Measuring Inequalities: Do Household Surveys Paint a Realistic Picture?

Abstract

The paper addresses the issue of the accuracy of standard-of-living measurements using household survey data. First, it highlights the fact that lighter data collection processes in some developing countries have added to measurement errors in consumption and income aggregates measurement errors. The paper reasserts the need to apply reference guidelines to the measurement of household consumption in order to compute comparable distribution indicators across countries and over time. Second, it contends that it is hard to analyze inequality solely from consumption patterns without taking income and savings into account. Two solutions are proposed for the correction of income measurement errors: by using savings declarations and by implementing a multiple imputation procedure. The results are based on a careful analysis of the EPM93 survey of Madagascar whose design is quite close to the LSMS household surveys, and the ENV98 survey of C�te d'Ivoire representative of surveys conducted nowadays in most Sub-Saharan African countries. Copyright 2010 The Authors. Review of Income and Wealth 2010 International Association for Research in Income and Wealth.

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