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Related Experiment Videos

Measuring living standards with proxy variables.

M R Montgomery1, M Gragnolati, K A Burke

  • 1Department of Economics, State University of New York at Stony Brook, USA. mmontgomery@popcouncil.org

Demography
|June 3, 2000
PubMed
Summary
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Household surveys in developing nations often lack income data, forcing reliance on proxy indicators. While these proxies weakly predict living standards, they remain useful for hypothesis testing in demographic research.

Area of Science:

  • Demography
  • Development Economics
  • Social Science Research Methods

Background:

  • Limited data on household income and consumption expenditures in developing countries.
  • Prevalence of using proxy indicators for assessing living standards due to data scarcity.
  • Lack of systematic analysis on the properties and utility of these proxy indicators.

Purpose of the Study:

  • To investigate the hypotheses that can be tested using proxy indicators for household living standards.
  • To systematically analyze and compare the predictive power of common proxy indicators against consumption expenditures per adult.
  • To evaluate the suitability of proxy indicators for research on living standards in developing countries.

Main Methods:

  • Comparative analysis of proxy indicators against a preferred measure of living standards (consumption expenditures per adult).

Related Experiment Videos

  • Statistical evaluation of the predictive accuracy of various proxy indicators.
  • Assessment of the power of hypothesis tests utilizing proxy indicators.

    • Main Results:

    • Proxy indicators commonly used in demographic research demonstrate weak predictive power for consumption expenditures per adult.
    • Despite weak predictive accuracy, hypothesis tests employing these proxies may still possess sufficient statistical power.
    • The systematic analysis reveals limitations but also potential utility of proxies in specific research contexts.

    Conclusions:

    • While imperfect, proxy indicators can be a viable, albeit limited, tool for studying living standards when direct expenditure data is unavailable.
    • Researchers should be aware of the limitations of proxies but can still leverage them for hypothesis testing in demographic studies.
    • Further research into refining proxy indicators and understanding their specific applications in diverse developing country contexts is warranted.