The authors discuss when and how to adjust expenditures derived from household surveys to reflect the consumption of basic services. They discuss simple adjustment methods for markets that are subsidized, rationed, or subject to increasing marginal tariff pricing. Using Ecuador as an example, they show how incorporating adjustments in markets for water, electricity, and cooking gas can significantly alter estimates of poverty and are therefore important to comprehensive measure of welfare. For Ecuador, adjustments must be made for water, for example, because the nonpoor urban population often has access to subsidized public water and the poor depend on the private market; adjustments must be made for electricity because increasing marginal tariff rates lead to different prices per kilowatt-hour (kwh). Adjustments need not be made for cooking gas, which is highly subsidized in Ecuador, because the amount consumers use is not rationed. The authors compare the sensitivity of poverty indicators and the poverty profile in Ecuador to adjustments in nominal expenditures for basic services in Ecuador. The poverty indicators (headcount and the poverty gap for extreme poverty) showed changes that were statistically significant. The results dramatize how important it is to carefully analyze markets for basic services when deriving welfare measures from household surveys. Such adjustments, by improving the measure of welfare, can also encourage wider acceptance and use of consumption as welfare indicator and a guide for developing public policy.
Details
-
Author
Hentschel, Jesko Lanjouw, Peter
-
Document Date
1998/11/30
-
Document Type
Policy Research Working Paper
-
Report Number
WPS2006
-
Volume No
1
-
Total Volume(s)
1
-
Country
-
Region
-
Disclosure Date
2010/07/01
-
Doc Name
Household welfare measurement and the pricing of basic services
-
Keywords
Basic services; Natural gas; Electricity; Household surveys; Household welfare indicators; Poverty measures; Poverty reduction; Public services; Rationing; Subsidies; Water consumption; Water utilization; Public policy
- See More
Downloads
COMPLETE REPORT
Official version of document (may contain signatures, etc)
- Official PDF
- TXT*
- Total Downloads** :
- Download Stats
-
*The text version is uncorrected OCR text and is included solely to benefit users with slow connectivity.
Citation
Hentschel, Jesko Lanjouw, Peter
Household welfare measurement and the pricing of basic services (English). Policy, Research working paper; no. WPS 2006 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/940751468751760044/Household-welfare-measurement-and-the-pricing-of-basic-services