Improving Estimates of Inequality and Poverty from Urban China's Household Income and Expenditure Survey

UC Davis Working Paper No. 01-018

28 Pages Posted: 10 Nov 2003

See all articles by John Gibson

John Gibson

University of Waikato; Motu Economic and Public Policy Research

Jikun Huang

Chinese Academy of Sciences (CAS)

Scott Rozelle

University of California, Davis - Department of Agricultural and Resource Economics

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Date Written: April 2001

Abstract

In urban China the Household Income and Expenditure Survey requires respondents to keep a daily expenditure diary for a full 12-month period. This onerous reporting task makes it difficult to recruit households into the survey, compromising the representative nature of the sample. In this article we use data on the monthly expenditures of households from two urban areas of China to see if data collection short-cuts, such as extrapolating to annual totals from expenditure reports in only some months of the year, would harm the accuracy of annual expenditure, inequality and poverty estimates. Our results show that replacing 12-month diaries with simple extrapolations from either one, two, four or six months would cause a sharp increase in estimates of annual inequality and poverty. This finding also undermines international comparisons of inequality statistics because no country other than China uses such comprehensive 12-month expenditure records. But a corrected form of extrapolation, based on correlations between the same household's expenditures in different months of the year, gives much smaller errors in estimates of inequality and poverty.

Keywords: China, Income distribution, Inequality, Survey methods

JEL Classification: D31, O15

Suggested Citation

Gibson, John and Huang, Jikun and Rozelle, Scott, Improving Estimates of Inequality and Poverty from Urban China's Household Income and Expenditure Survey (April 2001). UC Davis Working Paper No. 01-018, Available at SSRN: https://ssrn.com/abstract=341640 or http://dx.doi.org/10.2139/ssrn.341640

John Gibson (Contact Author)

University of Waikato ( email )

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Jikun Huang

Chinese Academy of Sciences (CAS) ( email )

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Scott Rozelle

University of California, Davis - Department of Agricultural and Resource Economics ( email )

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