Durable Goods and Poverty Measurement

Abstract

The paper focuses on durable goods and their role in the measurement of living standards. The paper reviews the theoretical underpinnings of the methods available to estimate the value of the services flowing from consumer durable goods. It also provides a unified framework that encompasses the acquisition approach, the rental equivalent approach, and the user cost approach. The pros and cons of each method are discussed in the context of poverty and inequality analysis and it is argued that the user cost should receive the highest consideration.

Modelling the Influence of Durable Goods Possession on Subjective Wellbeing of Households

“…Table 1 contains results of three multinomial logit models estimation for the dependent variable (possession of own house -model 1; possession of own flat -model 2; possession of own car -model 3). Percentage of correctly predicted cases in the first model (count R 2 ) is 81.5%, Pseudo-R 2 McFadden measure is 64.7%, while in the second model percentage of correctly predicted cases (count R 2 ) is 75.4% and Pseudo-R 2 McFadden measure is 56.1%. For third model percentage of correctly predicted cases (count R 2 ) is 79.4%, Pseudo-R 2 McFadden measure is 53.2%.…”

Tony Atkinson's New Book, Measuring Poverty Around the World: Some Further Reflections

“…Tony mentions the important distinction between the consumption of the good's services and the expenditure required to purchase the good, but he provides no further analysis of methods to deal with the problem or of what is done in practice around the world. In a very useful survey paper, Amendola and Vecchi (2014) note that official poverty measurement in the US, Canada, Australia and the UK ignores durables and that the same is true in 41 out of 95 poverty assessments carried out by the World Bank between 1996 and 2014 (covering 61 countries) in which the definition of the welfare aggregate was clear.…”

Estimating Poverty in a Fragile Context: The High Frequency Survey in South Sudan

“…The consumption aggregate includes the consumption flow of durables calculated based on the user-cost approach, which distributes the consumption value of the durable over multiple years (Amendola and Vecchi, 2014). The usercost principle defines the consumption flow of an item as the difference of selling the asset at the beginning and the end of the year as, this is the opportunity cost of the household for keeping the item.…”