LSM- 10u "lJ OCT. 1980

LI

Reflections on the LSMSGroup Meeting

Christopher SaundersChristiaan Grootaert

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LSMS Working Paper SeriesNo. 1. Living Standards Surveys in Developing Countries.

No. 2. Poverty and Living Standards in Asia: An Overview of the Main Results and Lessons ofSelected Household Surveys.

No. 3. Measuring Levels of Living in Latin America: An Overview of Main Problems.

No. 4. Towards More Effective Measurement of Levels of Living, and Review of Work of theUnited Nations Statistical Office (UNSO) Related to Statistics of Levels of Living.

No. 5. Conducting Surveys in Developing Countries: Practical Problems and Experience in Brazil,Malaysia, and the Philippines.

No. 6. Household Survey Experience in Africa.

No. 7. Measurement of Welfare: Theory and Practical Guidelines.

No. 8. Employment Data for the Measurement of Living Standards.

No. 9. Income and Expenditure Surveys in Developing Countries: Sample Design and Execution.

No. 10. Reflections on the LSMS Group Meeting.

No. 11. Three Essays on a Sri Lanka Household Survey.

No. 12. The ECIEL Study of Household Income and Consumption in Urban Latin America: AnAnalytical Hist ory.

No. 13. Nutrition and Health Status Indicators: Suggestions for Surveys of the Standard of Livingin Developing Countries.

No. 14. Child Schooling and the Measurement of Living Standards.

No. 15. Measuring Health as a Component of Living Standards.

No. 16. Procedures for Collecting and Analyzing Mortality Data in LSMS.

No. 17. The Labor Market and Social Accounting: A Framework of Data Presentation.

No. 18. Time Use Data and the Living Standards Measurement Study.

No. 19. The Conceptual Basis of Measures of Household Welfare and Their Implied Survey DataRequirements.

No. 20. Statistical Experimentation for Household Surveys: Two Case Studies of Hong Kong.

No. 21. The Collection of Price Data for the Measurement of Living Standards.

No. 22. Household Expenditure Surveys: Some Methodological Issues.

Reflections on the LSMSGroup Meeting

The Living Standards Measurement Study

The Living Standards Measurement Study (LSMS) was established by the World Bank in1980 to explore ways of improving the type and quality of household data collected by ThirdWorld statistical offices. Its goal is to foster increased use of household data as a basis for policydecision making. Specifically, the LSMS is working to develop new methods to monitorprogress in raising levels of living, to identify the consequences for households of past andproposed government policies, and to improve communications between survey statisticians,analysts, and policy makers.

The LSMS Working Paper series was started to disseminate intermediate products from theLSMS. Publications in the series include critical surveys covering different aspects of the LSMSdata collection program and reports on improved methodologies for using Living StandardsSurvey (LSS) data. Future publications will recommend specific survey, questionnaire and dataprocessing designs, and demonstrate the breadth of policy analysis that can be carried out usingLSS data.

LSMS Working PapersNumber 10

Reflections on the LSMSGroup Meeting

Christopher SaundersChristiaan Grootaert

The World BankWashington, D.C., U.S.A.

Copyright (© 1980The Intemational Bank for Reconstructionand Development/THE WORLD BANK

1818 H Street, N.W.Washington D.C. 20433, U.S.A.

All rights reservedManufactured in the United States of AmericaFirst printing October 1980Second printing July 1985

This is a working document published informally by the World Bank. To present theresults of research with the least possible delay, the typescript has not been prepared inaccordance with the procedures appropriate to formal printed texts, and the World Bankaccepts no responsibility for errors. The publication is supplied at a token charge to defraypart of the cost of manufacture and distribution.

The World Bank does not accept responsibility for the views expressed herein, whichare those of the authors and should not be attributed to the World Bank or to its affiliatedorganizations. The findings, interpretations, and conclusions are the results of researchsupported by the Bank; they do not necessarily represent official policy of the Bank. Thedesignations employed, the presentation of material, and any maps used in this documentare solely for the convenience of the reader and do not imply the expression of any opinionwhatsoever on the part of the World Bank or its affiliates conceming the legal status ofany country, territory, city, area, or of its authorities, or concerning the delimitation of itsboundaries, or national affiliation.

The most recent World Bank publications are described in the annual spring and fall lists;the continuing research program is described in the annual Abstracts of Current Studies. Thelatest edition of each is available free of charge from the Publications Sales Unit,Department T, The World Bank, 1818 H Street, N.W., Washington, D.C. 20433, U.S.A., orfrom the European Office of the Bank, 66 avenue d'Iena, 75116 Paris, France.

When this paper was first published Christopher Saunders was Professor at the SussexEuropean Research Centre, University of Sussex, England, and Christiaan Grootaert wasan economist with the Development Research Center, World Bank.

Library of Congress Cataloging-in-Publication Data

Saunders, Christopher Thomas.Reflections on the LSMS group meeting.

(LSMS working paper, ISSN 0253-4517; no. 10)"October 1980."Bibliography: p.1. Cost and standard of living-Developing countries-Congresses. 2. Household

surveys-Developing countries-Congresses. I. Grootaert, Christiaan, 1950- . II.Intemational Bank for Reconstruction and Development. Development Research Center.III. Title. IV. Series.HD6978.S28 1985 339.4'7'091724 85-12197ISBN 0-8213-0037-7

REFLECTIONS ON THE LSMS GROUP MEETING

TABLE OF CONTENTS

Page No.

I. HOUSEHOLD SURVEYS AS AN INSTRUMENT FOR ASSESSINGLIVING STANDARDS IN DEVELOPING COUNTRIES, 1-22by Christopher Saunders

II. SELECTED PROBLEMS IN THE IMPLEMENTATION OFHOUSEHOLD SURVEYS, by Christiaan Grootaert 23-43

III. PROCEEDINGS OF THE LSMS EXPERT GROUP MEETING,FEBRUARY 25-29, 1980 44-76

HOUSEHOLD SURVEYS AS AN INSTRUMENT FOR ASSESSINGLIVING STANDARDS IN DEVELOPING COUNTRIES

I. GENERAL CONSIDERATIONS

The purposes of the exercise initiated by the World Bank and UNSO are to

assess, and where desirable to promote, the use in developing countries of

household surveys 1/ in order to provide information needed for social and

economic development and planning and for displaying the impact of development

on the life of peoples.

Household surveys are one essential instrument, among many, which can help

accomplish these purposes. Their use must, in practice, be balanced against

the improvement of other forms of statistical information (demographic, economic).

The balance will necessarily depend in any country upon national circumstances,

which include the content and quality of these other sources of information.

However, the launching of the present exercise implies the belief that, despite

much experience in many developing countries, the use of household surveys has

not as yet received enough attention in the organization of statistical in-

formation. This is recognized by the resolutions agreed upon by the ECOSOC

and the UN Statistical Commission 2/ as well as by the World Bank funding of the

Living Standards Measurement Study.

The special issues for study are, then (i) to begin an assessment of the

areas in which household surveys are the best - sometimes the only - way of

1/ "Household surveys" are taken to include sample surveys of individuals, ofhouseholds however defined, and sample surveys (as suggested in the LSMSExpert Group discussions) of villages.

2/ Quoted in the United Nations Prospectus (ST/FSA/STAT. 92/Rev 1 of November 15,1979) Annex I.

eliciting information, and (ii) to examine how the methods of using this instru-

ment might be improved. The focus is on information about the variegated aspects

of the complex concept of standards (better yet, "levels") of living.

In general terms, some of the comparative advantages of well-conducted

sample household surveys, as opposed to those sources of information used in

national accounits, population censuses, tax records, trade statistics, vital

statistics etc. are:

1) to detect the distribution of significant elements in socio-economic

development in order to answer the question: What people or groups of

people within a country - divided by income levels, forms of economic

activity, geographical area, ethnic origin, urban/rural residence etc.

- have benefited most, or least, or can be expected to benefit, from

particular elements in the development process? This is perhaps the

most important merit of the household survey as compared with the aggre-

gated facts provided, for example, by national accounts or overall pro-

duction and consumption estimates;

2) to elicit information in much greater depth and covering more topics

than is generally possible in a comprehensive and necessarily limited,

enquiry such as a population census;

3) to obtain, ideally, more accurate information; this is simply because

the interview method (or the detailed scrutiny of written diaries)

allows for consistency checking and deeper inquiry of a kind which can

rarely be achieved in comprehensive censuses. (Post-census sample in-

quiries to detect census errors are an example);

4) to link together various elements in levels of living which are diffi-

cult, or impossible, to interrelate from other sources (e.g., to relate

adequacy of food consumption to patterns of economic activity, or to

seasonal variations in income, or to prices of commodities sold in the

market). Such interrelations are obviously relevant to the formulation

of social policies, even to price support policies;

5) to concentrate attention on problem areas or deprived groups by selec-

tive or stratified sampling: the main use of surveys in this respect

(related to (4) above) is to detect the factors underlying poverty or

malnutrition;

6) to up-date comprehensive statistical sources such as population censuses.

It can be noted that sample household surveys are commonly used in developed

countries for all these purposes. In both developed and developing countries

household surveys are also extensively used for filling gaps in estimates of

aggregate national income and expenditure; this function is no doubt more impor-

tant in developing countries where the ordinary official statistics of income

(derived from wage and/or tax data) and of expenditure (from retail sales,

commodity flows and enterprise investment records) generally cover a much smaller

part of the economy than in developed countries.

II. THE WORLD BANK AND UNSO PROJECTS

For the present exercises of the World Bank and of the UNSO, two objectives

have to be distinguished; a certain risk of conflict between them arises and

needs to be resolved:

1) The objective of the UNSO is to pursue a major development of household

survey capability. The aim is long-term and continuous and involves the

- 4 -

establishment in as many developing countries as possible of an "effective

and enduring statistical infrastructure", bringing technical assistance donors

and many interested international organizations into cooperation with the

national statistical office. -V Thus the UNSO is bound to be deeply concerned

with organizing this cooperation and with encouraging national statistical

offices to formulate systematic long-term programs of surveys, together with

training of staff - all essentially long-term aims needing new resources (with

a time-scale presumably comparable to that of the major efforts to build up

national accounting data, population censuses etc. in the 1950s and 1960s).

2. The World Bank's program, in its present form, is essentially short-term

with its funding of $1.5 million for a two-year period. The ultimate purpose

is of course perfectly compatible with that of the UNSO. The difference is that

the constraints of time and money oblige the World Bank to produce substantial

results, say in 1982: the results should demonstrate with conviction - to the

governments of developing countries, to national statistical offices and to

possible technical cooperation donors - how a wider and more purposeful develop-

ment of household surveys, with additional and longer term commitment of re-

sources, can become an essential element in development planning.

For these reasons, the World Bank's two-year program, described as compris-

ing a series of "pilot studies", has to be carefully selective among the great

number of topics and methodologies which could be examined and assessed. The

papers and discussions at the LSMS Expert Group meeting clearly showed the

variety of purposes which household surveys could fulfill; they also showed how

many problems of organization and methodology remain to be solved. But in addi-

tion, they displayed the wealth of experience already acquired on which to build.

1/ Ibid.

--

It may be useful here to consider some criteria for deciding what kinds of

studies might be conducted within a short-term (two-year) program.

III. SUGGESTIONS FOR A TWO-YEAR PROGRAM

The first requirement is that such studies should, as suggested above, aim

at demonstrating the usefulness of the instrument of household surveys. "Useful-

ness" must denote that, within the time limit, results must emerge which (i) are

not already well enough known and (ii) display clear implications for policy;

otherwise, the aim of encouraging both the administrators and the statistical

producers - both faced with competing claims on very limited resources of money

and manpower - will not be achieved.

"Implications for policy" can mean many things. It can mean assessing the

results of an existing policy or project (from a micro-analysis of what has

happened to the people involved in a resettlement project for nomads to the

need for an improved system of agricultural credits). It can mean anticipating

the need for new or modified policies by exposing problem areas which appear to

be ignored by existing policies (or even by showing that some problems are not

in fact so serious as is believed). It can also mean providing information

which stimulates public pressures on the authorities to act in a neglected area.

Not all such policy implications will be welcomed by the authorities; it is a

matter of discretion whether to restrict new information to what the authorities

think they want to know, or to their present policy preoccupations. The essen-

tial point is that the information obtained should be capable of being fed into

the policy-making machinery; it should come within the range of matters on which

governments are able to act and - preferably perhaps, to achieve the tactical

objectives of the short-term studies - on which governments are in fact likely

to act in the not too distant future.

- 6 -

While considerations might well be expected to dictate different approaches

in different societies, the present short-term exercise is intended to arouse

wide international interest. Hence, a second requirement is that the sltudies

envisaged at this stage be restricted to matters of fairly general interest

among developing countries.

A third and rather obvious requirement, given the time limit, is that new

studies must be relatively simple and based where possible on existing experience

and on existing capacity to carry through not only the actual investigations

but also a fruitful analysis. This requirement does not necessarily rule out

methodological experiments but such experiments should be subordinated to the

possibility of achieving substantial results (e.g., experiments in alternative

ways of solving the much-discussed questions of how best to define the "house-

hold" unit or of how best to impute values to home production are important, but

are unlikely to arouse passionate interest among administrators or the public).

To meet these requirements, what kinds of study might prove desirable for

a short-term program? There are two possible alternative lines of approach

which might be considered by the team (from the international organizations and

related national statistical offices) which it is proposed to establish. One is

to make an intensive review of a selection of existing surveys to demonstrate

the uses to which they have been put and especially how far they have beten used,

or could have been used, to influence policies.-V This approach could be parti-

cularly useful where surveys have already been conducted over a long period; an

analysis of such surveys could illuminate significant changes in levels of

living, in distribution and in the impact of development policies which other

1/ An approach on these lines may have been in the minds of Altimir and Savanein the LSMS Expert Group meeting (final day's discussion).

-7 -

sources of information fail to disclose. Examples might be the National Sample

Survey of India, conducted in various forms since 1950-51; the household expendi-

ture (or income and expenditure) surveys conducted in Israel since 1950/51, in

South Korea (urban areas) since 1963, in Malaysia since 1957/58, and in Pakistan

since 1963. !/ This approach would not be an attempt to write a complete economic

or social analysis (or history) of a country, but to show how household surveys

can illuminate specific economic and social problems on which policy can act.

It could also illustrate how such surveys have been used, or might be better used,

to fill gaps in the general body of statistical information. This approach could

well include, where practicable, new tabulations and cross-tabulations of the

basic records to establish new and useful findings.

The second approach is to initiate new pilot surveys in a few selected

countries. Because of the time-scale and the expense, these would have to be very

small. 2 However, one way of saving both time and money would be to graft the

pilot surveys on to country surveys already in the planning stage, possibly by

extending or modifying them by agreement with the national survey organization

concerned. 3/

1/ M.A. Wahab, "Income and Expenditure Surveys in Developing Countries: SampleDesign and Execution," LSMS Working Paper No. 9, presented to the LSMS ExpertGroup Meeting, February, 1980 (Washington, D.C.: World Bank, October, 1980).

2/ Bearing in mind the national estimates of cost of a survey program made in theUN Prospectus (ST/ESA/STAT 92REV. 1 of 15 Nov. 1979) Annex V - e.g., $3 million fora four-year program in a "medium-sized" country. These costs include a numberof items, such as equipment and other "overheads", which would not be neccessaryin a country with an established organization. However, the figulres show thatthe World Bank's $1.5 million would not fund (even in part) more than a hand-ful of new surveys.

3/ As suggested in the discussion by Davies.

- 8 -

Another way of getting useful results quickly would be to invite a natiorLal

survey organization to repeat a survey conducted, say 5-10 years ago, thetreby

adding information on change to what is already known. This would not preclude

asking questions on additional topics while preserving the core of the previous

survey (perhaps omitting or modifying previous questions to which the answers

proved valueless). A large number of one-shot surveys have been conducted and

the value of the information would be greatly increased by a repetition.

Further, there seems to be general agreement that longitudinal surve!ys

(in the sense of matched samples, following the fortunes of households or indivi-

duals over a period) are both valuable and difficult to carry out. They are

valuable because, for example, the problem of long-lasting poverty can demand

different treatment from the problems associated with temporary distress.l/

On the other hand, they are difficult due to the absence of facilities for

tracing people in many developing countries. _/ If a study were to be made based

on repetition of previous surveys, and using so far as possible the same sample

of households, it might be possible to incorporate, as an experiment, the changes

in the circumstances of at least those households who could easily be found again

(replacing in the sample those who could not be traced; one would have to accept

the limited value of the results since changes in the fortunes of people who had

moved out of reach would have to be ignored).

11 Christopher Scott, "Pra`ctical Problems in Conducting Surveys on Living Stan-dards," in LSMS Working Paper No. 5, presented to LSMS Expert Group me!eting,February, 1980 (Washington, D.C.: World Bank, October, 1980), p. 10. Scottherein gives examples of high variability of household income over time. Onthe other hand, Dandekar said in discussion (Tuesday p.m.) that Indian surveysshowed year-to-year income variations more or less within the sampling error.

2/ Even the annual British sample earnings survey, conducted annually, and basedon, in principle, a constant sample derived from national insurance records,loses about 30 percent of the sample each year through death, retirement,job changes etc. Yet the results have shed much light on the variability ofindividual earnings over time and equally on the nature of poverty due to lowwages,

- 9 -

Still another possibility for quick pilot studies might be to pick up

and process the data from surveys which have been made in the past but which

have never been analyzed because of lack of resources. According to some mem-

bers of the Expert Group, a number of such sets of unanalyzed survey data exist

in national filing cabinets.L/

IV. TOPICS FOR THE SHORT-TERM STUDIES

Whichever of the two approaches suggested above is to be adopted, a choice

must be made of the topics which can usefully be examined. If the first ap-

proach is taken - a fuller study of existing survey material - the choice of

topics is limited to material already collected; continuous surveys appear to

concentrate chiefly on household income and expenditure patterns, although some

will incorporate other variables. But the one-shot surveys cover many other

topics - activity patterns, patterns of poverty, problems of landless people....

If the second approach is taken - the initiation of new surveys - the field is

open for experimentation with new topics, but limited by reasonable hopes of

getting useful results within the time limits.

In both approaches, the longer-term objective of promoting a continuing

survey capability must be kept in mind. The studies should suggest possible

patterns for a continuing program of surveys; they should show what kinds of

information are most useful, and how often they need to be collected. The short-

term surveys must assist and facilitate the movement from one-shot or ad hoc

surveys towards systematic programs.

1/ For example, L. Savane's "Experimental Survey of Household Budgets and Con-sumption in Senegal 1973-75," in LSMS Working Paper No. 6, presented to theLSMS Expert Group Meeting described an experimental survey carried out inSenegal in 1974-75, covering a number of interesting variables including house-hold budgets; but states that "it has not yet been possible to complete theprocessing of the data: one might even say that this has hardly begun".

- 10 -

Most of the topics reviewed in the papers for the Expert Group might,

in principle, be investigated by new surveys, if often in simplified form. The

exceptions are (i) very detailed multi-purpose surveys (such as the Brazilian

ENDEF survey) and (ii) surveys which need specialized investigators (e.g., those

involving anthropometric examinations, nutritional calculations or medical

examinations) - although the latter might be considered if there are qu,alified

staff already available. Topics which seem to meet the requirements both of

policy-oriented interest, and of feasibility within the time limits, arie sug-

gested below - not as a menu to be devoured from the hors d'oeuvres to the

dessert but as a list from which a selection might be made. If the study is to

be based on existing material, there is scope for combining different topics

covered by the available information so as to bring out interrelations. If

new surveys are to be undertaken, it is desirable to cover more than ones topic

even if this may well mean more simplification than would be desirable for a

more intensive enquiry into a single topic.

A. Income and Expenditure Surveys

Income and/or expenditure surveys are no doubt among the most difficult to

carry out satisfactorily. Yet in the light of policy, for general economic

planning, for the analysis of distribution, and for highlighting problem areas,

they are generally regarded as the most useful, and the amount of experience

already acquired is probably greatest in this type of survey. I' There seems to

be, therefore, a strong case for including budget surveys in the short-iterm

study; however, if they are to be included, a number of troublesome poinlts arise.

1/ W.L. Booker's paper, "Development of African Surveys and Measurement of Levelsof Living," in LSMS Working Paper No. 6, prepared for the LSMS Expert Groupmeeting, (Washington, D.C.: World Bank, October, 1980) shows that out of 126household surveys carried out in 1960-79 in African countries all but four aredescribed as covering "income, consumption and expenditure."

I It wust be acknowledged tbat a complete ans accurate account of incomes

- even of cash incomes - presents formidable problems; it is easy to simplify

the questions to be asked. For example, it is probably useless to ask for total

cash income; it is essential to categorize the different sources. Some members

of the Expert Group suggested that the attetpt to obtain reasonable figures of

total income is hopeless. Others, less pessimistic, maintained that if no

attempt is made to explore inconsistencies bet-Ween stated incomes and expendi-

tures, the accuracy of the expenditure data ls bound to be in doubt. (Experience

in developed countries i.s similar). The conlue1sion seems to be that income

statements must be attempted; qualifications must be attached to the results,

but the effort may be worthwhile if only to improve the validity of the expendi-

ture data.

2. Three forms of income present particular difficulties (in developed

countries, also): entrepreneurial incomes (in cash), top incomes and the lowest

incomes. (a) Entrepreneurial incomes including cash incomes of farmers require

at least a crude book-keeping operation. It i s possible that restricting the

questionnaire to cash expenditure on consumpti-on for small traders, street

traders, and farmers could lead to more useful results in a short survey than

putting a great deal of effort into establishing incomings and outgoings with-

out much hope of reliable answers, (b) To obtain accurate data on top incomes,

except by a specially mounted and delicate operation beyond the scope of the

present exercise, may well prove hopeless. One possible solution is simply to

code those produced by the sampling frame as "probably in excess of $ X" rely-

ing on the investigator's external observation. It would surely be misleading

and unnecessary to include them among "refusals" without further comment.

(c) On the other hand, intensive effort to distplay the living conditions of the

lowest income households is likely to be among the main objectives of a survey

and to deserve intensive effort.

- 12 -

3. We then come to the thorny question of own-account, or home roduction/

consumption, on which there is much experience but no clear agreement on treat-

ment, among either the practitioners or the theorists. Notwithstanding, it

seems to be fairly widely accepted that the primary requirement is to obtain

quantities of food. For other non-market activities (house construction and

maintenance, handicrafts), time-use surveys (see below) may be the most appro-

priate instrument. The question of value imputations may reasonably be regarded

as secondary at this stage; the main point is that the vuluations, which can be

applied centrally in the course of analysis (either by separate surveys or from

price informations already available), must probably be fairly arbitrary but

should be consistent.

4. Reporting periods (reference periods). Because of variability of income

and expenditure over short periods it seems clear that surveys must cover a full

year Cat least where, as in farming and in other activities such as tourism,

seasonal variations are significant). Following households throughout a year

may be the ideal but would greatly limit the feasible size of the sample and

thus the number of cross-classifications for reliable analysis. The obvious

solution is to spread the survey over the year within each sub-sample, e.g., by

taking budgets for two or three weeks from a few households throughout a year.

(Two or three weeks is suggested because of the "first week bias" which is some-

times found.) I/ Large lump sum receipts (periodic bonuses, legacies) and

expenditures (purchases of large items, weddings, funerals, hospital treatments)

1/ In some surveys in Britain, the differences between the first and subsequentweeks' expenditure were so great that it was found desirable to throw awaymuch of the records for the first week (since tests showed these to be theleast accurate, being biased by the novel experience of recording).

- 13 -

and serious losses of income (spells of sickness, complete unemployment) could

probably be recalled from memory over a longer period. Thus it should be pos-

sible to estimate annual incomes and expenditures for at least the more impor-

tant sub-samples; and such annual estimates should give a sufficient number of

records for fairly detailed subdivisions and cross-classifications. Furthermore,

it may be useful to ask about incomes over a longer period than expenditures.

B. Assets and Liabilities

In order to make sense of income and expenditure data, a simple listing of

assets and debts is essential. Listing of consumer durables should present

little difficulty (including the house). Valuation, again, may be fairly arbi-

trary. The real problem arises with farmers and entrepreneurs: For farmers it

should be possible to list amounts of land, livestock and availability of

machinery (e.g., possibility of hiring machines when required); for small scale

entrepreneurs in industry or commerce with no accounts, perhaps not much can

be done in a simple survey. Debts are obviously an important element, often more

important than assets, and information on amounts owed to moneylenders might be

sought. Particularly important is the debt position (to credit institutions,

merchants) of farmers and small handicraft enterprises.

C. The Household Unit

The definition of what constitutes a 'household' can hardly be resolved by

any general rules applicable to all societies. The principle may be based on

a significant and regular pooling of incomes and/or of a substantial proportion

of expenditures, but how far that can be detected in practice is often doubtful.

What is important for analyzing relationships between variables is to get as

complete information as is practicable about all members of whatever is taken

as the household unit: ages, sex, form of economic activity, educational quali-

fications, and, where relevant, race, birthplace in addition to income and

- 14 -

expenditure details (as a minimum contribution to the "household" budget). It

might well be possible to add questions and recent changes in the household -

who has left (where to?) or arrived (from where?) in the past year - as a first

indication of stability and movement in the sample population.

D. Economic Activity

It is clear enough that the categories familiar in industrial sociieties

such as "active" and "inactive", full-time employment, part-time employment,

unemployment, family worker are inapplicable to large numbers of people in

developing countries (Perhaps the only easily ascertainable group is the minority

with a single full-time (or part-time) job for one employer. Although these

may be a minority, they are, after all, quite a substantial minority in the

medium income, developing countries). Yet some kind of account of the activi-

ties (or lack of activity) of the individual members of the household unit is

essential. The discussion at the Expert Group and other experience suggest

that some form of time-use surveys is the most effective solution; such surveys

have been carried out in a few developing countries apparently with some success.

The methods and coverage are various. 1/

1. The usefulness of a complete diary kept by the respondent over, say, a

week is doubtful in developing countries, at least for many groups of people.

It seems that the preferred methods are (a) direct observation by the inLvesti-

gator over a day or so, which is time-consuming and expensive, or (b) recall by

questioning on a day or two's activity (using either a structured list cf leav-

ing the respondent to describe his/her activities). Quantitative precision is

l For an account of the various methods used, see the report of the 1978Workshop on Time-Use Data sponsored by the Asia Society Inc. This gives an(incomplete) list of nine time-use surveys in developing countries carriedout in 1974-79. For a useful account of the findings of one such survey, seeEva Mueller, "Time Use in Rural Botswana" (paper for a seminar in Gabarone in1979). See also the UN Secretariat's Progress Report on the Development ofStatistics of Time-use (E/CN.3/519 of April 18, 1978, a paper for theStatistical Commission 20th Session.

- 15 -

not to be expected and the investigator may have to make rough calculations from

vague replies (perhaps "before noon", "afternoon", "after sunset" and such des-

criptions are the most precise units of time that can be expected in som cir-

cumstances). However, this problem may be exaggerated; the Asia Society Seminar

reports that "the lives of most people are more structured, and a considerable

proportion of their day's activities more routinized, than we might assume." -/

2. Should the time-use survey be restricted to "economic" activities (of

course including own-account production on farms and elsewhere), or should it

also include child care, other family and domestic activities, time.spent in

school, leisure time, etc.? The answer depends on the aims of the enquiry; it

may well be simpler to restrict the survey to those activities which have a

definite policy interest (noting, however, that covering a full 24 hours can aid

consistency).

3. What is clear is that significant information can emerge about the pro-

duction-related time spent by women and children especially (but not only) in

agriculture. For example, P. Singh pointed out in the Expert Group discussion

(Tuesday a.m.) that a survey in Kenya showed that 80 percent of household cereal

production is done by women; the policy interest arises because agricultural

training institutions are directed almost wholly towards men.

4. Time-use data can also have a special value as an approach to measuring

non-market, own-account activities. Combining time spent with data on produc-

tion might even (but perhaps this is unrealistic?) afford material for compara-

tive measures of productivity.

1/ Asia Society, op. cit., page 12.

- 16 -

N

5. The question of occupational descriptions then arises. This must be as

simple as possible if only because of the time-consuming operation of coding.

Simple descriptions such as shopkeeper, street trader, farmer, farm employee,

truck driver, shop employee, hotel manager, clerk, factory worker, as well as

combinations thereof, may be practicable. The real problems of classification

arise in subdividing such simple categories, especially for manual workers.

(The conventional classification of job descriptions into skilled, semi-skilled

and unskilled from more precise descriptions is a particularly experi: task).

Some progress in classification may be achieved by associating the job with the

qualifications shown for the individual in the description of the household unit

and with his income. 1-) In this connection a question about the namie or busi-

ness of the enterprise or organization (if any) for which the individual works

would be helpful. In short-term surveys, however, detailed occupational des-

criptions are probably to be avoided.

Thus the data needed for a basic classification of households anld indivi-

duals might, tentatively, correspond to the following lines:

For each household

Location

Composition by sex, age group, status inhousehold (relationship to head of hLousehold)

1/ T. Juster suggested, in the Monday p.m. session of the LSMS Expert GroupMeeting, that data collection should focus on "occupational characteristics"rather than occupational titles and Muller suggested that most users arelikely to be concerned only with broad classes.

- 17 -

For each individual

Economic activity status a)

Employer

Employee

Own Account

Family worker

Mixed b)

In school or training

Without specific activity

Occupation (simple description) a)

Sector of activity a) t)

Size of enterprise (e.g., employing over 5, or less) for

employers and employees only a)

Income (or income range) by source d)

Educational and occupational qualifications

a) Dividing principal and subsidiary activity on the basis of time-use data

b) If time-use data does not give evidence of principal activity

c) Agriculture etc., industry, commerce, public services

d) Earnings from employment, entrepreneurial income (if ascertainable),

social security, other transfers, property; notes on income in kind.

E. Access to Public Services

The policy interest in this aspect of living standards is obvious. Access

to potable water was particularly stressed in the Expert Group discussions. -

1. Seers emphasized the problems of interpreting data on water access because ofthe variation of quality. Is there some way of clarifying water suppliesaccording to quality with the help of expert assistance?

- 18 -

Other items of special interest could be: distance (perhaps in terms of time)

from nearest doctor, hospital or other medical facilities; distance from avail-

ability of public transport to work, to school, to nearest market town. Such

questions could be linked with expenditure on education, medical services,

transport - whether from public or private institutions or "informal" facilities.-

F. Housing

Whether housing conditions should be regarded as a priority for the short-

term program may be rather doubtful. Much depends on what information was col-

lected in the most recent population census, and when that was taken (or analyzed),

since housing conditions are unlikely to change rapidly. If up-to-date in-

formation is thought necessary, it should not be difficult, with little expendi-

ture of time, to get information on fairly simple matters: general description of

the kind of house; ownership; number of rooms; nature of water supply; exiLstence

of w.c. and bath; waste disposal; lighting; garden plot (if any).

G. "Perceptual" Questions

Questions about attitudes (of which the simplest variety consists of such

questions as "Do you feel better-off than a year ago?" or 'What changes in the

past years have been most welcome to you?") take up little time, and are often a

useful way of establishing good relations with the respondent. Their value arises

less from a direct analysis of replies than from their correlation with other

variables and from comparisons over time.

V. ANALYSIS AND PRESENTATION OF RESULTS

For the ultimate aim of establishing a firmer conviction of the social value

of household surveys and guidance on their use, the analysis and presentaition of

1/ It is slightly depressing to read that in Africa (according to W.L. Booker'spaper, op. cit.,p. 7) "It is only items such as health and education whaich arelikely to receive rather low priority as survey topics in the near future."

±hF906i 14t* rpJt!rP_eMv.i_ 4t rveys are atQMte,,cy Pruei4a

eyp t W- resources. This demands much more than a sta ard des-

cription and tabular presentation, and more than a critical appraisalPtljh,e

statistics and suggestions for further research (although these have their own

importance). One could hope that the reports on the pilot surveys could be re-

garded as, in some sense,models for subsequent survey reports by national statis-

tical offices. Some requirements can be suggested.

It was stressed at the beginning of this paper that a major aim is to show

that household surveys can monitor the actual impacts of development policies -

who benefits and who does not - and can display the weaknesses as well as the

strength of existing policies. Thus the first requirement for analysis is a

classification of the households and individuals covered to exhibit meaningful

distributions which will bring to light the particular problem areas - notably

the areas of poverty or deprivation - in the society. (Obviously this require-

ment must be kept in mind from the beginning in designing the questionnaire and

the sample).

The basic c'lassification (stressed by G. Pyatt in the Expert Group discus-

sion) must inevitably be by groups of households and/or groups of individuals

with common characteristics. Policy-makers and social scientists inevitably deal

in terms of groups and group averages; nevertheless, whatever grouping is used,

variability within the group can be significant and often needs to be illustrated

to avoid the fallacy of averages. Measures such as coefficients of variation

(carefully explained of course) within groups appear as a necessary adjunct to

group averages. 1- A diminishing difference over time in average incomes between

1/ Measures of variability within groups need to be distinguished from samplingprobability tests, although obviously related to them.

ZO-:

&Lctory worker-s and s4opkeepers does notdfeedsasily ufab a df 1-over-

-- al-l"inequalIty, when all members of the two groups are aggiredg,t*&il:v&EW

a -reduction.

The appropriate classification of groups must be related to national needs.

Yet it is highly desirable to maintain at least a core of common classifications

which could be used in many countries. Although international comparability of

survey results may be regarded for the time being as a secondary objective, it

will become increasingly important.

It is highly desirable that the groupings should maintain a basic compara-

bility with those established in other statistics - population censuses, the

sectors used in national accounts, labor force and wage statistics, industrial

censuses. In some cases, the sample surveys will be more detailed (e.g., in

analysis of forms of economic activity), while in others less detailed. This

comparability is important because of the usefulness of household surveys for

complementing and updating the other sources, and for treating household surveys

as important parts of an integrated body of statistical information.

This raises the issue of using household surveys in connection with the

formation of Social Accounting Matrices, of which some main features are (a) the

identification of numbers of people engaging in different forms of activity

(or non-activity) with flows of the different forms of income, (b) the separa-

tion of monetary from non-monetary activities, (c) the separation of the

l"organized"' or "modern" sectors from the "informal" or "traditional" sectors -

however this dualistic division of an economy is to be defined.'/ Again, such

matrices require the combination of many statistical sources and so reiinforce the

need for comparability of basic classifications.

l/For a useful discussion see Harry Schimmler, Towards Distinguishing BetweenTraditional and Modern Activities in the National Accounts of DevelopingCountries (OECD Development Centre Papers 1979).

- 21 -

The impact of a survey report could be strengthened if other sources of in-

formation, besides the "pilot study", could be incorporated where relevant. For

example, differences in food consumption or in average incomes in different areas

could be compared with school records of height and weight measurements of children.

The notes above on analysis and reporting concentrate rather heavily on the

policy implications of the short-term studies made. But the readers, especially

statistical offices, will also require comments on the methodologies applied in

sample design, training of investigators, questionnaire design and response rates

and response biases; on the reliability of the results (e.g., on conflicts with

other evidence); on the editing and cleaning process; and on the problems of

tabulation (especially on computer problems). I' It was recognized in the

Expert Group discussion that an approach towards the recommendation of "best

practices" must be a slow one. Moreover, such an approach must take into account

the large amount of experience of household surveys aroused by recent interna-

tional discussions, it will be expected that the present exercise will make a

contribution towards the resolution of some of the methodological issues.

In conclusion, throughout this paper the view has been taken that the main

purpose of the short-term studies is to demonstrate the use of household surveys

for establishing substantial results regarding levels of living, and of interest

for policy, and that this is the best way, with the constraints of time and money,

to achieve the longer term aims of extending and strengthening the survey capa-

bility of developing countries. It is, however, recognized that various opinions

on the implied priority in designing the studies may exist. The alternative

1/ Remembering, in particular, Muller's warnings (LSMS Expert Group meeting Thurs-day morning discussion) about the illusions of supposing that computer systemsare cheap, when maintenance and repair, breakdown etc. are taken into account.

- 22 -

view II is that the short-term studies should be principally directed towards im-

proving survey methodologies. Although neither aim completely excludes the other,

the choice between them must affect the kind of studies to be undertaken. The

choice between stress on substance and stress on methodology is therefore one of

the first things to be decided by the organizers.

1/ Taken for example by D. Seers in the final session of the LSMS Expert GroupMeeting. His point was essentially that with a limited budget very littleimpact could be made on the quantity of data available for those investiga-ting poverty, distribution, etc. However, an immense contribution could bemade to the improvement of methodology in general, with consequently a higher"multiplier effect." The question, however, was not fully argued out.

- 23

SELECTED PROBLEMS IN THE IMPLEMENTATION OF HOUSEHOLD SURVEYS

I. iNTRDJ'IUUON

The pu ziose of this paper is to highlight some problem areas in the imple-

mentation of household surveys. These are areas where decisions must be taken

by the survey authorities and are taken often in a somewhat ad hoc fashion,

resulting in a lack of homogeneity and comparability of surveys both inter-

nationally and with other data sources within a given country. They are areas

where the Living Standards Measurement Study (LSMS) will also have to make

decisions. The perhaps ambitious purpose of LSMS is to make these decisions on

a scientific basis so that they will be acceptable to a wide array of statisti-

cal agencies and data users, and thereby substantially improve quality, inter-

nal consistency and comparability of data.

Five such decision areas have been identified:

(1) the concept of a household

(2) the measurement of income and expenditures

(3) the concept of employment

(4) the design of surveys

(5) the tabulation and analysis of results.

Each of these problem areas has been identified in a variety of publications

and papers, including those presented at this meeting. Equally, a variety of

solutions has been suggested, often, to put it mildly, along non-converging

lines of thinking.

This parer surveys the five problem areas and presents relevant key issues.

The issues are presented in the form of questions, which, it is hoped, can be a

guide to debate, and/or can help alert the thinking of the designer and statisti-

cian in charge of implementing a survey. A consensus can perhaps be obtained

- 24 -

on the answers to a number of the questions. For those where that is not possi-

ble, a research program might be identified to obtain an answer. Finally, there

may remain some questions where it might be agreed that only ad hoc answers are

possible.

II. THE CONCEPT OF A HOUSEHOLD

Although there are only five questions in this section, the corresponding

answers are quite involved. First, (question 1) it is noted that there is no

general agreement on the definition of the household and of the two closely

associated units, the spending unit and the family. The question is whether such

agreement can be reached. If this proves to be impossible, two alternatives are

presented (question 2): to focus on the individual or to use a multiple layer

approach. A case that deserves special attention arises when the production

and consumption units to which individuals belong are not the same (question 3).

Next, (question 4), we make the link with welfare. Here attention on the

individual is inevitable and the relationship with the household or other

decision unit is emphasized. This raises such issues as economies of scale and

equivalent adult scales.

Lastly, it is necessary to put the household concept in a dynamic per-

spective (question 5) which raises new problems of definition.

1. What is the most appropriate unit of data collection: spending unit, house-

hold (institutional, non-institutional), family?

While there is no general agreement on definitions, the spending unit

emphasizes a joint provision among the members for basic housekeeping. This

usually excludes boarders and servants. The latter are generally included in

- 25 -

the household concept. Family emphasizes kinship. There is a need to

establish an internationally acceptable and applicable definition, as well

as a generally agreed choice of which unit is relevant f&r which purpose.

Presently, the rules for identification of a unit differ across countries.

When they are not sufficiently detailed, their interpretation becomes a

matter of judgement for the field staff, a fact which can greatly affect

the internal reliability and consistency of the data.

2. If one thinks that it will be very difficult, if not impossible, to come up

with a universally applicable definition of a household, two solutions seem

possible. One is to abandon the concept altogether and focus on the indi-

vidual. In this approach the problem becomes one of specifying inter-

individual linkages. How is a child-individual linked to an adult-individual

in terms of income, expenditures, etc.? In other words how does one allo-

cate the income of, say the "household head" to the other members? The

alternative solution is to use a multiple layer approach similar to that

used in geographic divisions: village, district, region, province, etc.

Here one might use individual, nuclear family, spending unit, household,

compound, village. Data need not be available on every level everywhere

but the terminology would be universal and one would know on which "level"

the unit that is now labeled with the catch-all "household" is really

situated. A variant of this set of levels would be: individual, dwelling

unit, compound, village. Which of these approaches is more promising? Is

there a third alternative?

3. How does one define the survey unit when there is no production-consumption

link? For example, in many African communities an extended family owns a

field but cooking and housekeeping arrangements are done per nuclear family.

- 26 -

In such a case income is not quite measurable per nuclear unit, although

consumption is. The opposite situation is also possible: income is measur-

able for each nuclear unit, but the cooking arrangement involves the exc-

tended family.

4. It is generally agreed that what is relevant for social welfare is the

distribution of living standards over individuals. However, decisions that

influence living standards (spending, education, employment) are generally

taken by a household, family, homestead or other decision unit, and survey

data are collected for those units. The transition to the individual in-

volves detailed knowledge on size, age and sex composition of the decision

unit. This raises the complex issues of adult equivalent scales, economies

of scales, and intra-decision unit distribution of spending. Adult equiva-

lent scales have so far only been constructed for minimum required food in-

take. How are they to be constructed for other items? If the scales are

based on actual expenditures, then they become a function of the level of

living. Are economies of scale to be treated as a separate issue or can

they be incorporated in the adult equivalent scales? In the latter case

the scales also become a function of household size. How does one incor-

porate differences in the intra-decision unit distribution rules? What

operational conclusions are now known for immediate practical use in LSMS?

5. Apart from defining a household per se, problems can arise in determining

how long someone must have been in the household to become a member of it

for the survey's purpose. In one country, "four out of the previous seven

days" was the criterion used in a labor force survey while, for an income

- 2 7 -

survey, a person had to be "usual resident" to be included in the household.

Is it accentable to use different criteria for different purposes, and how

is the matter to be solved in a multi-purpose survey?

Closely related is the issue of instability of household membership

over time. This problem can be considered as a mere result of a statis-

tically inadequate definition of the household which takes too static a view-

point. In this case it calls for a re-definition of household so as to in-

clude some dynamic aspects of reality. Alternatively, one can try to find

out the socio-economic behavior that underlies household changes. If an

approach on these lines is possible, it might yield valuable insights into

the dynamics of societal transformation. Could questions relating to who

left/joined the household and why, provide useful material for an initial

investigation into this issue?

III. THE MEASUREMENT OF INCOME AND EXPENDITURES

The first issue to be resolved (question 6) is which income concept is

most relevant for measuring living standards: specifically, is it income

after taxes and/or benefits? Decisions must be made as to which items to

include in money income (question 7) and in income in kind (question 8).

The latter brings up, of course, a series of imputation problems (questions

9-12).

The next issue raised (question 13) is that of the (in)stability of

income over time and its implications for living standards.

Regarding expenditures, a first issue has to do with the prices used

to value expenditures (questions 14-15) and the consturction of index numbers

(question 16).

- 28 -

The recording of certain expenditure items presents special difficulties:

public services (question 17), barter transactions and resales (question 18).

Also, in several instances the purchase or payment period does not coincide

with the consumption period. This occurs in the cases of purchases of

durable goods, credit and hire purchases, and when the household accumulates

stocks (question 19).

Lastly, we raise questions on reporting errors: item specific errors

(question 20) and overall accuracy of expenditure vs. income reporting

Cquestion 21).

6. Which concept of household income is most relevant for measuring living

standards: household income after taxes (which taxes: direct, indirect,

social security) and after benefits (which benefits: transfers, income in

kind, public services).

7. Which items are to be included in money income. Present practice is to

include regular and recurring receipts. What time framework defines "re-

curring". the survey reference period, one year,...? Is it a consistent

practice to exclude insurance compensation from income while ins .ai;.ce pay-

ments are part of expenditures? How should social security benefits be

treated (they may only be partially paid for by the household directly)?

And how should the employers' contribution be treated? Equally important

is the question of what should be excluded from money income. One thinks

here especially about the "regrettable necessities", which should perhaps

be called intermediate consumption items, i.e. purchases which do not enter

a household's utility function directly but which are necessary to ac-

quire the items that do and which, therefore, can be seen as increasing the

cost of acquisition of final consumption items.

- 29 -

Remittances are often counted twice in household surveys, viz. once

in the income of the receiving household and once in that of the remitting

household. Where would it be recorded best? Or, is it better to record

it both ways for cross-checking?

8. Which items are to be included as income in kind (e.g., free meals, uni-

forms, company or estate products, subsidized or free housing, etc.) and

how are they to be valued? Should the recommendations of the U.N. for the

System of National Accounts be followed or are there differences appropriate

for a household survey?

9. What is the experts' position on using farmgate prices as reflecting oppor-

tunity cost for self-produced food in rural areas? The argument has been

made that an actual opportunity to sell produce at farm gate does not exist

in many LDCs and that farmers must transport their output to markets them-

selves. Therefore, income foregone when output is consumed is the value

that would have been received on the market had farmers actually sold their

output, less the opportunity cost of the effort involved in moving goods to

the market. These two approaches may not give the same answers. And even if

they did, market prices differ between markets so that relative purchasing

power parity is not necessarily the same as relative incomes.

10. Imputation of rent for owner-occupied dwellings is standard practice. How-

ever, just as valuation of home grown,home consumed food is based on alter-

native uses (e.g., selling in the market), one can question whether rent

imputation makes sense in areas where no opportunity for renting a house

exist (e.g., African villages). Should one, therefore, look at theoretical

opportunities to determine valuation?

-. 30 -

11. Among many imputation problems, one that deserves special attention is the

valuation of housewives' time: time spent fetching water, preparing food,

watching children, etc. A part of the problem arises because several

activities can be done simultaneously. Another problem is comparison over

time or between rural and urban areas - for example, the time spent prepar-

ing food will depend on the degree of treatment the food bought at the

market has already undergone. Rural women fetch water from the well, while

urban women often have to buy it from a water carrier. If fetching water

is to be treated as an income-generating activity, then it must also be

treated as an expenditure.

12. Whatever procedures one eventually decides to adopt for imputation of in-

come in kind and for production activities the results of which are home

consumed, there is an inevitable tendency to miss some items (even though

what is captured may be overvalued). Since such items and activities are

typically more important for poorer groups, the resulting distribution will

be biased. Because the proportion of income derived from these sources

diminishes over time, comparisons over time will be distorted as well.

Is the best solution, therefore, to present two distributions, one f'or in-

come earned via a monetized market and one for other income?

13. It has been observed that the spread of annual incomes is less than the

spread of monthly incomes due to short-term stochastic variations in in-

come and to (more or less predictable) seasonable patterns. If income pre-

dictability is considered a desirable feature, then these variations

negatively affect living standards to the extent that they are unforeseen.

In which way should a measure of living standards reflect both average levels

and the existence of unpredictable fluctuations around that level? What

are the implications for survey design (reference period, number of visits

to the same household, etc.)?

- 33. -

14. Market prices of many products-, especially agricultural ones, vary con-

siderably within each day, from day to day, from season to season. When

recording household purchases, should one use actual prices paid or some

average relevant for the entire sample and/or period? If one opts for the

latter solution, how is the average to be determined (a creative solution

would be to interview a group of housewives and ask them about "normal"

prices).

15. How should indirect taxes be treated? Standard practice is to include

indirect taxes in spending prices or values. Direct taxes are, of course,

excluded. This means that comparisons between countries, which rely in

different proportions on indirect taxes for revenue, will be distorted.

Furthermore, indirect tax incidence is likely to vary across income groups.

Thus, the question is whether for specific purposes producers' prices are

not preferable to consumers' prices for valuing consumer expenditures.

16. The assessment of differences in income distribution and incidence of

poverty between urban and rural areas and between regions is seriously im-

paired by the absence of sector and region specific price indices.

Similarly, distributions and the analysis of changes overtime can be quite

misleading if prices faced by different income groups differ. This diffi-

culty is to be corrected by constructing income group specific price

indices. Is the construction of sector/region/income group specific price

indices an item of high priority?

17. How should public services be handled?

Households receive a number of public services free or below cost.

Is the value of the unpaid portion to be recorded as income? It is, in

fact, a transfer in kind. A distinction must be made between services to

- 32 -

individuals and services to the community as a whole. The purer the "public

good" character of the item, the harder it will be to impute the value to

an individual household. Also, how is consistency maintained wil-h treatment

of such public services on the expenditure side of the accounts, i.e., is

the value of public health to an individual equal to the cost of producing

it (obviously not when externalities are present -- can they be measured)?

18. Two types of household transactions pose special problems: bartier purchases

and inter-household re-sales. How are they to be valued? If th,e re-sales

involve items that have undergone a transformation in the household, how

does one separate out the value added of the transformation?

19. A problem arises when the period during which consumer goods are consumed

and/or paid for does not coincide with the period in which they were pur-

chased. Relevant cases are household stocks, purchases of durab:Les, credit

and hire purchases. Most household surveys will record the consumption as

taking place entirely during the period of purchase. Such pract:Lce will

produce no bias in the estimate of the mean only if changes in sitocks, pur-

chases of durables, credit and hire purchases by the households in the

sample are distributed perfectly uniformly over time. (Note, however, that

the estimate of the variance would still be biased. A special case is that

of the petty farmer whose purchases of inputs and consumer goods are

financed by a middleman-merchant who receives payment in the fonn of part of

the farmer's harvest.

20. Households may over or under report particular expenditures because social

prestige or stigma is attached to its consumption. Are any correcting pro-

cedures recommended? In general, what are the priorities in research on

reporting functions?

- 33 -

21. The general issue can be raised concerning the accuracy of reporting of

expenditures as opposed to income. It is widely held that consumption is

reported more accurately but this belief often rests on a comparison with

National Income Accounts aggregates. Is the comparison a valid one? Is

further research needed on this topic?

IV. THE CONCEPT OF EMPLOYMENT

The relationship between living standards and employment status is an

important one. Empirical investigations have produced a variety of re-

sults, often ambiguous and partially conflicting. This is due, in part,

to a general tendency for definitions and concepts to be unclear. Defini-

tional issues are raised regarding employment and occupational status

(questions 22-23), willingness to work (question 24), seasonal unemployment

and underemployment (question 25).

Definitions that rely only on hours worked are bound to be misleading

as they do not cover differences in work intensity (questions 26-27). Two

issues extremely relevant in LDCs are disguised underemployment (question

28) and the discouraged unemployed (question 29).

Finally, however, one must raise as a general issue for debate whether

the concepts of unemployment and hours worked are at all appropriate for

developing countries (question 30).

22. The relationship between employment status and living standards has not

been clearly established. Part of the problem is the general ambiguity of

employment status definitions, especially regarding the "unpaid family

worker" and the "casual laborer." Related to employment status is the

occupational group where often no distinction is made between traditional

- 34 -

and non-traditional types of activities. What are the priorities in terms

of clarifying the concepts in order to resolve this problem?

23. Employment and occupational status can be recorded either by the "current

status" or "usual status" methods. Which is preferable for which purpose?

What are the implications for the length of the survey reference period and

for the need of multiple visits?

24. Should we define an international standard of number of hours worked to

consider a person employed, and ask a question regarding willingness to

work more hours only to the people below the cutoff point, or should one

ask the latter question to everyone thereby emphasizing the voluntary aspect

of employment status?

25. Which cutoff point (in number of hours worked) is to be used to define under-

employed or part-time employed? How is seasonal unemployment defined?

26. Information regarding the number of hours worked can be misleading in some

situations. They may be subject to seasonal fluctuations which could not

be captured by a short reference period. But even with a longer reference

period and/or repeated visits, the concept of hours worked must be carefully

interpreted. One study found that respondents worked roughly the same

number of hours in the slack and busy seasons. What differed was work in-

tensity (productivity per time unit). Clearly, the notion of un(der)-

employment encompasses both hours worked and productivity. The problem is

to find a suitable measure for work intensity. Can some suggestions be made?

27. A related problem (to question 26) is the concept of capability under-

utilization, i.e., people working in jobs for which they are overqualified

in terms of their education, epxerience, age. Can an operational concept

be defined to measure such underutilization?

- 35 -

28. A proposed way to measure disguised underemployment is to compare a self-

e.mployed person's income in the reference period with the highest income

level pr>tiiously achi.eved. Is this a feasible approach in view of likely

variations in unpaid family workers' input over the life-cycle, and in

vie.w of the considerable recall problem involved?

29. In many labor surplus countries the phenomenon of the "discouraged un-

employed" has been observed. Are such peopie truly unemployed or have

they become economically inactive? Is it possible by means of appropriate

questions in the survey to probe for reasons for not seeking work. In

general, what is the borderline between the two categories, and is the

marginal group important enough to deserve special attention in surveys?

30. Are the concepts of unemployment,underemployment, and hours worked oriented

too much towards Western, developed-country standards; if so, should these

concepts be replaced by an entirely new approach? It is quite unclear,

for example, what hours "worked" means in the case of a ricksha driver who

is on duty for 14 hours a day to obtain two hours' worth of rides: is he

u.nderemployed or doing overtime? Similarly, his "willingness to work more"

is an ambiguous concept. The key.question is: can we devise a new approach

that will better take into account the realities of "employment in develop-

ing countries?

V. SURVEY DESIGN

Difficulties in survey design fall into two categories: sampling prob-

lems (questions 31-32) and the minimization of non-sampling error (question 33).

In the latter category a distinction can be made between response and non-response

bias, and a variety of procedures need to be studied to eliminate biases as

much as possible and to try to measure whatever bias remains. Response bias is

- 36 -

seen as a function of the length and degree of detail of the questionlaire

(question 34), of the selection of the respondent (question 35), and of the

length of the reference period (question 36). Non-response bias can be dealt

with through re-visits (question 37) and imputation procedures (question 38).

Two specific issues for expenditure surveys is the use of account books

vs. recall questionnaires (question 39) and the collection of quantities and

prices vs. quantities and values (question 40). For multipurpose surveys ob-

vious key decisions are how many and which topics to include (questions 41-44).

Miscellaneous issues to be considered include the usefulness of existing

administrative data (question 45), and international comparability (questions

46-47).

31. One reason for survey underestimation of income is sampling error, usually

faulty sample stratification which overlooks rich city blocks or slums.

(If they are included, the non-response rate is usually very high.) Has

practical experience provided some clues for minimizing or correcting the

problems?

32. Household surveys in many countries often cover only urban arEv tI r use a

lower sampling fraction for rural areas. The definitions of urban/rural

differ greatly across countries. What recommendations can be made to en-

sure international comparability and within-country consistency over time?

In this context how is the special problem of nomads to be treated? How

can regular seasonal migration to be captured, e.g., at harvest time and

again in the agricultural off-season?

- 37 -

33. The importance of minimizing non-sampling errors has been stressed re-

peatedly. Relevant factors are: (i) appropriate selection (teachers,

students, housewives?); (ii) use of interpenetrating sampies; (iii) close

monitoring of all field operations (including checks for enumerator cheat-

ing; (iv) editing in the field (use of micro-computers in regional offices);

Cv) direct data transcript methods; (vi) post enumeration samples;

Cvii) independent random re-interviews.

Can further suggestions be made to reduce or at least test for non-

sampling error?

34. The more precise a concept becomes, e.g. income, the more difficult it will

be to obtain the correct information through a simple questionnaire and

the more likely response bias will increase. Can one devise adequate pro-

cedures (e.g., reinterviews) to control such bias or at least to try to

measure it? Of special concern in this context is income from unincor-

porated enterprises which is difficult to ask with a few simple questions.

On the other hand, if a detailed, balance-sheet format approach is used,

the questionnaire is substantially lengthened and the household may be asked

information in far more detail than what it normally keeps account of and is

therefore able to provide with reasonable accuracy. Also, households can

easily be offended in this subject area.

35. Who in the household should be interviewed? Does this differ according to

the purpose of the survey? Should, for income and expenditure questions,

all adult members be interviewed?

36. Response error tends to increase with the length of the reference period.

Are rotating samples a useful procedure to reduce response error and still

capture seasonal variations. What are the disadvantages of the method?

- 38 -

37. Repeated visits to a household are, in principle, preferable to recall

questionnaires for fairly long reference periods. However, costs of the

survey increase rapidly by this procedure. Reducing the sample size or

shortening the reference period to hold down costs reduces sample relia-

bility. Repeated visits may increase refusal rate but, on the other hand,

may also promote confidence and rapport between interviewer and respondent,

thereby increasing reliability. What are the recommended procedures?

38. How does one deal with non-response bias due, for example, to households

that refuse to answer questions on income: Does one use an imputation

procedure: If so, which one?

39. What are the relative advantages and disadvantages of account books vs..

recall questionnaires? Important considerations include period of

reference, degree of literacy, dropout rate, seasonality, non-response bias.

40. Is there any relevant experience to indicate whether for expenditures it

makes a difference in terms of accuracy to collect quantities and prices

vs. quantities and values?

41, Multipurpose surveys are to be preferred over a set of single-purpose sur-

veys at least for internal consistency, if for no other reasons. The

purposes might include income, consumption, employment, education, fertility,

housing. What, if any, is the optimal mix? Is it a correct approach to

arrange certain topics in a master questionnaire to be used for the entire

sample, with particular modules attached for sub-samples?

39 -

42.. An oftern cited problem 4 svrveys Is the tendency to overload the question-

naire wri- t ' results in respondent (and interviewer) fatigue and probably

a decline in response accuracy. Is this an argument for dividing a multi-

purpose survey into several surveys or merely for increasing the number of

visits to the same sample of households? Relevant considerations include

cost factors and the problem of linking single-purpose surveys.

43. Multipurpose surveys often have different reference periods for different

questions. Does this present problems? Are there arguments for combining

survey questions with the same reference period and splitting up visits to

households (or even surveys) according to reference period?

44, Longitudinal data over several years are in principle required to determine

permanent standards of living. In practice this data need is unlikely to

be met. Stills for policy purposes, e.g., anti-poverty programs, it is

extremely important to identify the permanently from the transitorily poor.

Can an approach be suggested to achieve this purpose, e.g., combining con-

tinuous micro-data single-purpose surveys of a small sub-sample with five-

yearly large multipurpose surveys?

45. What is the general feeling regarding the usefulness of existing adminis-

trative data (birth records, marriage licenses, etc.)? Are they useful in

cross-checking survey results? Should the design of questionnaires

(especially definitions, district boundaries etc.) take existing data into

account, and, if so, how and to what extent?

- 40 -

46. When nationally used definitions are in conflict with those proposed for

international comparison how is the problem to be solved? One suggestion

has been to use the national definition but, in additior to collect the

information for a subsample using the international definition. In general,

how much weight should be given to the concern for international definitions?

47, The work program of LSMS will include the design of survey questionnaires

for use in a variety of developing countries. This can be approached from

two ways: a standard questionnaire can be designed which is applicable

across countries (with minor adaptations of course), or a set of survey

guidelines and principles can be crafted to instruct each country how to

design its own questionnaire. The two methods have trade-offs in terms of

comparability and flexibility. Which is the recommended approach for LSMS?

VI. TABULATION AND ANALYSIS

Although presented here as a last and separate section, decisions on tabu-

lations and analysis should not be taken after and independently of the other

survey decisions. Requirements for tabulations (questions 48-51) and priorities

for analysis (questions 52-54) will indeed feed back into questionnaiie, sample

design and other decisions. Consideration needs to be given to storage of the

collected data so that a variety of users can have easy access to them (question

55). The matter of data access also brings up the issue of confidentiality of

the survey results (question 56).

48. It is a regretful fact that in a number of developing countries which have

undertaken household surveys, resource constraints in the national statis-

tical offices prevent the full tabulation and utilization of the results.

Key bottlenecks seem to be computer editing and processing. What are the

- 41 -

the prime requirements both in terms of software (standardized packages)

and hardware (micro-computers)?

49. Regarding classification and tabulation of the results a number of issues

are deemed important. Wbat is the experts' opinion on each of the follow-

ing:

i) degree of detail in item classification to capture quality

differences

ii) use vs. commodity classification of expenditures

iii) classification according to frequency of purchase

iv) consistency of classification with the U.N. System of National

Accounts

v) tabulation according to characteristics of the members other than

the household head

vi) two dimensional cross-classification tables (e.g., income groups

by occupational groups).

50. In tabulating the results, are income or expenditure fractile groups to be

used? Should both mean and median income/expenditure be presented?

51. What is the appropriateness of the International Standard Classification

of Occupations (ISCO) for classifying households in the informal sector?

52. Surveys can record the state of affairs of a number of issues (literacy,

health, etc.) or they can emphasize interrelationships (how literacy affects

migration, how health affects fertility, etc.). What are the important re-

lationships to focus on?

- 42 -

53. It is well known that poor households are larger in size. What is not

known is the completed or target household size, as well as fertility

and mortality data, in relation to level of income. Actual size is a

function of target size and uncertainty regarding child survival. For

example, health improvements can reduce child mortality, thereby reducing

the need for actual household size to exceed target size. Is the study of

these relationships considered a high priority research item, and should

we therefore collect information on both actual and target household size?

54. For the purpose of using household income data in the framework of Social

Accounting Matrices it is extremely important to know (for all household

members) the sector of origin of their income. With that information the

flows of income from production activities to income and socio-economic

groups can be followed. Presently it is often assumed that the sector

where the household head earns his income applies to the entire family.

This need not be true, of course, and in fact will often not be the case,

especially when the head is self-employed. The household head is not

necessarily even the main earner.

A more difficult issue is property income. Here, it is not suffi-

cient to know the amount of income (which can be considered to flow to the

household as a unit rather than to one or more members); the sectoral

breakdown of the assets that generate the income should be known as well.

However, it is, not strictly necessary to have a full inventory of the

assets themselves, as the question can be approached from the income side.

Nonetheless, a problem arises because property income is likely to

fluctuate much more than wage income year by year (e.g., dividends). What

recommendations can be made regarding the procedures to be followed?

- 43 -

55. Simple data storage and easy access by a variety of users is essential to

obtain maximum usefulness of the collected data. Data storage involves

problema of hardware, software, data bank design, etc. What are the bottle-

necks, and can priority issues to be solved be identified?

Users seeking to analyze the data will include national governmental

agencies, international institutions and universities. Can one envisage a

division of labor among these? Can cooperation between them be extended

to include the survey design stage (the latter will indeed depend upon

the envisaged types of analysis)?

56. An issue directly related to data access is confidentiality. Respondents

are usually guaranteed that the data will not be made available in a

format that allows identification of individual responses. Is erasure of

the original I.D. numbers on the tape and replacement by random I.D.

numbers a sufficient procedure to safeguard privacy? Are other steps

recommended?

- 44 -

PROCEEDINGS OF THE LSMS EXPERT GROUP MEETING'/FEBRUARY 25-29, 1980

Monday, February 25

A. M. SES$ION: INTRODUCTION

Chairmen: Mr. Goldberg and Mr. Waide

Goldberg ./ opened the meeting by stressing the importance of the subject matter

of this conference: the betterment of the levels of living of people is or should

be the ultimate goal of national and international economic and social efforts.

The United Nations has had a long-standing interest in the measurement of

levels of living. The work has progressed along two lines: the long-term develop-

ment of social statistics and indicators on the one hand, and the elaboration of

the System of National Accounts (SNA) on the other hand.

Several approaches may be identified in recent work on social statistics and

indicators. One sought to identify "social indicators" for various facets of

levels of living, in light of the policy concerns of each country. Another

endeavoured to systematize the basic data in the social fields, following the

view that a comprehensive range of social data are relevant to the meesurement of

levels of living, and that it is necessary to bring economic and social data to-

gether into a comprehensive framework.

1/ These proceedings were drafted by C. Grootaert. Very helpful comments wereprovided by C. Saunders. All participants were asked if they wished to makeamendments to an earlier draft. Various ones did so, and all such amendmentshave been included in this text. Therefore, all interventions reported herehave been, either explicitly or implicitly, cleared by the speakers in question.

2/ The content of Mr. Goldberg's opening address is taken from a paper "TowardsMore Effective Measurement of Levels of Living" prepared by the UN StatisticalOffice, which will appear as No. 4 in the LSMS Working Paper Series.

- 45 -

Meanwhile, there has been a corresponding interest in the extension of the

national accounts to improve their usefulness for measuring le-els of living.

Initially the national accounts were disaggregated into institutional sectors:

enterprises, general government, and households. In a second stage, the house-

hold sector itself is to be disaggregated into socio-economic groups, a develop-

ment that has seen a further flowering in the construction of Social Accounting

Matrices (SAMs). Beyond this sub-sectoring by socio-economic group, however,

the new SNA also envisaged the construction of a full-fledged set of income dis-

tribution statistics as an integral part of the national accounts. For measur-

ing levels of living, however, it is necessary to go beyond SNA along several

lines. There are, first, non-monetary but essentially quantifiable items of in-

come and consumption that are not included in SNA's selection of subsistence

items; SNA's selection gives substantial weight to what can be most easily

measured and in some circumstances omits a significant share of what enters into

the level of living. Second, there is a group of activities - primarily those of

women and children - that take place entirely within the household and so fall

outside of the national accounting boundary. Third, there are the goods and ser-

vices that are furnished to households free or at reduced charges, mostly by

governments; these are included in the accounts, but not as part of household

income. Beyond this group of items which, while difficult to value, are at

least similar in kind to the items that are included in the national accounts,

there is a further range of information that is essentially of a 'social indi-

cator' nature, for example measures of the quality of living, and working and

environmental conditions not expressable as components of income or consumption.

And finally, there is the question of subjective measures of the quality of life.

Thus there is a whole range of social and economic statistics having an important

- 46 -

bearing on levels of living that must be taken into account for effective analysis.

Furthermore, developing a comprehensive and consistent conceptual framework

is by no means all that is necessary. The basic problems of measurement must be

faced squarely and explicitly. The first necessity for an effective data col-

lection and dissemination program is the development of operational and readily

comprehensible concepts. The second consideration is cost: surveys are expensive

and careful planning and competent execution must be guaranteed. A thir,d con-

sideration is relevance; unless the analysis speaks to the needs of policy makers

and triggers them to policy formulation and action the job is only half ione. A

final and related consideration is effective user access.

The essential role of the household survey in the measurement of levels of

living is apparent. The need is for a continuing household survey capability.

It is to this need that the recently launched National Household Survey Capability

Programme is addressed. It is co-sponsored by the UN, UNDP and the Worl,d Bank

with additional support from UNFPA and UNICEF. Donor agencies in develo:ped

countries have indicated their willingness to contribute, and the regionial com-

mission and interested specialized agencies of the UN family are active parti-

cipants. The key features of NHSCP are that it is country oriented and it is

designed to establish capabilities for generating a wide range of interrelated

data on a recurring basis. A continuous flow of such data is precisely what is

needed for policy purposes.

Waide emphasized the interest of the Bank in the measurement of living

standards. The Bank is concerned both with income distribution and with the con-

sumption side of living standards. Important determinants of living standards

are access to health, education, etc., and the Bank's forthcoming World Develop-

ment Report III investigates the relative merits of public funds flowing into

- 47 -

production sectors as opposed to social overhead sectors. Concern with poverty

and the distribution of welfare is a key element in the evaluation of Bank pro-

jects. As an international institution the Bank is also clearly concerned with

intercountry comparison of levels of living.

Duloy identified the resources for LSNS, specifically the Bank's two-year

1.5 million budget for the study. He added that, from this meeting, the Bank

wished to obtain a clearer idea of what could be done within these constraints,

especially what role the Bank might play in the overall effort to measure living

standards.

Pyatt emphasized that the meeting should be concerned with the whole pro-

cess of conducting surveys, from conceptualization and design, to data collec-

tion, to policy uses. Furthermore, an important purpose of the meeting is to

gather some information about countries which might collaborate in the project.

He then presented five initial questions to the meeting:

1) Are the papers submitted to this meeting a sufficient reflection of

the state of the art?

2) Have we identified the key questions (what data to collect, processing,

uses, ... )?

3) What is the output we want in terms of tabulation, analysis, etc.?

4) Are the resources adequate for the project (time, budget)?

5) How shall we disseminate the results (International Statistical

Institute, International Association for Income and Wealth, ... )?

P. M. SESSION: POVERTY AND LIVING STANDARDS IN ASIA

Visaria presented his paper on poverty and living standards in Asia.l/

1/ Pravin Visaria, "Poverty and Living Standards in Asia: An Overview of theMain Results and Lessons of Selected Household Surveys," LSMS Working PaperNo. 2 CWashington, D.C.: World Bank, October 1980).

- 48 -

Saunders opened the discussion by stressing the importance of occupational

class; on the one digit level it is very heterogeneous and this could be the

reason for its "insignificance" in Visaria's Multiple Classification Analysis

(MCA). Also, the definition of unemployment varies considerably across countries

which makes the comparison of country analyses difficult.

Malinvaud: Classification by significant socio-economic groups iis an

essential part in the description of conditions of living in any society.

Since the best definition of such groups is not easily found and varies

to some extent from one society to another, it deserves great care and often

requires preliminary fieldwork. An emphasis on occupation, as the main criterion

used in such a definition, may not be warranted in LDC's in view of Visaria's

findings that occupation is not an important variable. French statist-icians and

sociologists working in Africa have been aware of that and have looked for a

methodology that should be followed for the definition of socio-economic groups;

this is an important part of their AMIRA research project.

Juster Occupation is a name for a combination of education, skill

and other factors. Data collection should focus on occupational charac-

teristics rather than on occupational titles; the productivity ch ranteristics

of each occupation are especially important. Similarly, educational categories

such as "eight years schooling" can mean vastly different things in terms of

quality across countries. The emphasis should be, therefore, on capturing these

differences.

Gura called for precise identification of the key questions that are able

to produce the answers we want. He wondered whether a household survey was the

best vehicle for all these questions.

- 49 -

Visaria suggested some key topics for study; essentiaL are labor market

characteristics, land quality, housing, access to basis se,-vices, as well as

migration and consumption of food in calories.

Scott proposed the use of synthetic variables, collecting information on

both household head and members, which may lead to a derived definition of socio-

economic groups.

Goldberg pointed at the existence of census and administrative data as

complementary to household surveys. The latter should not be viewed in isola-

tion even though their importance is enhanced in the absence of usable adminis-

trative records.

Muller wondered whether a large degree of detail in occupational classifi-

cations is relevant for policy makers and other users, or whether they are only

concerned with broad classes.

Savane proposed different types of investigations, including monographs,

to obtain policy relevant conclusions.

Mehran distinguished socio-economic groups from client groups. The

former are homogeneous with respect to certain variables, the latter are deter-

mined by the fact that they are easily identifiable and amenable to policy.

Seltzer: A key point is to observe for which activities the surveys

that Visaria analyzed, were used by the policy makers in the countries, and if

they didn't use them, what were the obstacles.?

Visaria responded that the surveys were used for cost of living indices,

national accounts, and the identification of problem areas.

Scott pointed out that the use of a survey will depend upon the policy

options actually open to policy makers.

- 50 -

Adelman added that one should also see how these policy options can be

modified through interaction with statisticians.

Duncan talked about policy "hooks" following from definitions. For ex-

ample, in the United States poverty is defined as a function of income and

family size. As a result of this definition policy programs will be based on

these criteria.

Juster stated that bad data will lead to bad policy. The first require-

ment is good data irrespective of what policy makers want. What surveys can

provide is an accurate description of living conditions, and that is really all

that policy makers need. The key question is therefore: what can a survey

accurately measure? In this context the importance of recall bias must be

stressed.

Dandekar: What is the relevance of Visaria's paper to LSMS?

Pyatt: Is Visaria's criterion (per capita income or expenditure)

relevant for measuring living standards?

At this point Chander presented his paper on the experience of Malaysia

and the Philippines.l/

Davies argued for using the expression "levels of living" instead of

standards of living.

Singh: The list of topics included in a survey is due to the inqenuity

of the statistician who foresees the needs of politicians (who often do not

know what they really want but are nevertheless ready, when the data are there,

to criticize the deficiencies). A list of topics such as those included in

Kenya's Integrated Sample Survey Programme is what really constitutes living

standards. It should be noted that such a list will differ over time and over

societies. The ultimate goal of what is to be explained is the dynamics of

1/ Ramesh Chander, "Recent Experience in Malaysia and the Philippines," LSMSWorking Paper No. 5 (Washington, D.C.: World Bank, October 1980).

- 51 -

societal changes. Base line observations are insufficient for that purpose.

At best, they may indicate trends, but they do not provide the variables that

explain the trends.

Adelman: The preliminary question to be asked is: 'What does it

mean to be poor?' Poverty is all of material, subjective and social depriva-

tion. Exclusion from consumption of commodities is only one aspect of this.

Deprivation has relative and absolute aspects. It includes vulnerability to

fluctuations, low resources to cope with poverty, low self-image which in itself

influences the range of activities one could undertake to escape poverty (in

other words, it influences the dynamics of poverty), biased access to social

justice, material and non-material, market and non-market resources. The

explanation of poverty must include personal dynamics in the context of social

dynamics. People move in and out of poverty status; therefore, the distinction

between the temporary and permanent poor is important.

Dandekar: The basic question LSMS tries to answer according to Pyatt's

paper is: who is benefitting from development? In India, there is no

problem in trying to identify the poor. A level of living concept based on

all consumption items is difficult because of many associated problems (imputa-

tions etc.) and because of its instability over time. Instead one should focus

on a few items: "What does a poor man do when he is a little less poor?" In

India he will buy some durables: clothing, utensils. We can therefore use a

shortcut and record these items only. In terms of education and health vari.ables,

collecting the information on children only will suffice.

- 52 -

Tuesday, February 26

A. M. SESSION: INCOME AND EXPENDITURES: MONETARY AND INPUTED

Chairman: Mr. Davies

Grootaert presented the section of his paper dealing with measuresment of

income and expenditures. 1/

Discussion was initiated by Adelman who said that poverty has objective as

well as perceptual and social aspects. Regarding the measurement of poverty a

distinction must be made between an input vs. output oriented approach. For

example, education and nutrition are typically measured on the input side, which

may be inadequate. A full view of poverty should also include the household's

assets and obligations. Notions of food security, personal security and pro-

tection from natural calamities are important.-

Duloy pointed out that the best practice regarding measurement of income

and expenditures differs in each country. The NSS in India uses a consumption

approach, while Brazil emphasizes income.

Pyatt stressed the importance of measuring inter-household transfers.

Altimir presented his paper on the survey experience in the ECLA region.-/

Srinivasan stressed that it is inevitable that compromises h-ve to be made

in practice regarding survey methodology, concepts, etc. The best practice in

a country presumably reflects the 'optimal' set of compromises that have been

made, given the objectives and constraints. In India, the household's basket

of goods has been divided into two groups, viz. market based commodities and

1/ See Christiaan Grootaert, "Selected Problems in the Implementation of House-hold Surveys," in LSMS Working Paper No. 10 (Washington, D.C.: World Bank,October 1980).

2/ Oscar Altimir, "Measuring Levels of Living in Latin America: An Overview ofMain Problems," LSMS Working Paper No. 3 (Washington, D.C.: World Bank,October, 1980).

- 53 -

public services. The poverty line was based on the former only under the assump-

tion that public policy will ensure that all households will Lave access to some

desired minimum of public services. As to imputation, there Is no general prin-

ciple, except that imputed prices should reflect marginal rates of substitution

in consumption. Farmgate prices reflect the producer's viewpoint and will be

appropriate for a producer-cum-consumer while market prices are relevant for a

pure consumer. Similarly, no general rule is possible to decide on the treatment

of taxes and subsidies. For practical measurement, one should focus on a few

consumption items only, and rely not only on household surveys. The latter are

often designed for obtaining reliable averages but not necessarily for obtain-

ing reliable distributions.

Kerstenetsky: There is no short-cut to obtaining serious accounts

of levels of living. The measurement of levels of living is difficult in one-

shot surveys. Occupational classifications .are to be seen in the context of

links with other data sources: national accounts, census, administrative records.

The measurement of non-quantitative components of levels of living is only

possible when the interviewer becomes a participant-observer in the household.

A general framework for surveys is not possible: they must be tailored to the

needs of individual countries. Strengthening survey capabilities must be done

in the Central Statistical Office (CSO), which is where the measurement of levels

of living must take place. The CSO must create the demand for data and when,

for example, the data indicate poverty incidence, it must press for policies.

de Andre noted that the Brazilian ENDEF was not a one-shot survey but one

point in the PNAD series.

Bartram pointed at some trade-offs in the gathering of consumption vs.

income data. Consumption data are expensive to collect but consumption can be

- 54 -

accurately measured. Income data are cheaper to gather but less accurate;

furthermore, income fluctuates more than consumption.

Dandekar: The collection of income data requires much detail:

a few questions will not do. Multiple sources and variability of income pose

additional problems. How does one find out about and treat the 25 percernt

interest that must be paid to the local moneylender? In general, income is un-

reliable as a measure of levels of living and Indian surveys have abandoned

efforts to obtain income and expenditure data.

Pyatt questioned, therefore, where the balance of LSMS resources in measur-

ing income vs. measuring consumption might be struck.

Chander noted that in Malaysia consumption was recorded during da.ily visits

and later revisits for durables. Income data will be useless unless they are

recorded in detail by source and for each household member separately.

Singh did not see the question on whether to. record income or consumLption

as a dichotomy. Both, are necessary, but they need not be measured with the

same frequency. Regarding definitions, it is more important to implement: a

definition consistently than to try to come up with an "ideal" one. Kenya's

experience points at the importance of having a permanent interviewer staLff.

In urban areas continuous surveys are not possible since poeple's mobility is

too high. Although,response fatigue was not found to be a problem, over-

familiarity of the interviewer made sample rotation necessary.

Scott argued that fluctuations in income for the poor need not be bad

per se; an upward fluctuation may give a person his only chance to make good.

Goldberg added that a distinction must be made between voluntary and in-

voluntary fluctuations.

Seltzer. The identifi-ation of best practice depends upon (i) the use

made of the data, i.e. poverty in general vs. specific programs: (ii) variations

in the struo.,ure of the economy; (iii) variations in the availability of other

data sources; (iv) variations in survey conditions (e.g., people's dispersion

etc.).

Altimir also saw the dichotomy between income and consumption data collec-

tion as a false one: both must be collected in the context of developing per-

manent capabilities.

Gura s,ressed the need for a continuing dialogue between users and pro-

ducers in order to obtain best practice compromises. He also stressed the need

for a system o-f statistics.

Bartram asked whether LSMS would try 3-4 different practices in its 3-4

test countries, or rather test one practice 3-4 times under the different con-

ditions.

Srinivasan answered that best practice is a function of local conditions,

and thus LSMS should try 3-4 different practices to assess their suitability

under the prevailing socio-economic political framework.

Pyatt agreed that priorities, needs, classifications, disaggregations

will differ by country, and,therefore, that 3-4 different best practices exist.

P. M. SESSION: EMPLOYMENT AND LINKS TO THE PRODUCTION STRUCTURE

Chairman: Mr. Malinvaud

Mehran presented his paper on the use of employment data for the measure-

ment of living standards. l/

1/ Published as LSMS Working Paper No. 8, "Employment Data for Measurement ofLiving Standards."

- 56 -

Pyatt proposed a methodology which would consistently integrate in one

framework a head count of how many people do what and the financial flows

resulting from these activities. Such a system would involve the construction

of a manpower matrix where the columns represent types of activity (distinguish-

ing formal and informal sector) and the rows types of labor (e.g., wage earners

and non-wage earners). A row could be added for people outside the labor force.

Note that type of labor is not the same as occupation class (the latter is often

inappropriate in the context of developing countries e.g., "transport" worker).

Type of labor is defined by age, sex, education level, etc. A practical

question here is: For which of these data can household surveys be the source,

and to what extent do we need time-use data for this purpose? Finally, the

matrix could be expanded with an "other-factors-of-production" row containing

enterprises' surplus for the formal sector and imputed income from household

production activities for the informal sector. If the matrix is then further

expanded with types-of-household columns, the distribution of factor income

over types of household could be read off directly from the totals of these

columns.

Dandekar said that India has attempted to develop something imilar to

Pyatt's matrix. For the organized sector, general statistics rather than sur-

veys were used. The remaining households were classified according to activity.

Agricultural households were classified by land area per head. He thought

annual computation of this kind was too expensive; at any rate, the ear-to-

year changes are less than sampling errors.

Suh noted that the link with the production side is situated at the level

of the individual within the household, while the "other factors of production"

row pertains to the household as a unit. The data for non-wage earners would

require a detailed balance sheet type approach in the survey.

- 57 -

Srinivasan found the accounting framework interesting but wondered if we

can derive causal relationships from it without making essentially unstable or

untested assumptions. He also raised the question of the stat-;lity of the

matrix and warned against false analogies being drawn with an input-output matrix.

Pyatt thought that on first approximation the matrix would be stable; for

example, the fact that rural households derive most of their income from rural

activities does not change much over time, and neither does the balance between

formal/informal subsectors. He agreed that a model is needed to explain caus-

ality. Important dimensions of the matrix would be regions of location/employ-

ment and the classification of household according to endowment of factors of

production. Not all the data required for these purposes need come from surveys.

Adelman: The classification and aggregation depends also on the

mechanisms of policy interference; for example, if the intervention is regional

then region is an important classification. For productivity increases, skill

categories are important.

Visaria proposed a classification based on stability of employment, "stable"

being defined, say in the NSS context, by current activity equalling usual

activity.

Seltzer and Johnson reflected the UN emphasis on national use of data and

consistency of concepts and classification within institutions within countries.

Dandekar emphasized that a classification of unemployment in India is

meaningless because of the prevalence of low productivity "jobs" (e.g., street

vendors).

Singh did not see the need for predetermining classifications: computer

technology allows maintenance of individual files, and the users themselves can

construct the classifications relevant for their purposes.

- 58 -

Wednesday, February 27

A. M. SESSION: DISTRIBUTION WITHIN THE HOUSEHOLD, LONGITUDINAL INVESTIGATIONS,AND TIME-USE SURVEYS

Chairman: Mr. Scott

Duloy opened the session by giving some interim viewpoints after two

days of discussion. It seemed clear that for policy purposes, studies of changes

over time are necessary; one-shot operations will not yield the required in-

formation. Best practice for each country must be identified, which includes

studying what methods have worked elsewhere and which are transferable. Emphasis

must be placed on the complementarity of LSMS with the UN National Household

Survey Capability Program (NHSCP). The amount of fieldwork that LSMS should en-

gage in must be limited due to resource constraints, while dissemination should

be given top priority. Although international comparability is not "up front",

improvements are desirable. He expressed the hope that during the next three

days the meeting would help identify best practice, indicate areas where more

research is needed, present a judgement on feasibility given the resources, and

indicate efficient ways of dissemination.

Bartram suggested that as part of the dissemination effort, materials

could be sent to statistical schools around the world.

Dandekar pointed out that NHSCP has intentionally left the subject maatter

open. If LSMS wants to fill it in, it is not complementary but contradictory

to the intent of NHSCP, since the latter left the subject matter to counitries

purposefully.

Goldberg replied that this did not exclude helping the countries in speci-

fying their wishes, which, moreover, are likely to cover many of the same topics

over a number of years, though in different sequence.

- 59 -

Kerstenetsky emphasized the need to see LSMS in relation to the overall data

base: its function is to fill some gaps within the framework of an entire statis-

tical system.

Seltzer expressed the concern of the UNSO on how the subject matter of the

NHSCP would be filled.

Seers did not think that the household budget survey was necessarily the

chief tool for measuring levels of living. He proposed to look rather to anthro-

pometric surveys, and censuses for information on housing, mortality and morbidity.

Household surveys are useful for collecting a variety of combined items such as

consumption, emplovment, etc. With respect to levels of living, however, they

are not necessarily efficient per unit of money spent on the survey.

Singh raised the question of how to develop instruments that have an

immediate impact on development policy. Anthropometric measurements will be

most valuable in describing evolutions 20 years from now.

Seers replied that existing information is most useful for immediate impact.

de Andre stressed that information is costly and, hence, that an enumera-

tor should be enlisted to gather as much as he can handle, including anthropo-

metric measurements. New information should be linked with existing data.

Regarding intra-household distribution, he thought such information was very

expensive to obtain. One must look especially at the most vulnerable household

members (pregnant and lactating women, children below 5). And finally, there

is a need to develop better equivalent adult scales.

Seers: There are a number of reasons why an individual may be deprived:

inadequacy of household income, the composition of household expenditures

(composition reveals more than level by indicating possible misspending),

distribution within the household. The latter is often neglected because of the

- 60 -

use of the household as the unit of observation. Still, the policy implications

are often more specific, e.g., school meals vs. the provision of food as such.

Anthropometric measurements are closer to levels of living because they measure

outputs, but the problem is to specify appropriate norms. Anthropometric measure-

ment data are better than infant mortality data (the latter comes "too late").

A good source for the former is school records of weight and height.

Juster questioned whether an interviewer can reliably collect data on the

distribution of resources within the household. If the use of school weights

can identify problem areas, investigators can then be sent to these areas to

identify remedies. Intra-household distribution of resources obtained (income)

can only be collected via household surveys. Studying the time use of each

household member is a way to obtain such information.

Srinivasan emphasized the distinction between input and outcome measures.

The latter are especially relevant for nutrition and education. However, moni-

toring will ensure merely that procedures are followed while a policy evalua-

tion will assess the effect of a policy intervention in achieving its intended

objective. For example, monitoring a program of school meals to children can

ensure that the children get their school meals but evaluation will -so check

whether they are now being deprived of a meal at home. This type of substitution

effect cannot be picked up from outcome surveys; one must go the household

directly.

Singh: In Kenya studies have been made which used as a target

population children 1-4 years old. This group is most relevant for anthropo-

metric measurements. The point of reference is the Harvard Standards, but there

is, nonetheless, a need to supplement these studies with case studies.

- 61 -

Seers said that work must be done on a general data systrm including time

use, social indicators, etc. Topics of research include the effect of choice

of respondent or presence of other household members. Anthrc ometric school

records are of particular use because they point directly to the areas, even

the families, where undernourishment is severe.

Duloy concluded by saying that intra-household distribution is clearly per-

ceived as important but hard to obtain. In the context of developing large

statistical systems in developing countries, the collection of intra-household

data must come at a later stage.

The meeting now turned its attention to the collection of longitudinal data.

Dandekar pointed at the danger in longitudinal surveys of overfamiliarity

of the interviewer. A longitudinal sample must be very small, and because it

required continuous interest from the respondent, it should be a voluntary

rather than random sample. The usefulness of longitudinal inquiries is that it

allows one to explore causality.

Duloy brought up the possibility of doing longitudinal surveys on villages

rather than on households.

Bartram said that the main problem in longitudinal household surveys is

mobility and the resulting need to keep track of the household.

Juster: If one wishes to know why people change location and how change

is induced by policy, longitudinal surveys are a must. Cross-sectional

surveys run into recall problems: People remember their location of five years

ago, but not their income, attitudes, motivation. For these questions (e.g., who

is poor for 9 out of 10 years) longitudinal surveys are necessary.

Muller raised the problem that classic statistical techniques are not

applicable to longitudinal surveys.

- 62 -

Savane proposed to select villages as a function of the purpose of the

analysis rather than randomly.

Scott introduced the concept of time sampling. There is no need to

follow the same set of households over 10 years. Perhaps, for constructing

estimates of time fluctuations, three years may be sufficient.

Gura stated that in Latin America 55 percent of the population is urban,

and that means of communication are sufficient to make longitudinal surveys

possible. It is important to link an area sample and a longitudinal sample.

Juster proposed to select households in the conventional way and then to

attach a village to them. Selecting villages as such is inefficient because

of the high intra-class correlation coefficient. There is a danger in select-

ing sampling groups on the basis of target groups, because when the targets

change one winds up with useless information. The feasibility of longitudinal

samples depends on the nature of society; for example, where the extended

family system exists, someone always knows where the other members are and hence

they are easier to trace.

Dandekar suggested a study on an entire village in order to gather informa-

tion on power structure etc. He advocated a longitudinal follow-up of a small

sample of a well-defined target group (e.g., farmers in debt if they represent

a policy target group).

At this point the meeting took up the subject of time-use surveys.

Juster: Available time and capital stock are two constraints to improving

levels of living. Households can enhance their levels of living by better time

use and/or improving their capital stock. One can start by recording time use

of both adults and children (an admitted problem is societies without clocks).

To have an idea of work intensity, time-use data can be linked up with output

data.

Pyatt saw a problem in tiDe-use su-rveys in distinguishing where a person

is ("on the field") vs. what he is doing. Also, how does one treat simsitaneous

activities?

Dandekar: The problem with time-use data is that their interpretation

is Judgemental, 7.ow do we decide, in terms of levels of living, whether a

household improves its level of living when it spent more time on activity A?

Seltzer noted that time-use data seem to have many of the problems that

are presently observed with unemployment data.

Saunders accepted time-use studies as useful but asked about their practi-

cality; for example, what time unit does one use?

Savane reported on the experience of gathering time-use data in Senegal

and said that they had focussed on production activities.

Scott stressed the difficulty of specifying to unsophisticated interviewers

the categories of time use required. He thought that in LDCs observation would

be necessary instead of relying on recall.

Duloy thought that the time-use approach is essentially still in the re-

search stage and likely to be too sophisticated for present conditions. He

noted the necessity to capture work intensity. It has been observed that

Austrailian farmers, for example, work as many hours during the slack as during

the busy season.

Gura suggested that the time-use approach may be better for small scale

studies. There is, however, a risk that households will consider it an invasion

of privacy, and consequently, many activities (illegal, etc.) will go unrecorded.

Juster: One way to handle multiple activities is the "random hour

approach" which is based on obtaining a full and detailed description of

activities during a randomly selected hour. Time-use analysis calls for a

joint product approach: a household activity reflects jointly a preference for

the activity and a preference for the good that the activity generates.

- 64 -

P. M. SESSION: ACCESS TO PUBLIC SERVICES

Chairman: Mr. Kerstenetsky

Singh opened the meeting by presenting Kenya's experience as described in

his paper.L/

King pointed to the necessity of publicity programs to inform housieholds

about the existence of facilities. Accessibility and utilization are tiwo

different things (e.g., vaccination). The monetary cost of using the facility

as well as the opportunity cost to the household should also be investigated.

(Here, for example, time-use data on children's activities would be useful to

help determine the opportunity cost of education).

Scott thought that time was a better indicator of accessibility than dis-

tance. A distinction should also be made between perceived and actual access-

ability.

Srinivasan added that one should also look at true vs. perceived exclusion

of certain (types of) households to a particular service, and at actual vs. in-

principle (non-) exclusion.

Visaria thought that next to recording availability of a public service,

one must look at the quality of the service provided (e.g., water stpply).

Adelman stressed the importance of studying the reasons for (non-) partici-

pation. Often there is a social exclusion phenomenon: a household perceives

itself as not included in the "usual clientele" of a particular service. One

might also measure some bads: indicators of victimization and stigmatization.

This has to do with a notion of "ill-fare" as opposed to welfare.

1/ Published in LSMS Working Paper No. 6, "Kenya's Data on Living Standards."

- 65 -

Seers: A distinction should be made between formal and informal

services. The latter are often as important as the former, e.g., in health,

education. The time needed to reach a facility has to be ta^ea into account in

assessing the value of a service. What can one say in cases when a service is

over-provided, resulting, e.g., in frustration of over-educated people who

cannot find an appropriate job.

Pyatt warned of the danger of targetry. For example, an observed low

ratio of hospital beds per capita need not imply that it would be a good thing

to start building hospitals, and not only when complementary inputs (nurses,...)

are not available.

Altimir pointed at the problem of aggregating health, education, etc.,

indicators with data on private consumption or income. Poverty incidence as

indicated only by either private consumption data or by the deprivation from a

Specific service will present a distorted picture.

Pyatt emphasized the need to study inter-relationships between education,

health, etc. How is time use related to access to services? Estimates of

cost of production of public services constitute no basis for imputation for

welfare purposes. The accessibility notion must be incorporated.

Duloy said that studying the impact of the water supply, for example, must

distinguish direct effects and indirect effects (e.g., on health). This is a

research area which LSMS may explore further.

Thursday, February 28

A. M. SESSION: SURVEYS: SCOPE, INTER-RELATIONS, DESIGN

Chairman: Mr. Seltzer

Scott opened the meeting by presenting his paper on practical problems in

conducting surveys on living standards. l/

Savane presented his paper reflecting on the experience with household

surveys in Senegal.2/

de Andre discussed the Brazilian experience of ENDEF as described in his

paper. 3/

Kim gave some highlights of the experience in Korea. In 1975 a set of

300 social indicators were pre-tested. Fifty items (all of the objective type)

were ultimately selected for inclusion in the survey. The Korean experience

indicates that as far as income goes, non-wage income is most under-reported.

In 1980, Korea will launch the Survey on Status of Living Conditions. The

intention is to set up a data base leading ultimately to the construction of

a SAM for Korea.

Gura listed three types of linkages that are important. System linkages

relate data sets (surveys, census, etc.) within the statistical system.

Methodological linkages exist via definitions, questionnaire, sampling frame.

Lastly, there are conceptual linkages (see e.g. Atlantida).

1/ Published in LSMS Working Paper No. 5, "Practical Problems in ConductingSurveys on Living Standards."

2/ Published in LSMS Working Paper No. 6, "Experimental Survey of HouseholdBudgets and Consumption in Senegal 1973-75."

3/ Published in LSMS Working Paper No. 5, "The Brazil 1974/75 National HouseholdExpenditure Survey."

- 67 -

Juster: To accomodate different household definitions "hierarchical"

files can be constructed, which (i) allow for various specifications of who

is in the hotusehold or (ii) can be used for analyzing by individuals. Emphasis

should be put on easily measurable items: household stocks, housing conditions

(no recall problemn involved). Some components of consumption are more stable

and important than others and, therefore, are a better reflection of levels of

living. They should constitute the data core. Regarding data processing,

hardware today is cheap, software is readily available and many international

institutions provide technical assistance.

Adelman: Korea's experience with subjective questions (they were

found either irrelevant in Korea's cultural context or displayed zero

variance) may not be common to other LDCs. Korea is a very homogeneous country

with little ethnic and cultural diversity. Similarly, the high correlation

between the distribution of income and of social indicators may be typically

Korean and due to the pervasiveness of social services.

Duncan cited substantial scope for innovation by LSMS in researching how

to involve data users in the survey design stage.

Srinivasan said that the tabulation program must be kept in mind at the

design stage; otherwise data will be collected that may never be tabulated or

used.

The meeting now turned its attention to software.

Chairman: Mr. Chander

Bartram stressed the need to coordinate the editing and processing stages.

Edit packages are presently available to developing countries. Hardware is not

the problem. The key issue is personnel (often unqualified and under-paid).

Due to a shortage of people, a lot of unprocessed surveys are presently lying

- 68 -

around. The sometimes perceived dichotomy between making questionnaires vs.

guidelines available to countries is a false one: both are needed (see POPSTAN).

There is a need to study the best practice in survey processing.

Muller: Surveys are to be seen as part of a total statistical system

and, for policy purposes, must be repetitive. Relevant questions on

hardward include unit cost, reliability (consistency of electric power supply

in LDCs, quality of telephone lines), maintainability (parts). Decreasing unit

cost and increasing reliability is only true for big systems. Most expensive

for LDCs is the lack of documentation on software. The software itself may be

available, but not the instructions to set it up, run test cases, change it

according to need, etc. Tabulation is less of a problem than editing, storage/

retrieval, error recovery. LSMS could make a contribution to help improve com-

munication and dissemination of materials to inform LDCs on what is available.

Seltzer: The key issues are hardware maintenance and spare parts

availability. Mini- and micro- computers are cheap and can cover most uses in

developing countries. The flexibility of software is important to accomodate

different users. The critical point, however, is neither hardware nor software

but the human resources: the programming staff and their interaction with subject

matter people. The UN efforts in the field of software development have focused

on ease of use and applicability to smaller machines.

Gura noted that the data entry equipment is often more troublesome than

the computer itself.

Dandekar reflected on the problems of installing a large computer in India

(including union resistance). The fast pace of change in computer technology

makes machines rapidly outmoded. This points at an advantage of smaller machines

that are cheaper to replace. In addition, they allow decentralized data entry

which is important in a large country like India (it also creates a feeling of

local participation).

- 69 -

Bartram said that for basic tabulations decentralized miii-computers are

effective, whereas for large analyses a central computer is zequired. With

regards to packages, while tabulation and edit packages are readily available

and mostly free to developing countries, data management and updating packages

are not available.

Seers warned against premature computerization, i.e., before staff, con-

sistent electrical power, managerial ability are available.

Juster advocated the design of questionnaire forms so that the number of

transfer steps (and thus the potential for error) is cut down. He argues that

purchasing mini-computers is often cheaper than maintaining old equipment.

What is really needed, but almost impossible to obtain, is first quality advice

on the state of the art in computerology.

Johnston replied that the UNSO has three people who give advice on computer

installation design, but the problem they face is the wide variety of different

situations and the adaptation to local conditions.

P. M. SESSION: NATIONAL ACCOUNTS AND LSMS

Chairman: Mr. Singh

Kerstenetsky: SAMs provide a succession of static pictures. What is the

role of simulation models to picture alternative scenarios of the future in

this context? When one is concerned with income distribution, the pattern of

consumption, the pattern of production and feedbacks onto the former, it is

unavoidable to bring in socio-economic groups. SAMs are a challenging approach

in this context.

- 70 -

Srinivasan: Users of national accounts data in India did not go

into the direction of constructing SAMs. Income or expenditure distribution is

captured in the NSS data. Attempts have been made to link the two data sets

which are generally close to each other insofar as aggregates are concerned, but

less so for individual commodities. Still, conclusions can be different whether

national accounts or NSS data are used; hence, forcing a consensus on the data

in order to fit them into an accounting framework may not always be appropriate

or useful.

Seers: Much capital formation will never be captured in the nationa:L

accounts (e.g., rural activities such as work on ditches, removing stones

from the field, etc.). Such non-conventional forms of capital formation are,

however, often the most important ones in rural economies. Similarly,

the bulk of consumer goods and services escape the statistician's net (e.g.,

among food, all fruits and vegetables, fish and poultry). Income growth or

improving income distribution can sometimes merely reflect increasing moneti-

zation and is thus a "statistical illusion." This raises the problem of ade-

quacy of concepts. A careful look at existing practice and its adequacy is

needed.

Goldberg replied that the UNSO publication "Directions for Future Work on

the SNA" touches upon many of these issues.

Juster argued that monetary aggregates can not quite capture the importance

of non-market activities nor reflect shifts in their relative importance. Time-

use data could tell more about these activities.

Goldberg considered a SAM as an integral part of the national accounts and

therefore part of a "conceptual blueprint" providing unifying threads not else-

where available. As a blueprint it gives directions in the process of further

developing statistics.

- 71 -

Malinvud: Socio-economic classes have been used in France since 1950 and

are an impo-tant dimension of the statistics. When used consistently they are

very useful and superior to ad hoc groupings. They can be used to match data

from various sources.

Pyatt-concluded by saying that a SAM is a conceptually consistent frame-

work for reconciling data at one point in time. It has both analytic and

modeling purposes.

The last discussion of the day sought to identify the implications of the

previous days' discussions for the LSMS work program.

Chairman: Mr. Duloy

During this session the participants raised a number of issues which could

be on the critical path of the LSMS. The purpose was to subject those issues

to a full discussion during the last session of the meeting on Friday. The

series of 18 questions presented below were drafted to form the basis of that

discussion.

QUESTIONS RAISED IN DISCUSSION

1. Is there a danger that pilot studies will be biased by the selection of

countries which are already aware of the policy relevance of results?

2. Will LSMS attempt the design of short-cut approaches as compared with full

household income and expenditure surveys?

3. Will LSMS attempt to embrace perceptual questions?

4. Insofar as there is a trade-off between work on concepts and actually under-

taking pilot studies, how will this be struck?

5. Will LSMS attempt work on the design of the systems of socio-economic

classification?

- 72 -

6. To what extent will LSMS pilot studies be one-shot efforts, as opposed

to longer-term endeavors set in the context of national statistical

systems?

7. To what extent will LSMS be concerned with 'splicing' survey data with

other types of data?

8. Will LSMS address the questions that arise from trying to link data from

different surveys (at a point in time or over time)?

9. Should LSMS undertake research concerning the effects (direct and indirect)

of availability and access to public services, as well as the substitutions

among public services, and between them and private services?

10. Will LSMS undertake in-depth research into nutrition and its relationships

with water supply and education, for example?

11. Will LSMS explore the conceptual limitations of national accounts coverage

(e.g,, of investment and production)?

12. Will LSMS address questions of data processing, storage and retrieval, and

the management aspects of these and other aspects of survey work?

13. Will LSMS make recommendations in the area of tabulations and analyses?

14. Is two years a reasonable time frame?

15. How will papers of this meeting, and of LSMS in general, be disseminated?

16. How might the results of LSMS be institutionalized after the pilot: study

stage?

17. Does LSMS want to do pilot studies at all?

18. How are the ultimate objectives of LSMS to be defined?

- 73 -

Friday, February 29

FINAL SESSION

Chairman: Mr. Goldberg

Adelman mentioned a large scale nutrition study presently being under-

taken at the Nutrition Department of the University of California at Berkeley

(see question 10).

Duncan stressed the need to incorporate pilot studies into the existing

frame of surveys in countries, in order to institutionalize the effort more

efficiently. Otherwise, the danger exists that the pilot survey would be a

one-shot deal with no lasting impact. He also suggested taking a closer look

at existing data bases to see what can be learned from them. This approach

would take some pressure off the pilot study. He generally suggested de-

emphasizing the pilot survey and expanding the time horizon of LSMS beyond two

years.

Altimir saw two possible approaches, not mutually exclusive; one would be

to draw upon the best existing data bases in the statistically most advanced

country in each region. The other would be to do a new pilot study in a

statistically "standard" country. The frame to present data could include SAM,

income distribution and a manpower matrix. He suggested holding another meeting

of this group to review the progress made about mid-way through the work program.

Malinvaud referred to the pilot survey undertaken in France last year to

catch "situations defavorisees."

Seers emphasized that a distinction must be made between programs designed

to improve methodology and those designed to produce substantive results. The

main focus here should be on the former. Within that focus, one must improve

the identification of poverty and the study of causality, as well as increase

the information on the household as an entity in an overall accounting framework.

- 74 -

The pilot studies should cover both highly and less monetized societies. Test-

ing different questionnaires in the same population would have a demonstration

effect regarding conceptual issues.

Dandekar wanted to know whether the pilot study would be an expendittLre

survey or have a broader scope. The purpose should be the demonstration effect,

not the methodological improvement. One approach would be to take the experience

of statistically advanced countries and to use it as a "good starting point"

in less advanced countries.

Srinivasan recommended that the pilot study be done within the existing

statistical framework. One could test whether the level of living of the house-

hold can be described by its consumption of a few selected items or by compar-

ing the results from a wider set of questions with those from a subset. AL SAM

is a full accounting set in that context, and as it requires more information,

it ought to be seen as a next stage, if at all.

Duloy stressed that the fundamental interest of LSMS is the study of changes

over time, and in that focus the subset may not be the right approach. The pur-

pose of LSMS is to identify best practice, and to go beyond it, where research

efforts could improve best practice. In other words, there is a strong focus

on methodology.

Pyatt: The purpose of the pilot study is to go beyond best practice

as presently identified from the experience in the ESCAP, ECLA etc. studies.

SAMs help as a framework for statistical offices, but they need not be at the

center of LSMS. Accounting is not the prime purpose of LSMS but rather to

identify the poor and their links with development.

Scott saw an ambiguity between a pilot study as a test (it could be small,

subnational) vs. as a demonstration (decide on best practice and implement it

nationwide). POPLAB, for example, was intended as a laboratory for testing

methodology but pressure from the host countries caused a switch to substantive

objectives. The same would be likely to happen to any project attempting to

test methodology in LDCs over a period. Secondly, he thought that community

variables would be hard to incorporate (one would need 500-1000 communities).

It is also very difficult to experiment with different household definitions.

Finally, he saw two years as a very short time span for LSMS.

Gura said that the first two years of LSMS should be "phase 1" of a pro-

gram, implying other pbases. The pilot should be incorporated into existing

statistical programs. For example, Venezuela and Mexico have volunteered to

carry out pilot surveys on behalf of the other countries in the region in the

context of the Interamerican Household Survey Programme planned to begin in 1981

(in the framework of the UN NHSCP)

Kerstenetsky: The ultimate goal is policy design. A pilot study

is a partial approach which could only collect some of the data needed, and

which should therefore be reserved for after the examination of existing data.

Davies suggested that a pilot study is needed, but within two years all

that is possible are some small scale methodological experiments. An option may

be the modification of a survey already in the planning stage.

Muller stressed the selection of a pilot country that wants the data and

will use them for policy.

Savane suggested reviewing existing experience first, and then determining

best practice from there.

Juster: Two years is too short a period for LSMS. LSMS should

develop indices of levels of living including conventional (income, expendi-

tures) and non-conventional indicators. LSMS must therefore be methodological

and experimental. It should work within ongoing statistical programs. The

- 76 -

study of shortcut methods is important: perhaps a short survey can capture

95 percent of the variation of a full size survey. It would be very worth-

while to demonstrate that. All the above is clearly very different from

merely doing another better household consumption survey.

Dandekar pointed at the large amount of experience gained in India, Kenya,

etc. Most advances are therefore to be made in presently inexperienced

countries.

Adelman: There is something special about poverty which conventional

measures alone cannot capture. Hence, there is a need for conceptual work and

small scale tests of various approaches, rather than one large scale all-

purpose survey.

Goldberg stressed the relationship and common ground between LSMS and the

NHSCP. Cooperation with work elsewhere (ILO, WFS, etc.) is desirable.

Pyatt thanked the participants for a free and frank discussion. The

critical question is who is benefiting from development, which implies a need

for data in order to improve policy to allow wider sharing of the benefits from

development. There is a continuous line from inquiry to data and finally to

policy.

Duloy called the meeting a success in guiding the thinking of LSV[S towards

a work program. We learned about the achievements in other countries, we have

a better idea now about what can be accomplished in two years, we heard argu-

ments on pilot surveys vs. experiments, we have indicated a number of research-

able areas, and, last but not least, possible areas of collaboration with other

institutions have opened up.

Goldberg declared the meeting adjourned.

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