DRAFT Updating Small Area Welfare Indicators in the Absence of a New Census

Abstract –Elbers, Lanjouw and Lanjouw (2003a) show how, for census years, welfare estimates for small target populations can be derived through the combination of sample survey household information with unit record population census information. Estimates for non-census years are less reliable and are, for that reason, typically not generated. This leaves small area welfare estimators often dated. This paper extends the Elbers et al. methodology by showing how reliable, updated small area welfare estimators can be generated in the absence of a new census. The approach requires panel data and the estimation of a relation between per capita consumption from the year of interest and household characteristics from the census year. The method is illustrated for Uganda. It is demonstrated that updated welfare estimates are plausible (in that they match well stratum level estimates calculated directly from the household survey) satisfactorily precise (at a level of disaggregation below that allowed by the household survey), and obtainable at low cost