In Search of Poverty Predictors: The Case of Urban and Rural Pakistan

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The main objective of this research exercise is to provide correlates of household consumption or poverty using the latest household survey. The estimated coefficients and their weights may be used to predict poverty incidence from light monitoring survey such as Core Welfare Indicator Questionnaire (CWIQ). The CWIQ survey instrument essentially collects simple welfare indicators from a large segment of population and is not designed to measure income, consumption or expenditure. The paper estimates welfare functions separately for urban and rural areas. These functions are estimated with the help of non-monetary correlates of consumption and applied to predict poverty at provincial and district levels. The paper also provides the latest estimates of poverty in the country using a consistent methodology. Overall, 33 percent people were poor, according to the estimates from the latest available household survey of 2001-02. Incidence, depth and severity of poverty in rural areas, are high as compared with their urban counterpart.