Is Predicted Data a Viable Alternative to Real Data?

45 Pages Posted: 6 Oct 2016

See all articles by Tomoki Fujii

Tomoki Fujii

Singapore Management University - School of Economics

Roy van der Weide

World Bank; World Bank - Development Research Group (DECRG)

Date Written: September 28, 2016

Abstract

It is costly to collect the household- and individual-level data that underlies official estimates of poverty and health. For this reason, developing countries often do not have the budget to update their estimates of poverty and health regularly, even though these estimates are most needed there. One way to reduce the financial burden is to substitute some of the real data with predicted data. An approach referred to as double sampling collects the expensive outcome variable for a sub-sample only while collecting the covariates used for prediction for the full sample. The objective of this study is to determine if this would indeed allow for realizing meaningful reductions in financial costs while preserving statistical precision. The study does this using analytical calculations that allow for considering a wide range of parameter values that are plausible to real applications. The benefits of using double sampling are found to be modest. There are circumstances for which the gains can be more substantial, but the study conjectures that these denote the exceptions rather than the rule. The recommendation is to rely on real data whenever there is a need for new data, and use the prediction estimator to leverage existing data.

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

Suggested Citation

Fujii, Tomoki and van der Weide, Roy, Is Predicted Data a Viable Alternative to Real Data? (September 28, 2016). World Bank Policy Research Working Paper No. 7841. Available at SSRN: https://ssrn.com/abstract=2848469

Tomoki Fujii (Contact Author)

Singapore Management University - School of Economics ( email )

90 Stamford Road
178903
Singapore
+6568280279 (Phone)
+6568280833 (Fax)

HOME PAGE: http://www.mysmu.edu/faculty/tfujii/

Roy Van der Weide

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

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