Household Survey Data and Pricing Policies in Developing Countries

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 refortn of prices, wbether 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 housebolds. 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 C6te d'Ivoire, Indonesia, and Morocco are reviewed. Although household surveys have been used to describe living standards for a very long time, there has recently been a considerable increase in interest in the use of such data, particularly for developing countries. This interest has been motivated in part by methodological concerns, in part by data availability, and in part by advances in computing. However, there has also been an increased awareness of the fact that household surveys are by far the richest source o