Guidelines for Constructing Consumption Aggregates for Welfare Analysis
An analyst using household survey data to construct a welfare metric is often confronted with onfronted with An analyst using household survey data to construct a welfare metric is often confronted with a number of theoretical and practical problem...
| Main Authors: | , |
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| Format: | Publication |
| Language: | English en_US |
| Published: |
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2002/05/1944189/guidelines-constructing-consumption-aggregates-welfare-analysis http://hdl.handle.net/10986/14101 |
| Summary: | An analyst using household survey data
to construct a welfare metric is often confronted with
onfronted with An analyst using household survey data to
construct a welfare metric is often confronted with a number
of theoretical and practical problems. What components
should be included in the overall welfare measure? Should
differences in tastes be taken into account when making
comparisons across people and households? How best should
differences in cost-of-living and household composition be
taken into consideration? Starting with a brief review of
the theoretical framework underpinning typical welfare
analysis undertaken based on household survey data, this
paper provides some practical guidelines and advice on how
best to tackle such problems. It outlines a three-part
procedure for constructing a consumption-based measure of
individual welfare: 1) aggregation of different components
of household consumption to construct a nominal consumption
aggregate; 2) construction of price indices to adjust for
differences in prices faced by households; and 3) adjustment
of the real consumption aggregate for differneces in
household composition. Examples based on survey data fro
eight countries--Ghana, Vietnam, Nepal, the Kyrgyz Republic,
Ecuador, South Africa, Panama, and Brazil--are used to
illustrate the various steps involved in constructing the
welfare measure, and the STATA programs used for this
purpose are provided in the appendix. The paper also
includes examples of some analytic techniques used to
examine the robustness of the estimated welfare measure to
underlying assumptions. |
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