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Social Indicators Research

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04-01-2021 | Original Research

Poverty Implications of Household Headship and Food Consumption Economies of Scales: A Case Study from Sri Lanka

Authors: Maneka Jayasinghe, Christine Smith

Published in: Social Indicators Research | Issue 1/2021

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Abstract

The traditional per-capita based poverty measurements that ignore the heterogeneity in household size and composition (and hence the potential economies of scale in consumption) in female-headed households (FHHs) and male-headed households (MHHs), appear to underestimate the incidence of poverty of FHHs. Using two waves of Household Income and Expenditure Survey data (2012/2013 and 2016) collected by the Department of Census and Statistics for Sri Lanka, this study examines whether there is a difference between the level of food consumption economies of scale materialised by MHHs and FHHs, and whether FHHs overrepresent the poor after economies of scale in food consumption is incorporated when estimating poverty measurements in Sri Lanka. The Engel curves and implied equivalence scales were used for the empirical analysis. Our results indicate that de-jure FHHs materialise higher economies of scale in food consumption than de-facto FHHs and MHHs, and that the incidence of poverty is higher among de-jure FHHs even after economies of scale for food consumption are allowed for. Adjusting the poverty measurements for consumption economies of scale is critical to identify the poorest of the poor and enhance their welfare.

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This particular political unrest refers to the armed revolt conducted by the JVP party (a radical Marxist revolutionary group) against the Government of Sri Lanka in 1971 and 1987–1989 periods, which killed an estimated 80,000 people, mainly young men. This is different from the 30-year long civil war between Sri Lankan government and the Liberation Tigers of Tamil Eelam (LTTE) that ended in 2009.

The Department of Census and Statistics of Sri Lanka Microdata dissemination guidelines can be found in http://www.statistics.gov.lk/databases/data%20dissemination/DataDissaPolicy_2007Oct26.pdf.

Liviatan (1961) provides an in-depth analysis that with expenditure as a proxy for income, one can use income as an instrumental variable to obtain consistent estimates in Engel curve estimations. This is because there is a relatively close correlation between income and expenditure which makes it an efficient instrumental variable and no correlation with the random elements in expenditures, which means essentially that income received during the period of survey in household surveys is exogenous to the consumer and is not influenced by expenditures. Massell (1969) further extended this approachand used cash-income as an instrumental variable for household expenditure in estimating Engel curves for Kenya.

This is equivalent to 21US$ (in 2012/13) and 24US$ (in 2016).

In the interest of brevity, we do not present these results in this paper. However, the results are available on request.

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Title: Poverty Implications of Household Headship and Food Consumption Economies of Scales: A Case Study from Sri Lanka
Authors: Maneka Jayasinghe
Christine Smith
Publication date: 04-01-2021
Publisher: Springer Netherlands
Published in: Social Indicators Research / Issue 1/2021
Print ISSN: 0303-8300
Electronic ISSN: 1573-0921
DOI: https://doi.org/10.1007/s11205-020-02560-z

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