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recent innovations in ECLAC measurement of poverty for Latin America
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Xavier Mancero
Statistics Division, ECLAC
The Role of Administrative Records and Complex Surveys in the Monitoring and Evaluation of Public Policies
Rio de Janeiro, 3-4 November 2014
Multidimensional approaches to poverty are not new, but there is a renewed interest in them as tools to inform public policy. The multidimensional approach is best suited to new conceptual frameworks on welfare ◦ Rights approach ◦ Capability approach
Income provides an incomplete assessment of living standards. ◦ Possible underestimation of the poverty level ◦ Possible bias characterizing poverty ◦ Income poverty measure does not account for the impact of
public policies in various areas of welfare
Mexico (2008) and Colombia (2011) have established official multidimensional measures.
The multidimensional measurement requires assessing whether people are able to pass the minimum thresholds in each of the dimensions considered.
This requires ◦ selecting the dimensions and indicators
◦ setting minimum thresholds for each dimension and
◦ combining the results into a synthetic indicator
Some recurrent questions ◦ Is any deprivation (lack of capacity or lack of rights) an
expression of poverty?
◦ Is an aggregate index needed?
◦ Which weights should be used (in the aggregate index)?
◦ Can we get adequate information to capture the relevant dimensions?
It incorporates elements from the perspective of rights, capabilities and unmet basic needs. ◦ These traditions are not opposites, but realize different
aspects of deprivation.
◦ The available tools usually do not allow for distinctions in their quantification
Based on the traditional indicators of Unmet Basic Needs
Added measures of deprivation and exclusion from income
Aggregate indexes based on Alkire & Foster (2007).
Poor = 2 or more deprivations
DIMENSIONS AND DEPRIVATION INDICATORS weight
WATER AND SANITATION (1/6)
Improved watersources
Urban: any source except public system. Rural: unprotected wells, bottled water, mobile sources, rivers, rain, other.
1/12
Toilet facility Urban: no sanitation or toilet not connected to sewer system or septic tank. Rural: no sanitation, or untreated toilet system.
1/12
ENERGY (1/6)
Electricity HH with no electricity 1/12
Cooking fuel hazardous to health
HH that use firewood, coal or waste for cooking. 1/12
DWELLING (1/6)
Housing materials Dwellings with dirt floors, in rural and urban areas, or roof and walls made of makeshift materials.
1/12
Crowding Three or more people per room, in rural and urban areas. 1/12
EDUCATION (1/6)
Non-attendance at school
At least one child of school age (6 to 17 years old) that does not attend school. 1/12
Non-attainment of minimum level
Household has nobody aged 20 or above with a minimum level of schooling.- Persons aged 20 to 59: have not completed lower secondary education.- Persons aged 60 and above: have not completed primary education.
1/12
INCOME Per capita income below cost of basic food basket 1/6
EXCLUSION (1/6)
Youth not studying orworking
At least one youth aged 18-29 who does not study or have a paid job 1/12
social protection At least two of the following situations: No person of a health risk group (less than 5 years, women 15 to 49 years and adults over 60) has health insurance No employed person affiliated to pension fund No elderly has pension or retirement (men 65+ yrs, women 60+ yrs)
1/12
Latin America (18 countries): Adjusted headcount index (M0) of poverty withdifferent thresholds (k), 2011
Source: ECLAC, Social Panorama 2013
0
10
20
30
40
50
60
70
80
90
Chile
Uru
guay
Arg
enti
na
Venezuela
Bra
sil
Costa
Ric
a
Ecuador
Colo
mbia
R. D
om
inic
ana
Méxic
o
Perú
Para
guay
El Salv
ador
Bolivia
Hond
ura
s
Guate
mala
b/
Sólo NBI NBI + Ingresos/c. Pobreza Ampliada
Latin America (16 countries). Headcount index, by different structures, 2011
Source: ECLAC, Social Panorama 2013
Collaboration between ECLAC and Oxford Poverty and Human Development Initiative (OPHI) for advancing towards a regional multidimensional poverty index. ◦ Based on Social Panorama 2013◦ Revision of certain thresholds ◦ New indicators are included
Housing tenure Educational lagUnemployment (+ discouraged and some inactives)
Weights◦ Equal weights (7.4%), excluding social security (3.7%) and income (14.8%). ◦ Deprivation of social protection less associated with the traditional
concept of poverty. ◦ Income income is itself a synthetic indicator of welfare.
Multidimensional threshold k = 23%. ◦ Poor = deprivation in a complete dimension plus an indicator from other
dimension; or deprivation in income and at least two additional deprivations.
◦ No person who is deprived in only one dimension is identified as multidimensionally poor.
DEPRIVATION INDICATORS WDWELLING 22,2%Housing materials Dwellings with dirt floor or ceiling or walls with precarious materials (waste,
cardboard, cans, sugar cane, palm, straw, other materials)7,4%
Crowding Three or more people per room 7,4%Insecure housing tenure Households that: a) live squatters or b) living in dwellings transferred or loaned. 7,4%
BASIC SERVICES 22,2%Water source Similar to SP 2013 7,4%
Sanitation Similar to SP 2013 + shared bathroom 7,4%
Energy No electricity or that use firewood, coal or waste for cooking. 7,4%
EDUCATION 22,2%
Non-attendance Similar to SP 2013 7,4%
Education lag At least one child aged 6 to 17 years in school is more than two years behind the level according to their age.
7,4%
Non-attainment Similar to SP 2013 7,4%
DEPRIVATION INDICATORS WLEVEL OF LIVING 22,2%Income Income below of the cost of a basket that covers food and non-food needs. 14,8%
Durable assets Households that do not have any of the following items: a) vehicle, b) refrigerator and c) washing machine
7,4%
EMPLOYMENT AND SOCIAL PROTECTION 11,1%Unemployment Households where at least one person aged between 15 and 65 years old are in
any of the following situations: - unemployed - Employee without pay - discouraged worker
7,4%
Social protection Households where all the following conditions are met: - No person has some sort of contributory health insurance- No person affiliated to a contributory social security system - No person has income from pensions or retirement
3,7%
Contribution of deprivations to adjusted headcount index (M0), 2012
Source: Preliminary results, based on work by Santos et.al. (2014)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
NIC09 GTM06 HND10 BOL11 ELS12 PRY11 MEX12 PER12 COL12 RDO12 ECU12 VEN12 CRI12 BRA12 URY12 ARG12 CHL11
D - Housing materials D - Crowding D - Tenure BS - Water BS - Sanitation
BS - Energy E - Schooling E - Attendance E - Lag ESP - Employment
ESP - Social protection LL - Assets LL - Income
The multidimensional measurement requires that all information comes from the same source. The information we currently have is insufficient and lacks comparability. ◦ Education: Indicators of access but not quality or competency in
adults. ◦ Housing: variables and categories not clearly linked to deprivations. ◦ Health: not measured in most regular surveys of the region.
Opportunity to review the content of household surveys (within the constraints of size/representativeness). Look for complementarity between income and multidimensional measurement. Moving towards the harmonization of certain basic dimensions. ◦ Working Group of the Statistical Conference of the Americas ◦ Multidimensional Poverty-Peer Network (MPPN)
Most countries in the region have official measures of monetary poverty.
All are part of the method of "cost of basic needs", albeit heterogeneously.
ECLAC poverty measurements seek to generate a more comparable regional picture.
Measurements are currently in the process of updating: ◦ Based on the same general methodology.
◦ Consumption patterns based on recent Household Budget Surveys
0
10
20
30
40
50
60
1990 1993 1996 1999 2002 2005 2006 2007 2008 2009 2011 2012
Brasil America Latina
Source: Cepalstat
Brazil and Latin America. Poor population(Percentage)
Inadequate caloric intake is not so relevant today as it was 20 years ago.
Methods commonly used to select the reference population depend on caloric intake. ◦ First group, ordered by income, whose intake is equal to
the energy requirement. ◦ Iterative method: implicitly depends on the difference
between caloric intake and energy requirement.
Additional obstacle: quality of caloric intake measured by household budget surveys.
This requires special attention to the selection of the reference population and the basic food basket are appropriate.
0
10
20
30
40
50
60
Bo
livia
Nic
arag
ua
Re
p.D
om
inic
ana
Gu
ate
mal
a
El S
alva
do
r
Ho
nd
ura
s
Co
lom
bia
Ecu
ado
r
Par
agu
ay
Pan
amá
Pe
rú
Co
sta
Ric
a
Arg
en
tin
a
Bra
sil
Ch
ile
Mé
xico
Uru
guay
Ve
ne
zuel
a
Am
éri
ca L
atin
a
1990_1992 1999-2001 2012-2014
Source: CEPALSTAT, FAO online database
Population below minimum level of food energy(Percentage)
1500
1700
1900
2100
2300
2500
2700
2900
3100
3300
Pan
ama
(20
07
)
Pe
ru (2
00
8)
Ve
ne
zue
la (2
00
8)
Par
agu
ay (
20
11
)
Gu
ate
mal
a (2
00
6)
Ho
nd
ura
s (2
00
4)
Bo
livia
(2
00
3)
ElSa
lvad
or
(20
06
)
Co
lom
bia
(2
00
7)
Nic
arag
ua
(20
05
)
Ch
ile (2
00
7)
RD
om
inic
ana
(20
07
)
Ecu
ado
r (2
01
1)
Co
sta
Ric
a (2
00
4)
Uru
guay
(2
00
6)
Me
xico
(20
12
)
Bra
sil (
20
08
)
Arg
en
tin
a (2
01
2)
Encuesta de Presupuestos Familiares Hoja de Balance FAO
Source: FAO; CEPAL
Average energy consumption, according to food balance sheets and household budgetsurveys
(Daily kilocalories per person)
The non-food component of the poverty line comes from the ratio of total expenditure to food expenditure in the reference population (Orshansky coefficient). All costs of the reference population reflect needs associated with "poverty"? ◦ If there is underestimation of spending on food, the OC is
overestimated. ◦ Non-food expenditure may include non-basic items.
Several countries have changed the observed OC with different criteria: ◦ Colombia: exogenous OC, AL average for urban areas. ◦ Mexico: exclusion of items based on income elasticity,
perceived need, minimum percentage of households consuming.
◦ Dominican Rep.: exclusion of items from category "other" and other superfluous goods.
◦ Uruguay: observed OC without exclusions.
1.0
1.5
2.0
2.5
3.0
3.5
MEX
BO
L
PA
N
SLV
ECU
CR
I
GTM UR
Y
NIC
PR
Y
CO
L
VEN
HN
D
RD
O
CH
L
AR
G
BR
A
Source: ECLAC, on the basis of household budget surveys
Ratio of total expenditure to food expenditureObserved vs. Implicit in current poverty lines
Urban areas (ca. 2012)
ECLAC measurements apply to income measured in surveys a factor ...
... calculated according to the discrepancy with National Accounts;
... to the main sources of income;
... property income adjusted only for the richest quintile.
This practice faces several limitations: ◦ Lack of availability of household accounts of income and expenditure
in several countries.
◦ Misattribution of the discrepancy between the two sources only to "underreporting in the survey."
◦ Overestimation due to omission of higher-income households in the survey.
◦ Introduction of bias in the structure of income measured by the survey.
Evidence favors not to continue using this procedure