IDEAS home Printed from https://ideas.repec.org/p/cdi/wpaper/1509.html
   My bibliography  Save this paper

Finding the Best Indicators to Identify the Poor

Author

Listed:
  • Adama BAH

    (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

Abstract

Proxy-means testing (PMT) is a method used to assess household or individual welfare level based on a set of observable indicators. The accuracy, and therefore usefulness of PMT relies on the selection of indicators that produce accurate predictions of household welfare. In this paper I propose a method to identify indicators that are robustly and strongly correlated with household welfare, measured by per capita consumption. From an initial set of 340 candidate variables drawn from the Indonesian Family Life Survey, I identify the variables that contribute most significantly to model predictive performance and that are therefore desirable to be included in a PMT formula. These variables span the categories of household private asset holdings, access to basic domestic energy, education level, sanitation and housing. A comparison of the predictive performance of PMT formulas including 10, 20 and 30 of the best predictors of welfare shows that leads to recommending formulas with 20 predictors. Such parsimonious models have similar predictive performance as the PMT formulas currently used in Indonesia, although these latter are based on models of 32 variables on average.

Suggested Citation

  • Adama BAH, 2013. "Finding the Best Indicators to Identify the Poor," Working Papers 201324, CERDI.
    • Handle: RePEc:cdi:wpaper:1509
    as

    Download full text from publisher

    File URL: http://publi.cerdi.org/ed/2013/2013.24.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. David Coady & Margaret Grosh & John Hoddinott, 2004. "Targeting of Transfers in Developing Countries : Review of Lessons and Experience," World Bank Publications - Books, The World Bank Group, number 14902.
    2. Chris Elbers & Jean O. Lanjouw & Peter Lanjouw, 2003. "Micro--Level Estimation of Poverty and Inequality," Econometrica, Econometric Society, vol. 71(1), pages 355-364, January.
    3. Leamer, Edward E, 1983. "Let's Take the Con Out of Econometrics," American Economic Review, American Economic Association, vol. 73(1), pages 31-43, March.
    4. Temple, Jonathan, 2000. "Growth Regressions and What the Textbooks Don't Tell You," Bulletin of Economic Research, Wiley Blackwell, vol. 52(3), pages 181-205, July.
    5. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-963, September.
    6. repec:bla:revinw:v:47:y:2001:i:4:p:473-87 is not listed on IDEAS
    7. Sudarno Sumarto & Daniel Suryadarma & Asep Suryahadi, 2007. "Predicting Consumption Poverty using Non-Consumption Indicators: Experiments using Indonesian Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 81(3), pages 543-578, May.
    8. Xavier Sala-I-Martin & Gernot Doppelhofer & Ronald I. Miller, 2004. "Determinants of Long-Term Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach," American Economic Review, American Economic Association, vol. 94(4), pages 813-835, September.
    9. Menno Pradhan & Asep Suryahadi & Sudarno Sumarto & Lant Pritchett, 2001. "Eating like which “Joneses?” an Iterative Solution to the Choice of a Poverty Line “Reference Group”," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(4), pages 473-487, December.
    10. Leamer, Edward E, 1985. "Sensitivity Analyses Would Help," American Economic Review, American Economic Association, vol. 75(3), pages 308-313, June.
    11. Ahmed, Akhter U. & Bouis, Howarth E., 2002. "Weighing what's practical: proxy means tests for targeting food subsidies in Egypt," Food Policy, Elsevier, vol. 27(5-6), pages 519-540.
    12. Edward E. Leamer, 2010. "Tantalus on the Road to Asymptopia," Journal of Economic Perspectives, American Economic Association, vol. 24(2), pages 31-46, Spring.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Adama Bah, 2015. "Estimating Vulnerability to Poverty using Panel data: Evidence from Indonesia," CERDI Working papers halshs-00936199, HAL.
    2. Stephan Klasen & Simon Lange, 2015. "Targeting Performance and Poverty Effects of Proxy Means-Tested Transfers: Trade-offs and Challenges," Ibero America Institute for Econ. Research (IAI) Discussion Papers 231, Ibero-America Institute for Economic Research.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Adama Bah, 2015. "Finding the Best Indicators to Identify the Poor," CERDI Working papers halshs-00936201, HAL.
    2. Yongfu Huang, 2005. "What determines financial development?," Bristol Economics Discussion Papers 05/580, School of Economics, University of Bristol, UK.
    3. Mark F. J. Steel, 2020. "Model Averaging and Its Use in Economics," Journal of Economic Literature, American Economic Association, vol. 58(3), pages 644-719, September.
    4. Garett Jones & W. Schneider, 2006. "Intelligence, Human Capital, and Economic Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach," Journal of Economic Growth, Springer, vol. 11(1), pages 71-93, March.
    5. Melisa Chanegriha & Chris Stewart & Christopher Tsoukis, 2017. "Identifying the robust economic, geographical and political determinants of FDI: an Extreme Bounds Analysis," Empirical Economics, Springer, vol. 52(2), pages 759-776, March.
    6. Sai Ding & John Knight, 2011. "Why has China Grown So Fast? The Role of Physical and Human Capital Formation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 73(2), pages 141-174, April.
    7. R Burger & S du Plessis, 2011. "Examining the Robustness of Competing Explanations of Slow Growth in African Countries," Studies in Economics and Econometrics, Taylor & Francis Journals, vol. 35(3), pages 21-47, December.
    8. Carmen Fernandez & Eduardo Ley & Mark F. J. Steel, 2001. "Model uncertainty in cross-country growth regressions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(5), pages 563-576.
    9. James Alm & Janet Rogers, 2011. "Do State Fiscal Policies Affect State Economic Growth?," Public Finance Review, , vol. 39(4), pages 483-526, July.
    10. G. Jones & T. Kane, 2012. "U.S. Troops and Foreign Economic Growth," Defence and Peace Economics, Taylor & Francis Journals, vol. 23(3), pages 225-249, June.
    11. Klump, R. & Prüfer, P., 2006. "Prioritizing Policies for Pro-Poor Growth : Applying Bayesian Model Averaging to Vietnam," Other publications TiSEM dc14add6-f581-4eea-92dd-3, Tilburg University, School of Economics and Management.
    12. Bruns, Stephan B. & Ioannidis, John P.A., 2020. "Determinants of economic growth: Different time different answer?," Journal of Macroeconomics, Elsevier, vol. 63(C).
    13. C. Hopp & A. Dreher, 2013. "Do differences in institutional and legal environments explain cross-country variations in IPO underpricing?," Applied Economics, Taylor & Francis Journals, vol. 45(4), pages 435-454, February.
    14. Rockey, James & Temple, Jonathan, 2016. "Growth econometrics for agnostics and true believers," European Economic Review, Elsevier, vol. 81(C), pages 86-102.
    15. John Knight & Sai Ding, 2008. "Why has China Grown so Fast? The Role of Structural Change," Economics Series Working Papers 415, University of Oxford, Department of Economics.
    16. Axel Dreher & Jan-Egbert Sturm, 2012. "Do the IMF and the World Bank influence voting in the UN General Assembly?," Public Choice, Springer, vol. 151(1), pages 363-397, April.
    17. Oberdabernig, Doris A., 2013. "Revisiting the Effects of IMF Programs on Poverty and Inequality," World Development, Elsevier, vol. 46(C), pages 113-142.
    18. Jochen Hartwig & Jan-Egbert Sturm, 2018. "Testing the Grossman model of medical spending determinants with macroeconomic panel data," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(8), pages 1067-1086, November.
    19. Lundström, Susanna, 2003. "Effects of Economic Freedom on Growth and the Environment - Implications for Cross-Country Analysis," Working Papers in Economics 115, University of Gothenburg, Department of Economics.
    20. Mallick, Debdulal, 2012. "The role of the elasticity of substitution in economic growth: A cross-country investigation," Labour Economics, Elsevier, vol. 19(5), pages 682-694.

    More about this item

    Keywords

    Proxy-Means Testing; Variable/Model Selection; Targeting; Poverty; Social protection;
    All these keywords.

    JEL classification:

    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cdi:wpaper:1509. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Vincent Mazenod (email available below). General contact details of provider: https://edirc.repec.org/data/ceauvfr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.