Construction of a Consumption Aggregate Based on Information from POF 2008‐2009 and Its Use in the Measurement of Welfare, Poverty, Inequality and Vulnerability of Families

Abstract

Given the complexity of family and individual welfare, this study aims to explain the construction of a family consumption aggregate, using data from Brazilian Family Expenditure Survey (2008–2009), and also to measure and analyze welfare, poverty, inequality and vulnerability. Following the literature, some aspects were considered: the selection of expenditures, the analysis of extreme values, the imputation of food consumption, the user cost of durable goods and a spatial price deflator. After the definition of the family consumption aggregate, we analyzed the Generalized Lorenz Curves, social welfare functions and inequality measures. Then we presented the sensitivity of the identification exercise to different poverty lines and analyzed the severity of poverty. Finally, based on Chaudhuri et al. (2002) and Elbers et al. (2002), the vulnerability to poverty was studied taking account of area (clusters) effects. In this last exercise, the poverty line was based on half the minimum wage in 2008.

Estimating a Poverty Line for Brazil based on the 2017/18 Household Budget Survey

“…We include, however, expenditures on health insurance. This is in line with Oliveira et al (2016) and justifiable, given that these can be seen as welfare-enhancing. • Nonmonetary education consumption.…”

“…13 There are several differences between our consumption aggregate and other studies using POF data. In one of the most recent ones (Oliveira et al 2016), the authors aim to measure and analyze welfare, poverty (using the administrative "poverty'' line equivalent to half a minimum wage), inequality, and vulnerability. Thus, the differences found with our work are somewhat expected.…”

“…Thus, the differences found with our work are somewhat expected. For instance, while we exclude observations with zero food expenditures from our analysis, Oliveira et al (2016) impute food expenditures for these households to be able to include them in the estimations. Our main objective is to estimate a poverty line and not necessarily to reproduce the population distribution of expenditures.…”

“…In a variation of the main specification, we exclude all toys and recreational goods and services; domestic electrical appliances; domestic nonelectrical appliances; and furniture, regardless of the average amount spent on these. Results are presented in section 4.12 Oliveira et al (2016) calculate and include in their aggregate the value of services provided by the following durable goods: Goods in modules "Machines, equipment and household utilities acquisition" and "Vehicles acquisition." However, the estimation is only partial (i.e., goods need to be registered in the inventory of durable goods) and potentially biased (as all valuations are from items acquired in the last 12 months prior to the survey).…”

Essays on households\' consumption and saving

“…Moreover, a sub-category corresponds to the semi-durables, which include expenditures on home decor, home utensils, toys, and sports equipment. For this chapter, we consider it also as durable goods.11Oliveira et al (2016) proposes an approximated measure of the monetary value of durable goods considering data from the 2008 POF. The authors used State-level median prices, average real interest rate, and depreciation rate to compute the user cost of durable goods.…”