CPI Bias and Its Implications for Poverty Reduction in Africa
International poverty estimates for countries in Africa commonly rely on national consumer price indexes to adjust trends in nominal consumption over time for changes in the cost of living. However, the consumer price index is subject to various ty...
| Main Authors: | , , |
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/284781481032358665/CPI-bias-and-its-implications-for-poverty-reduction-in-Africa http://hdl.handle.net/10986/25806 |
| Summary: | International poverty estimates for
countries in Africa commonly rely on national consumer price
indexes to adjust trends in nominal consumption over time
for changes in the cost of living. However, the consumer
price index is subject to various types of measurement bias.
This paper uses Engel curve estimations to assess bias in
the consumer price index and its implications for estimated
poverty trends. The results suggest that in 11 of 16
Sub-Saharan African countries in this study, poverty
reduction may be understated because of consumer price index
bias. With correction of consumer price index bias, poverty
in these countries could fall between 0.8 and 5.7 percentage
points per year faster than currently thought. For two
countries, however, the paper finds the opposite trend.
There is no statistically significant change in poverty
patterns after adjusting for consumer price index bias for
the other three countries. |
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