The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.
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The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.
Housing should always be included in the construction of the welfare aggregate for welfare analysis. However, assigning a value to the flow of services from dwellings is problematic. Many households own the dwelling in which they live, making this value unobserved; others receive free housing or face prices lower than those at the market. Over the last decades, several estimation techniques have been proposed and implemented by practitioners to overcome this issue. This paper provides a review of methods commonly used to impute rent and discusses the relative advantages and disadvantages of each. We find no consensus on which imputation method is the most appropriate for welfare analysis, as well as a lack of evidence regarding the distributional impact of including rents in the welfare aggregate, particularly in developing countries. Moreover, practices for imputing rents vary across countries, calling for the future development of a unified framework.JEL Codes: C46, D31, I32
The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.
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