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Poverty and Permanent Income : A Methodology for Cross-Section Data

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  • Ramses H. ABUL NAGA
  • Enrico BOLZANI

Abstract

If the set of households which are income poor does not fully overlap with the set of the consumption poor, it could well be that income and consumption expenditure convey different information regarding an unobserved variable on the basis of which families allocate their resources intertemporally. This paper presents a methodology for predicting the unobserved permanent incomes of households using multiple welfare indicators typically available in cross-section data. The methods are illustrated using data from the Swiss Consumption Survey of 1990.

Suggested Citation

  • Ramses H. ABUL NAGA & Enrico BOLZANI, 2000. "Poverty and Permanent Income : A Methodology for Cross-Section Data," Cahiers de Recherches Economiques du Département d'économie 00.26, Université de Lausanne, Faculté des HEC, Département d’économie.
    • Handle: RePEc:lau:crdeep:00.26
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    4. Abul Naga, Ramses H. & Burgess, Robin, 1997. "Prediction and determination of household permanent income," LSE Research Online Documents on Economics 2143, London School of Economics and Political Science, LSE Library.
    5. Glewwe, Paul & van der Gaag, Jacques, 1990. "Identifying the poor in developing countries: Do different definitions matter?," World Development, Elsevier, vol. 18(6), pages 803-814, June.
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    7. Hall, Robert E & Mishkin, Frederic S, 1982. "The Sensitivity of Consumption to Transitory Income: Estimates from Panel Data on Households," Econometrica, Econometric Society, vol. 50(2), pages 461-481, March.
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    11. Tobin, James, 1970. "On Limiting the Domain of Inequality," Journal of Law and Economics, University of Chicago Press, vol. 13(2), pages 263-277, October.
    12. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1, July.
    13. Ramses H. Abul Naga, 1994. "Identifying the Poor: A Multiple Indicator Approach," STICERD - Distributional Analysis Research Programme Papers 09, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    14. Brigitte Buhmann & Lee Rainwater & Guenther Schmaus & Timothy M. Smeeding, 1988. "Equivalence Scales, Well‐Being, Inequality, And Poverty: Sensitivity Estimates Across Ten Countries Using The Luxembourg Income Study (Lis) Database," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 34(2), pages 115-142, June.
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    1. repec:hal:spmain:info:hdl:2441/5l6uh8ogmqildh09h6m8hj429 is not listed on IDEAS
    2. Riccardo Massari, 2005. "A Measure of Welfare Based on Permanent Income Hypothesis: An Application on Italian Households Budgets," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 64(1), pages 55-92, September.
    3. Ramses H. Abul Naga, 2005. "Social Welfare Orderings: A Life‐Cycle Perspective," Economica, London School of Economics and Political Science, vol. 72(287), pages 497-514, August.
    4. Berloffa, Gabriella & Modena, Francesca, 2013. "Income shocks, coping strategies, and consumption smoothing: An application to Indonesian data," Journal of Asian Economics, Elsevier, vol. 24(C), pages 158-171.
    5. Nasri, Khaled & Belhadj, Besma, 2017. "Multidimensional Poverty Measurement in Tunisia: Distribution of Deprivations across Regions," MPRA Paper 83318, University Library of Munich, Germany.
    6. repec:hal:wpspec:info:hdl:2441/5l6uh8ogmqildh09h6m8hj429 is not listed on IDEAS
    7. Céline Antonin, 2009. "Age, revenu et comportements d'épargne des ménages : une analyse théorique et empirique sur la période 1978-2006," Sciences Po publications info:hdl:2441/5l6uh8ogmqi, Sciences Po.
    8. Fulgence Dominick Waryoba & Li Jing, 2019. "Consumption Uncertainty Reduction Among Sweet Potato Smallholder Farmers in Tanzania," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 11(1-2), pages 132-147, January.
    9. repec:spo:wpecon:info:hdl:2441/5l6uh8ogmqildh09h6m8hj429 is not listed on IDEAS

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    More about this item

    Keywords

    poverty; permanent income; latent variables; prediction; Switzerland;
    All these keywords.

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • D6 - Microeconomics - - Welfare Economics
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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