The 1995/1996 Household Income, Expenditure - (PDF, 101 mb ...

IH.E Household Poverty in Egypt
II!.ll
The existence of relative differences in endowment provides the
justification for comparing poverty across larger economic divisions.
This section is an exercise in presenting poverty rates by classifications
and over time using data from the two HIECS surveys. Making two data
sets comparable over space and time requires assumptions. One can
adjust both the units of measurement as well as the standard measured
against. Change across space is partly accommodated by adjusting the
data using household equivalence scales. Change over time affects the
poverty line itself. The procedure is as follows: assume that total
expenditure is the indicator of household economic well-being; fix a
poverty line, then rank areas and classifications by the incidence,
depth, and severity of poverty over two survey periods. I will follow
the tradition of relying on statistical inference when comparing profile
rankings of the FGT (Foster, Greer, and Thorbecke (1981)) class of
poverty measures. These measures are sums of shortfalls conventionally
taken to the power of 0, 1, or 2, evaluated for only those households
with expenditures below the poverty line.
The consumption basket used to construct household total
expenditures for the two survey years was an annualized sum of
monthly or quarterly (depending on the commodity type) expenditures
from household diaries kept for one full month. The household
respondent was instructed to keep this record for every expenditure
transaction made by all household members. The monthly household
expenditure totals were then transcribed onto the primary instrument,
the questionnaire, which was pre-coded to accommodate all classified, as
well as unclassified, goods. Budget shares were calculated for 572
distinct expenditures in the 1990/1991 HIECS. The 1995/1996 HIECS is
even more detailed: 635 separate commodities or groupings are
represented.
Certain commodities, such as balady and shami bread, flour,
cooking oil, sugar, tea, and soap, were subsidized or rationed during
the 1990/1991 HIECS data collection. Bread, flour, cooking oil and sugar
were also subsidized and consumed by large proportions of the Egyptian
population, poor and rich alike. However, they are decreasing in
importance as components of total household budgets, and the proportion
of households which chose to consume subsidized goods in the cross
section, in both surveys, should not have been biased in selection.
Finally, with the exception of flour, they are empirically normal goods. 22
Earlier studies exist which assess both the spatial and temporal
dimensions of poverty. Cardiff (1993) uses the full 1990/1991 HIECS
22 That this result directly contradicts the findings of Ali and Adams
(1996), op. cit., should in no way detract from their primary thesis, that
consumption of subsidized goods falls as income rises, so that these goods are
proper candidates for attracting government attention through transfers.
However, the focus of the debate has shifted, rightly, to the question of
efficient targeting of subsidies - at present subsidized goods are too widely
consumed to have their intended fiscal impact on disadvantaged groups.