Estimating Vulnerability to Poverty using Panel data: Evidence from Indonesia

Adama Bah ()

No 201325, Working Papers from CERDI

Abstract: Traditional poverty measures fail to indicate the degree of risk of becoming or remaining poor that households are confronted to. They can therefore be misleading in the context of implementing poverty reduction policies. In this paper I propose a method to estimate an index of ex ante vulnerability to poverty, defined as the probability of being poor in the (near) future given current observable characteristics, using panel data. This method relies on the estimation of the expected mean and variance of future consumption conditional on current consumption and observable characteristics. It generates a vulnerability index, or predicted probability of future poverty, which performs well in predicting future poverty, including out of sample. About 80% of households with a 2000 vulnerability index of 100% are actually poor in 2007. This approach provides information on the population groups that have a high probability of becoming or remaining poor in the future, whether currently poor or not. It is therefore useful to complement traditional poverty measures such as the poverty headcount, in particular for the design and planning of poverty reduction policies.

Keywords: Poverty; Vulnerability; Household consumption (search for similar items in EconPapers)
JEL-codes: C53 I32 (search for similar items in EconPapers)
Pages: 26
Date: 2013
New Economics Papers: this item is included in nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://publi.cerdi.org/ed/2013/2013.25.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://publi.cerdi.org/ed/2013/2013.25.pdf [301 Moved Permanently]--> https://publi.cerdi.org/ed/2013/2013.25.pdf)

Related works:
Working Paper: Estimating Vulnerability to Poverty using Panel data: Evidence from Indonesia (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cdi:wpaper:1511

Access Statistics for this paper

More papers in Working Papers from CERDI Contact information at EDIRC.
Bibliographic data for series maintained by Vincent Mazenod ().