Summary
Summary Chapter 11 - Measurement (J. De Weerdt)
- Course
- Institution
The whole lesson typed out, in detail!!
[Show more]
Seller
Follow
maari
Reviews received
Content preview
11. Measurement (J. De Weerdt)1. Introduction
Question: Which country has the highest number of absolute poor living in it? (using the World Bank’s
international poverty line for extreme poverty of US$1.90 in 2011 purchasing power parity dollars per person
per day)
- 56% of the poor live in Africa
- Of the world’s 28 poorest countries (with highest poverty rates), 27 are in Sub-Saharan Africa, all with
rates above 30%
- 50% of poor live in 5 countries: India, Bangladesh, Nigeria, DRC & Ethiopia
- India has 13% poverty rate but most poor because of high population (1.3b).
The change:
- An impending change to survey methodology may make Nigeria the country with the most poor. It
only depends on the way that people are surveying!!
- India will change from a universal reference period of 30 days for all consumption items
Long for frequently consumed
Short for capturing infrequently purchased items.
- To a modified reference period
1 year for infrequently purchased items
7 days for frequently purchased items
30 days for the remaining items
The effect:
- 50 million Indians classified from poor to non-poor
- Country in the world with most poor will change from India to Nigeria
- Clearly survey methods matter for headline development statistics
- But they also matter for analysis (next)
, 2. Standard measurement error
Classical measurement error
Very good summary here https://www.youtube.com/watch?v=Pz4ephK-f94
For a more formal treatment see section 1, 2.0 and 2.1 in Bound, John, Charles Brown, and Nancy Mathiowetz.
2001. Measurement Error in Survey Data. In Handbook of Econometrics, vol. 5, edited by James J. Heckman
and Edward Leamer, 3705–3843. Amsterdam: Elsevier Science. Paywall broken here:
https://www.psc.isr.umich.edu/pubs/abs/1252 (read what we have seen in the slides!)
Bound et al. 2001
Assume true model is:
Where 𝑦* and 𝑋* are true values
Instead of 𝑦* and 𝑋* we only observe 𝑦 and 𝑋 with
One (very) special case known as classical measurement error: the errors ( and 𝜐) are uncorrelated with the
true values of X, Y and the error term in the model (𝑋*, 𝑦* and ε).s
Classical measurement error in dependent variable
True model is:
With we are really estimating
(𝜀 + 𝜐) is new error term, under classical measurement error assumptions this means:
- OLS remains unbiased and consistent
- Only efficiency is reduced because v𝑎𝑟(𝜀 + 𝜐) > 𝑣𝑎𝑟(𝜀)
- If 𝐸[𝜐] ≠ 0 then 𝛽0 (the constant term) is biased
Graphically, vertical shifts of observations do not change slope
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller maari. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $6.89. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
73314 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now