Methods matter: The sensitivity of Malawian poverty estimates to definitions, data, and assumptions

Abstract

This paper decomposes differences between the official poverty estimates of Malawi and a set of revised estimates by Pauw et al. (2016, forthcoming) with respect to five methodological differences: (i) the use of a revised set of unit conversion factors; (ii) the specification and use of regional poverty lines as opposed to a single national poverty line; (iii) the use of implicit survey-based prices rather than external price data; (iv) estimation of food separate poverty lines in the two surveys; and (v) permitting a change in the food/non-food composition of the consumption basket over time. Our results suggest that the decline in national poverty varies between 3.4 and 8.4 percentage points, compared to the official estimate of a decline of 1.8 percentage points.

Agriculture, food security, and nutrition in Malawi: Leveraging the links

“…Moreover, an estimated 80 percent of the post-harvest losses in maize for smallholder farmers in Malawi occur during crop harvest and transport operations or in processing, not in storage (Ambler, de Brauw, and Godlonton 2017). 8 Although agriculture can also affect nutrition via increased (for example, zoonoses) or decreased (for example, improved access to clean water) risk of infectious disease. 9 A related publication by Beck, Mussa, and Pauw (2017) presents a stepwise decomposition of the differences in poverty estimates obtained by the NSO and by Pauw, Beck, and Mussa (2016). As they explain, the alternative poverty results are not meant to challenge official numbers or set a gold standard for poverty measurement.…”

Synthesis

“…It appears this only holds for urban households in 2004/5. In all other instances, the non-food share declines or is constant as we move to higher food poverty lines, which suggests extra income earned by the poor is initially spent on more (or better-quality) food rather than non-food expenditures (see further analysis by Pauw et al 2015).…”

6 Conclusions and Looking Forward

“…Second, Malik et al (2014b) point out that, owing to a variety of factors, the CPI may not represent the true cost of living for those living near the poverty line and thus the subsequent poverty lines may not accurately reflect living standards. Third, as discussed in Beck et al (2015), inflating a fixed poverty line over time rather than re-estimating flexible poverty lines in each survey year ignores the substitution effects in consumption that may occur from variation in relative prices of essential commodities over time. Finally, estimating a single national poverty line fails to account for the possibility of regional differences in prices and consumption patterns.…”