Prices and Unit Values in Poverty Measurement and Tax Reform Analysis
Researchers often use unit values (household expenditures on a commodity divided by the quantity purchased) as proxies for market prices when calculating poverty lines and estimating consumer demand equations. Such proxies are often needed because...
| Main Authors: | , |
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| Format: | Journal Article |
| Language: | English en_US |
| Published: |
Published by Oxford University Press on behalf of the World Bank
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2005/01/17747626/prices-unit-values-poverty-measurement-tax-reform-analysis http://hdl.handle.net/10986/16485 |
| Summary: | Researchers often use unit values
(household expenditures on a commodity divided by the
quantity purchased) as proxies for market prices when
calculating poverty lines and estimating consumer demand
equations. Such proxies are often needed because community
price surveys in developing economies are either absent or
suffer quality problems. However, using unit values may
result in biases due to measurement error and quality
effects. In a household survey experiment, information on
prices was obtained in three ways: from unit values, from a
market price survey, and from the opinions of householders
who were shown pictures of items and asked to report the
local price. The three sets of price data are used to
calculate poverty lines, estimate price elasticities, and
analyze marginal tax reforms. There are substantial biases
when unit values are used as a proxy for market price, even
when sophisticated correction methods are applied.
Performance was better for the price opinions of household
members. The results highlight the importance of price
collection methods and the need to consider the wider costs
of having potentially unreliable community-level price data. |
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