The insights and illusions of consumption measurements

Abstract

While household well-being derives from long-term average rates of consumption, welfare estimates rely on shorter-duration survey measurements. We develop a strategy to identify the distribution of these long-term rates by leveraging a large-scale randomization that elicited repeated short-duration measurements from diaries and recall questions. Identification stems from diary–recall differences in reports from the same household, does not require reports to be error-free, and hinges on a research design with broad replicability. Our strategy delivers practical and cost-effective suggestions for designing survey modules to yield the closest measurements of household well-being. We find little empirical support for the claim that acquisition diaries yield the most accurate measurement of poverty and inequality and offer new insights to interpret and reconcile diary–recall differences in household surveys.