Part of PSSP's efforts in capacity building of distributional indicators and micro-simulations linked to CGE modeling

1. Using HIES Consumption
HIES data is used to inform the microsimulations
1) Consumption data from HIES is mapped onto the consumption
variables we want
2) Observed households are mapped into the representative
household groups in the CGE model
2) Data is standardized to monthly consumption
3) Data is weighted and aggregate consumption variables are created

2. SAM HIES Consumption Items
Wheat = Wheat and Wheat flour + Bread, Bun, Sheermal + Tandoori Roti, Nan, Kulcha, Puri, Paratha
Fruit and Vegetables = Banana + Citrus fruits + Apple + Dates + Grapes + Mango + Other Fresh Fruits + Canned Fruits + Potato + Onion +
Tomato + Cabbage, Cauliflower + Karaila, Lady finger, Brinjal, Cucumber + Tinda, Pumpkin, Bottle Gourd + Radish, Turnip, Carrot + Peas,
Moongra + Other ( Green Chillies, Tural, Lettuce, Kulfa etc. ) + Canned vegetables
Livestock = Milk (fresh & boiled) + Milk (packed by milk plants) + Milk, Powdered (for adults & children ) + Beef + Mutton
Poultry = Chicken meat / Other poultry birds + Eggs
Fishing = Fish / Prawns, Shrimps, Crabs
Vegetable oil = Desi Ghee + Vegetable Ghee + Cooking oils, other oils and fats
Sugar = Sugar (desi or milled)
Cotton Cloth = Purchase of cloth(for pillow covers, bed sheets quilts etc.) & Purchase of cotton (for quilts, pillows, etc.)
Knitware = New ready-made & second hand garments/under garments (for males, females & children), Sweaters,
Garments = Woolen cloth (suits, trousers, coats, etc.), Cotton cloth ( shirts, shalwar, etc.), Mixed(nylon ) + Wool for sweaters, socks, shawls,
gloves etc. + Burka, Chadar, Ajrak + Tailoring, embroidery, alterations etc. charges ,Clothing supplies(threads, needles, pins, buttons
Textile = Readymade pillow covers, bed sheets, blankets, curtains, mosquito nets etc. + Carding and other stitching charges on household
textile
Leather = Footwear made of leather, synthetic or any other material (all types new or second hand) + Repair charges of footwear, Polishes,
shoe shining and cleaning brushes etc. + Brief cases, hand bags, watch straps, belts etc. (leather or plastic)
Petroleum = Petrol/ Diesel charges, lubricants & oils, punctures
Rail = Expenses on travelling by train

3. Road Transport = Expenses on travelling by road (bus, taxi, rickshaw etc.) + Other travelling charges like tongas, camels, donkeys, ferries,
bicycles, Garage + Other expenses on tyre, tube, spare parts, repairs of vehicle etc. and service charges + Transport and travelling vehicles
(Bicycle, Motorcycle, Scooter, Car, horses, camels, tongas etc.)
Construction = Minor repairs/maintenance & redecoration/addition/alteration
Other Manufacturing = Personal durable effects (Wrist / pocket watches, sun glasses, etc. ) + Metal furniture/ cots etc + Plastic
furniture/cots etc + Floor coverings ( hand / machine made ), carpets, rugs etc. + Electric/ oil fans (table, pedestal, ceiling, exhaust), Air
conditioners, Air coolers, Refrigerators, Freezers etc. + Sewing machine, knitting machine (electric / hand) + Other(trunks, suitcase etc.),
Wall / table clock, water pipes (rubber, nylon, plastic), thermos bottle etc.
Air Transport = Expenditure on by Air Travel
Rent Housing = House rent (Market value) + Subsidized house rent (Hiring, Self-hiring) (Market value) + Summer cottage rent
Own Housing = Rent free accommodation (Market value) + Owner occupied accommodation(Market value)
Education = School/college fees and private tuition fees + Books and exercise note books / copies, stationary etc. + Hostel expenses +
Stationery supplies such as pen, pencils, stapling machine, pin etc.
Health = Medical fees paid to doctors, specialists, hakeem / midwives outside hospital, including medicine etc.
Hospitalization charges, including fee etc. for doctor / hakeem etc.and laboratory tests, x-Ray charges
Dental care, teeth cleaning, extraction, charges, eye glasses and all others, not elsewhere.classified
Chemicals = Purchase of medicines & vitamins, medical apparatus, and other equipment / supplies etc.
Rice = Rice and rice flour
Other Crops = Maize, Barley, Jawar and Millet (Whole and Flour ) + Suji, Maida, Besan + Gram Whole ( Black and White) + Dal chana + Mash +
Moong + Masoor + Other ( Arhar, chick / pigeon /garden peas, sunflower, soybean )

4. Other Food = Other cereals products (Vermicellies, Corn flakes, Noodles, Macronis, Spageite) + Biscuits ( Sweet & Saltish ) + Other baked or
fried products (Pakoras, Samosa, Qatlama, popcorn etc.) Cake + Jams, Marmalades/ Tomato Ketchup/pulp/ Pudding, Jelly, Pickles, Chatni,
Vinegar + Food and Grain milling/grinding charges + Sugarcane juices, Other fresh juices, Fruit juices (packed), Mineral water etc
Taxes = Fines, birth/marriage taxes and pet keeping taxes etc. Passport/Visa, Other cesses & taxes + House and property tax
Wood = Fire wood
Energy = Kerosene oil + Char coal + Coal hard & soft peat + Dung cake (dry) + Gas (pipe), (Gas (cylinder) + Electricity + Beggasses, Agricultural
wastes for fuel purposes
Personal Services = Hair cutting & dressing etc. for men(include shaving material), women and children + Beauty parlour services + Dry
cleaning, washing, dying, darning
Other Private Services = Wages & salaries paid to servants, gardeners, sweepers, chowkidars, aya + Legal expenses (not related to business)
+ Insurance premium such as fire, accident and travel insurance (exclude life / housing/vehicle insurance)

5. • The data is generated for every household of the
HIES survey. Every household is a single row in the
dataset, and variables are across the columns:
hhcode RHG SIZE ADEQ WEIGHT C-WHTF C-CHEM … TOTAL-CONS TOTAL-INCOME
10011100101 H-UOQ 9 7.627234 82.58048 1900 166.6667 401022 816000
10011100102 H-UOQ 7 5.529362 82.58048 1840 166.6667 267352 888000
10011100103 H-UOQ 6 5.935319 82.58048 750 125 236528 300000
10011100104 H-UOQ 8 7.234043 82.58048 900 166.6667 228505 672000
10011100105 H-UQ2 6 5.16766 82.58048 50 66.66666 179624 384000
10011100106 H-UQ1 5 4.762553 82.58048 915 166.6667 157606 240000

6. Generating the Poverty Line
• Official poverty line was estimated for year 2000-01
• Poverty line was ‘updated’ till year 2005-06 by
adjusting the poverty line by the inflation rate
• Poverty figures have not been published for 2007-08
and later years due to technical issues in estimation
• One of the criticisms of the updated poverty lines is
that they are based on inflation rates that
underestimates the real inflation in Pakistan

7. • Our estimated poverty line for 2010-11 is based
on the official poverty line estimated for 2000-01
(Rs748.565 per adult equivalent)
• We find the government inflation rates from PBS
for different consumption groups: 1) Food,
beverages & tobacco, 2) Apparel, Textile &
Footwear, 3) House Rent, 4) Energy, 5) Household
Furniture, Equipment etc, 6) Transport &
Communication, 7) Recreation, Entertainment,
8) Education, 9) Cleaning, Laundry & Personal
Appearance, 10) Medicare

8. • We calculate the composition of expenditure for
these 10 consumption groups for the quintile
with lowest adult equivalent expenditure
• We multiply the inflation of the consumption
group with its share in expenditure, and add
them for all consumption groups to calculate the
inflation affecting the poor
• This suggests that the inflation between 2000-01
and 2010-11 is 165.69%. The official government
inflation rate 144.26%
• We use our inflation measure to update the
2000-01 poverty line to year 2010-11. The
poverty line for 2010-11 is Rs. 1988.86

9. Microsimulation of consumption values
Update using the simulated percent changes in consumed quantities
(from CGE model) at original prices of associated RHG:
CSIMV(C,HO,SIMCUR) =
*Original consumption value of the sampled household
CSIMV(C,HO,'BASE')
*
*Simulated consumption value
QHX(C,H,SIMCUR)
/
*Base consumption value
QHX(C,H,'BASE')
• H: representative household group to which observed household HO belongs.

10. Foster-Greer-Thorbecke poverty measures
α
α ∑=





 −
=
M
i
i
z
yz
N
P
1
)(1
P0 = Poverty Headcount Ratio (HCR)
P1 = Poverty Gap Ratio
P2 = Squared Poverty Gap Ratio
where z is the poverty line
yi is the income (or consumption) of person i
N is the number of individuals in the population,
M (k in the Lecture Note) is the number of poor people

11. Microsimulation of FGT poverty
measures
POVTAB(G,SIMCUR,FGT) =
100/NI(G)
* SUM(HO$HPOOR(HO,SIMCUR),
GOI(HO,G)
*H0V0(HO,'SIZE')
*H0V0(HO,'WEIGHT')
*(( PLADEQ - WELFHO(HO,SIMCUR))/PLADEQ)
**(FGTP(FGT)))
, where G is group of interest (national, urban, rural), FGT and FGTP is
α, NI nr of individuals, HPOOR poverty dummy, GOI identified sampled
households belong to group G, size is household size, weight is nr of
households represented by observed one, PLADEQ is poverty line per
adult equivalent, WELFHO is consumption per adult equivalent.