Housing, Imputed Rent, and Households'Welfare

32 Pages Posted: 7 Aug 2019

See all articles by Lidia Ceriani

Lidia Ceriani

Bocconi University - Department of Policy Analysis and Public Management

Sergio Daniel Olivieri

World Bank

Marco Ranzani

World Bank; World Bank

Date Written: August 6, 2019

Abstract

Housing is the largest durable good consumed by households. As such, any consumption-based measure of welfare, to be comprehensive, must include the value of the flow of services households derive from their dwellings, the so-called imputed rent. However, estimating imputed rents is a daunting task, which researchers and practitioners tend to overlook. This paper is the first attempt to assess the distributional impact of including housing in the welfare aggregate; the paper tests two estimation methods and analyzes four developing countries. The distributional impact cannot be predicted a priori, and evidence suggests it is context and method specific. Although changes in poverty and inequality are always statistically significant, they are only occasionally larger than one percentage point. By contrast, shared prosperity exhibits sizable changes, which might also determine international re-rankings. Albeit the inclusion of imputed rents reshuffles the set of poor households, observed changes in the socioeconomic profiling of the poor are unlikely to affect pro-poor policy design.

Keywords: Inequality, Urban Governance and Management, Municipal Management and Reform, Urban Housing, Urban Housing and Land Settlements, Poverty Diagnostics, Poverty Lines, Poverty Assessment, Poverty Impact Evaluation, Small Area Estimation Poverty Mapping, Poverty Monitoring & Analysis, Global Environment, Labor & Employment Law

Suggested Citation

Ceriani, Lidia and Olivieri, Sergio Daniel and Ranzani, Marco, Housing, Imputed Rent, and Households'Welfare (August 6, 2019). World Bank Policy Research Working Paper No. 8955. Available at SSRN: https://ssrn.com/abstract=3433448

Lidia Ceriani (Contact Author)

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

Via Roentgen 1
Milan, 20136
Italy

Sergio Daniel Olivieri

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Marco Ranzani

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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