Update on the Impact of the Indonesian Crisis on Consumption Expenditures and Poverty Incidence: Results from the December 1998 Round of 100 Village Survey

This note is an update on the social impacts of the Indonesian crisis. In this note we focus exclusively on changes in real household consumption expenditures, as these reflect both actual changes in people's current living standards, and can also serve as a measurable proxy for income changes due to the crisis. Also, using consumption expenditures we can examine the evolution of poverty by tracking changes in the 'head count' measure of poverty: the number and proportion of individuals whose current consumption is below a defined poverty line. The data we use is from the consumption expenditures module of the '100 Village Survey' ("Survei Seratus Desa" or SSD), a survey of 12,000 households (HHs) concentrated in 10 districts ("kabupaten") carried out by the Indonesian Central Agency of Statistics ("Badan Pusat Statistik" or BPS) in May 1997, August 1998, and December 1998.

Section 1 provides a brief description of the survey. Section 2 discusses critically important issue of choosing the appropriate deflator to move from nominal to 'real' consumption expenditures, both for the analysis of the evolution of welfare and for poverty analysis. Section 3 analyzes the evolution of real consumption at the district level. Section 4 aggregates the figures from Section 3. Section 5 tests sensitivity of the changes in poverty incidence figures on the benchmark. Section 6 offers concluding remarks.

*) The authors would like to thank Lant Pritchett for his valuable comments and suggestions. We also would like to thank Franck Wiebe and Peter Rosner for their comments on earlier draft, Yusuf Suharso for his excellent research assistance, and BPS for providing access to the data.

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