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Consumption Subaggregates Should Not Be Used to Measure Poverty

Author

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  • Luc Christiaensen
  • Ethan Ligon
  • Thomas Pave Sohnesen

Abstract

Frequent measurement of poverty is challenging because 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 “subaggregates” instead. The use of consumption subaggregates is theoretically justified if and only if all 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 subaggregate might work in practice. The paper constructs such linear subaggregates using data from Rwanda, Tanzania, and Uganda. The findings show that using subaggregates is ill advised in practice as well as in theory. This also raises questions about the consistency of the poverty tracking efforts currently applied across countries, since obtaining exhaustive consumption measures remains an unmet challenge.

Suggested Citation

  • Luc Christiaensen & Ethan Ligon & Thomas Pave Sohnesen, 2022. "Consumption Subaggregates Should Not Be Used to Measure Poverty," The World Bank Economic Review, World Bank, vol. 36(2), pages 413-432.
    • Handle: RePEc:oup:wbecrv:v:36:y:2022:i:2:p:413-432.
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    File URL: http://hdl.handle.net/10.1093/wber/lhab021
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    Cited by:

    1. Dang, Hai-Anh & Kilic, Talip & Hlasny, Vladimir & Abanokova, Kseniya & Carletto, Calogero, 2024. "Using Survey-to-Survey Imputation to Fill Poverty Data Gaps at a Low Cost: Evidence from a Randomized Survey Experiment," GLO Discussion Paper Series 1392, Global Labor Organization (GLO).
    2. Dang,Hai-Anh H. & Kilic,Talip & Carletto,Calogero & Abanokova,Kseniya, 2021. "Poverty Imputation in Contexts without Consumption Data : A Revisit with Further Refinements," Policy Research Working Paper Series 9838, The World Bank.

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