But? What is the Poverty Rate Today? Testing Poverty Nowcasting Methods in Latin America and the Caribbean

36 Pages Posted: 24 Jul 2017 Last revised: 9 Nov 2017

See all articles by German Daniel Caruso

German Daniel Caruso

World Bank

Leonardo Lucchetti

World Bank

Eduardo A Malasquez

World Bank

Thiago Scot

University of California, Berkeley - Haas School of Business

Raul Castaneda

World Bank

Date Written: June 19, 2017

Abstract

Poverty estimates usually lag behind two years, which makes it difficult to provide real-time poverty analysis to assess the impact of economic crisis and shocks among the less well-off, and subsequently limits policy responses. This paper takes advantage of up-to-date average economic welfare indicators like the gross domestic product per capita and comprehensive harmonized micro data of more than 180 household surveys in 15 Latin American countries. The paper tests three commonly used poverty nowcasting methods and ranks their performance by comparing country-specific and regional poverty nowcasts with actual poverty estimates for 2003?14 period. The validation results show that the two bottom-up approaches, which simulate the performance of each agent in the economy to nowcast overall poverty, perform relatively better than the top-down approach, which uses welfare estimates to explain the performance of poverty at an aggregate level over time. The results are robust to additional sensitivity and robustness tests.

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

Suggested Citation

Caruso, German Daniel and Lucchetti, Leonardo and Malasquez, Eduardo A and Scot, Thiago and Castaneda, Raul, But? What is the Poverty Rate Today? Testing Poverty Nowcasting Methods in Latin America and the Caribbean (June 19, 2017). World Bank Policy Research Working Paper No. 8104, Available at SSRN: https://ssrn.com/abstract=3006128

German Daniel Caruso (Contact Author)

World Bank

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Leonardo Lucchetti

World Bank ( email )

1818 H Street, NW
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Eduardo A Malasquez

World Bank ( email )

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Thiago Scot

University of California, Berkeley - Haas School of Business ( email )

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2220 Piedmont Avenue
Berkeley, CA 94720
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Raul Castaneda

World Bank ( email )

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Washington, DC 20433
United States
2026778971 (Phone)

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