Changes in Access to Assets

Abstract

Over the last several decades economists have generally used income to measure wealth, welfare and other indicators of well-being. But income data have some limitations in both accuracy and measurement, especially in non-market economics, where people are generally engaged in economic activities outside the market. Incomes earned from the informal sector and self-employment are highly variable since income may be seasonal or temporary. Thus taking a snapshot of income at one point of time may give a less reliable measure of monthly or annual income. Problems of sampling bias, under-reporting of income and difficulties of assessing income from self-employment inside or outside household are also raised. This means that income data which are often unreliable or inaccurate do not provide a real picture of the well-being of people. In order to overcome these problems many economists have used expenditure and consumption data to measure well-being (Chen and Ravallion 2000; Ellis 2000). Although expenditure solves some of the problems faced in using income data such as seasonal variation, yet expenditure data are not completely free from measurement errors such as problems of measuring the value of bartered goods and measuring consumption expenditure on home products. However, despite having expenditure data with less error, the economists generally use income data to measure well-being.