Household Survey Data and Pricing Policies in Developing Countries

Abstract

In recent years, household survey data from developing countries have increasingly become available and have been increasingly used to cast light on important questions of policy. The reform of prices, whether agricultural prices, consumer taxes, subsidies, or tariffs, has consequences for individual welfare and for government revenues, and these can be investigated empirically with household survey data. The gainers and losers from price changes can be identified, and the magnitudes of their gains and losses measured. Nonparametric estimation techniques provide a straightforward and convenient way of displaying this information. The procedure is illustrated for the effects of rice pricing in Thailand using data from more than five thousand rural households. Estimates of the revenue effects of price reforms are harder to obtain, because they require estimates of supply and demand elasticities, estimates that are not easily obtained for many developing countries. A procedure is presented for estimating price elasticities of demand from spatial price variation as recorded in household survey data. The main innovations lie in the appropriate treatment of quality variations and measurement error. Applications of the procedure in Cote d'Ivoire, Indonesia, and Morocco are reviewed.