ETHIOPIAN DEVELOPMENT RESEARCH INSTITUTE

Kibrom Tafere and Alemayehu Seyoum Taffesse Ethiopia Strategy Support Program II

International Food Policy Research Institute

A Presentation at the 8th International Conference on the Ethiopian EconomyEthiopian Economic Association and Ethiopia Strategy Support Program II

June 24-26, 2010

Evolution of Expenditures and Well-being

The views expressed in this paper are those of the authors and do not represent the official positions of their respective institutions.

• Approaches

• Data

• Trends

• Closing observations

Outline

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• Objective • to ascertain the trend in the welfare of Ethiopian households over time using several

datasets;• ongoing

• Approach• Unit of analysis – households• Economic status – quintiles • Location – rural and urban• Characterisation – Descriptive statistics

• Data• HICE – 1995/96, 1999/2000, 2004/05• ERHS – 1997, 1999, 2004• DHS – 2000, 2005

Introductory

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• Expenditure patterns

• Levels – real per capita , over time by household group and location;

(Deflator – National CPI with 1995/96=100)

• Shares – food-nonfood, commodity groups, over time, location

• Calorie intake

• Trends in other well-being dimensions

• Demographics - household size, household composition;

• Assets – radios, bicycles, mobile phones

• Access to amenities, services – drinking water, schools, health facilities, power

Indicators

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Expenditure Patterns – Countrywide Levels/Shares• Food accounts for the bulk of household expenditure;• The level of total expenditure rising; • The share of food declining;

Real Per capita Expenditure (HICE)

Level (Birr) Share (%)

1995/96 1999/00 2004/05 1995/96 1999/00 2004/05

Food 652 595 630 61.4 63.2 53.7

Alcohol and Tobacco 9 7 13 0.9 0.7 1.1

Health 13 10 6 1.2 1.1 0.5

Education 4 7 10 0.4 0.7 0.9

Festivals 21 25 21 2.0 2.7 1.8

Other Non-food 364 296 494 34.3 31.5 42.1

Total 1,064 942 1,176 100.0 100.0 100.0

Price Index (1995/96=100) 100 109.6 128.6 5

Expenditure Patterns – Rural vs. Urban Levels/Shares• The above mentioned trends apply to household expenditure in rural areas;• Total household expenditure appears to remain unchanged in urban areas;

Real Per capita Expenditure (HICE) – Levels (Birr)

Rural Urban

1995/96 1999/00 2004/05 1995/96 1999/00 2004/05

Food 614 584 621 908 668 685

Alcohol and Tobacco 9 7 14 13 8 12

Health 12 9 5 21 18 10

Education 2 4 6 17 27 32

Festivals 21 26 21 19 24 22

Other Non-food 333 249 450 572 596 761

Total 990 878 1,117 1,549 1,342 1,522 Price Index (1995/96=100) 100.0 109.6 128.6

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Expenditure Patterns – Rural vs. Urban Levels/Shares• The share of food falling faster and more consistently in urban areas;

Real Per capita Expenditure (HICE) – Shares (%)

Rural Urban

1995/96 1999/00 2004/05 1995/96 1999/00 2004/05

Food 62.0 66.5 55.6 58.6 49.8 45.0

Alcohol and Tobacco 0.9 0.8 1.2 0.8 0.6 0.8

Health 1.2 1.0 0.4 1.3 1.4 0.6

Education 0.2 0.4 0.6 1.1 2.0 2.1

Festivals 2.1 2.9 1.9 1.2 1.8 1.5

Other Non-food 33.6 28.4 40.3 36.9 44.5 50.0

Total 100.0 100.0 100.0 100.0 100.0 100.07

Expenditure Patterns – Quintiles (Levels/Shares)• declining trend in food shares, festivals significant , • Narrowing differential between Q5 and Q1 from 4-fold to 3-fold – suggest income of

the poor growing faster but still low,

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Real Per capita Expenditure (HICE)Quintile Year Food Non-food Total

Level (Birr) Share (%) Level (Birr) Share (%) Level (Birr)

Q11995/96 341 63.7 194 36.3 534 1999/00 383 71.0 157 29.0 540 2004/05 398 59.5 271 40.5 670

Q21995/96 519 63.5 298 36.5 816 1999/00 550 69.2 245 30.8 795 2004/05 597 60.6 388 39.4 985

Q31995/96 665 61.3 419 38.7 1,084 1999/00 671 66.8 333 33.2 1,004 2004/05 708 55.9 558 44.1 1,266

Q41995/96 932 60.8 602 39.2 1,534 1999/00 810 61.6 505 38.4 1,316 2004/05 854 50.4 840 49.6 1,694

Q51995/96 1,567 58.1 1,131 41.9 2,698 1999/00 1,033 43.9 1,320 56.1 2,353 2004/05 1,036 37.2 1,753 62.8 2,789

Calories• Countrywide - Rising calorie intake, • Rural calorie intake higher in the last rounds (prices, composition of food basket);• The bottom quintile is not growing as fast

Per capita Calorie Intake - HICE

1995/96 1999/2000 2004/05

Countrywide 1,864 2,126 2,265

Urban 2,058 1,663 1,996

Rural 1,838 2,199 2,309

Quintile 1 1,293 1,577 1,568

Quintile 2 1,662 2,090 2,216

Quintile 3 1,883 2,406 2,573

Quintile 4 2,430 2,682 2,934

Quintile 5 3,280 2,658 2,997

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Expenditure Pattern - ERHS

• Upward trend with some fluctuation,

HouseholdsReal Per-capita Food Expenditure (ERHS)

1995 1997 1999 2004 2009 – ERHS deflator

2009 – National CPI

All Sample 608.9 909.2 931.2 885.1 616.8 1382.8

Quintile 1 144.1 259.6 236.4 212.5 231.50 426.9

Quintile 2 289.1 474.3 449.1 418.8 399.98 793.2

Quintile 3 452.4 728.8 686.9 649.1 519.14 1186.2

Quintile 4 692.1 1,005.4 1,066.1 938.7 777.48 1774.7

Quintile 5 1,469.6 2,082.0 2,220.6 2,210.4 1,470.57 3500.9

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Expenditure Pattern - ERHS

• The latest rounds provide some indication of a negative impact of the recent episode of rising real prices on households;

• The impact is varied over quintiles - the bottom two improved (still low), the top three deteriorated

ERHS Site Per capita calorie (2004)

Per capita calorie (2009)

Change from 2004 to 2009

(%)All Sample 1,004.5 844.2 -16.0

Quintile 1 305.1 363.1 19.0

Quintile 2 577.4 602.4 4.3

Quintile 3 852.0 782.9 -8.1

Quintile 4 1,191.3 1,023.3 -14.1

Quintile 5 2,524.4 1,794.0 -28.9

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Expenditure Pattern - ERHS• The impact is varied over space - shocks played a role

ERHS Site Region Per capita calorie (2004)

Per capita calorie (2009)

Change from 2004 to 2009

(%)Haresaw Tigray 960.4 594.1 -38.1Geblen Tigray 1,351.7 578.5 -57.2Dinki Amhara 772.7 746.9 -3.3Yetmen Amhara 1,361.5 768.8 -43.5Shumsheha Amhara 1,475.1 901.8 -38.9Sirbana Godeti Oromia 1,283.8 1,390.9 8.3Adele Keke Oromia 635.7 1,032.1 62.4Korodegaga Oromia 754.9 1,162.1 54.0Trirufe Kechema Oromia 1,035.3 935.1 -9.7Imdibir SNNP 385.9 530.4 37.4Aze Deboa SNNP 1,099.6 678.5 -38.3Adado SNNP 458.7 687.8 49.9Gara Godo SNNP 1,073.9 541.0 -49.6Doma SNNP 940.8 813.7 -13.5Debre Berhan, Milki Amhara 1,528.8 1,044.0 -31.7Debre Berhan, Kormaragfia Amhara 1,426.3 953.5 -33.1Debre Berhan, Karafino Amhara 1,100.2 907.7 -17.5Debre Berhan, Bokafia Amhara 1,749.9 896.2 -48.8

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Other Welfare Indicators

Assets (WMS-HICE (1995/96 – 2004/05); DHS (2000-2005), ERHS (1999-2004)

• Asset ownership growing overall, and growing faster in rural areas (albeit from a low base) - radio, bicycles – WMS, DHS

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Access to public services – education, health,

• School Enrollment: Children 7-14y - ERHS

Other Welfare Indicators

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Other Welfare Indicators

Self-Reported Perceptions of Poverty - ERHS

Household Demography (WMS-HICE, 1995/96 – 2004/05)

• Average household size more or less the same - close to 5;• Average household size rose by 1 in the poorest quintile, but declined

by about the same rate in the top two quintiles;• The same pattern is displayed, or caused by, the average number of

children;• Poorer households have larger and growing size, partly because they

have more and rising child membership; • Poorer household have rising dependency ratio;

Other Welfare Indicators

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Other Welfare IndicatorsHousehold Demography

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Expenditure Quintile Year Household

sizeNumber of

ChildrenDependency

Ratio (%)

Average Age of Household

Heads (years)

Q11995/96 5.2 3.0 47.9 45.3 2004/05 6.2 3.8 55.1 43.8

Q21995/96 5.1 3.0 48.8 45.4 2004/05 5.2 2.9 51.4 43.3

Q31995/96 5.1 2.8 42.9 45.3 2004/05 4.4 2.2 43.8 43.4

Q41995/96 4.6 2.3 38.2 44.0 2004/05 3.4 1.4 34.3 41.8

Q51995/96 4.2 1.8 30.3 41.4 2004/05 3.3 1.2 24.0 39.2

Some evidence of improving welfare• Assets – radios, bicycles, mobile phones; • Education and health outcomes – enrollment;• Perceptions – less poor, less unhappy

Mixed picture with total expenditure and calories • 10 PAs (out of 15) declined calorie intake;• Real expenditures fell – ERHS-based deflator;• Real expenditures more or less constant - national CPI • Some evidence of a decline in real wages

(eg. 15% fall in real wages of daily labourers in AA during 2003-12 and 2008-1) Outcomes display considerable variation across space

Rainfall Market access

Need more data (HICE 2010/11) more analysis

Observations

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