. / Small area estimation-based prediction methods to track poverty : Validation and applications. In: Journal of Economic Inequality. 2012 ; Vol. 10, No. 2. pp. 267-297.
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Small area estimation-based prediction methods to track poverty : Validation and applications. / Christiaensen, Luc; Lanjouw, Peter; Luoto, Jill; Stifel, David.

In: Journal of Economic Inequality, Vol. 10, No. 2, 06.2012, p. 267-297.

Research output: Contribution to JournalArticleAcademicpeer-review

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