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A Quick and Dirty Estimate of Measurement Error in Household Survey Consumption Expenditures: Application to Indonesian Data

Author

Listed:
  • Pritchett, Lant
  • Sumarto, Sudarno
  • Suryahadi, Asep

Abstract

Measurement error is an enormous problem in empirical work. In some types of analysis, it is often ignored for various reasons. In some others, however, it cannot be ignored because it affects the results of analysis significantly. We use a simple procedure to estimate the extent of measurement error in household consumption expenditures data by comparing the coefficients obtained from OLS and instrumental variable regressions. We applied the procedure into school participation, durable goods expenditures, and clothing expenditures models using 10 different household survey data sets from Indonesia. The results indicate that measurement error accounts for less than 20 percent of total variance found in cross section household expenditures. In general, surveys which use detailed consumption questionnaire have smaller measurement error than those which use aggregated consumption questionnaire.

Suggested Citation

  • Pritchett, Lant & Sumarto, Sudarno & Suryahadi, Asep, 2000. "A Quick and Dirty Estimate of Measurement Error in Household Survey Consumption Expenditures: Application to Indonesian Data," MPRA Paper 60936, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:60936
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    References listed on IDEAS

    as
    1. Bob Baulch & John Hoddinott, 2000. "Economic mobility and poverty dynamics in developing countries," Journal of Development Studies, Taylor & Francis Journals, vol. 36(6), pages 1-24.
    2. Hausman, J. A. & Newey, W. K. & Powell, J. L., 1995. "Nonlinear errors in variables Estimation of some Engel curves," Journal of Econometrics, Elsevier, vol. 65(1), pages 205-233, January.
    3. Pritchett, Lant & Suryahadi, Asep & Sumarto, Sudarno, 2000. "Quantifying vulnerability to poverty - a proposed measure, applied to Indonesia," Policy Research Working Paper Series 2437, The World Bank.
    4. Suryahadi, Asep & Sumarto, Sudarno & Suharso, Yusuf, 2000. "The evolution of poverty during the crisis in Indonesia, 1996-99," Policy Research Working Paper Series 2435, The World Bank.
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    More about this item

    Keywords

    Measurement error; household expenditure; education; Indonesia.;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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