Rent Imputation for Welfare Measurement: A Review of Methodologies and Empirical Findings

40 Pages Posted: 20 Apr 2016

See all articles by Carlos Balcázar Salazar

Carlos Balcázar Salazar

World Bank

Lidia Ceriani

Bocconi University - Department of Policy Analysis and Public Management

Sergio Olivieri

Universidad Nacional de La Plata

Marco Ranzani

World Bank

Date Written: November 1, 2014

Abstract

As well acknowledged in the literature, housing is often the dominant consumption good for most households. As such, it should be included in a comprehensive welfare aggregate to measure people's living standards accurately. However, assigning a value to the flow of the dwelling for homeowners and nonmarket tenants is problematic. Over the last decades several estimation techniques have been proposed and implemented by practitioners covering from very simple to sophisticated approaches. This paper provides an extensive review of different methods to impute rent, commonly used for welfare analysis. It also gives an overview of how this problem has been addressed by other economic domains, namely national accounts, price indices, purchasing power parities, and taxation. Finally, after setting up a theoretical framework, the paper summarizes the empirical findings about the distributional impact of including imputed rents in welfare aggregates.

Keywords: Poverty Assessment, Poverty Monitoring & Analysis, Small Area Estimation Poverty Mapping, Poverty Lines, Inequality, Poverty Impact Evaluation, Poverty Diagnostics

Suggested Citation

Balcazar Salazar, Carlos and Ceriani, Lidia and Olivieri, Sergio and Ranzani, Marco, Rent Imputation for Welfare Measurement: A Review of Methodologies and Empirical Findings (November 1, 2014). World Bank Policy Research Working Paper No. 7103, Available at SSRN: https://ssrn.com/abstract=2523711

Carlos Balcazar Salazar (Contact Author)

World Bank ( email )

1818 H Street NW
Washington, DC 20433
United States

Lidia Ceriani

Bocconi University - Department of Policy Analysis and Public Management ( email )

Via Roentgen 1
Milan, 20136
Italy

Sergio Olivieri

Universidad Nacional de La Plata ( email )

7 Nº 776
Buenos Aires, BA 1900
Argentina

Marco Ranzani

World Bank

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