2 - The Impact of the Economic Crisis on Consumption Expenditures and Poverty Incidence

Summary

INTRODUCTION

The economic crisis that began in mid-1997 had an overwhelming social impact on the Indonesian population, whose living standards deteriorated as the krismon increasingly affected their incomes. In examining this social impact, the present chapter focuses on changes in real household consumption expenditures, as they reflect actual changes in living standards and form a measurable proxy for income changes due to the crisis. At the same time, the use of consumption expenditures enables the evolution of poverty to be examined by tracking changes in the headcount measure of poverty.

The data used in this chapter are from the consumption expenditures module of the 100 Village Survey (Survei Seratus Desa or SSD), which was sponsored by UNICEF and carried out by Statistics Indonesia (Badan Pusat Statistik or BPS) in May 1997, August 1998, and December 1998. The Survey covered one hundred villages located in ten administrative districts (kabupaten) spread across eight provinces. The present analysis is based on three rounds of the Survey.

THE 100 VILLAGE SURVEY

In December 1998, the 100 Village Survey collected data from 12,000 households, many of which had previously been surveyed in August 1998 and May 1997. It surveyed 120 households in each of the 100 villages in each round. The selection of households was somewhat complicated. In the May 1997 round, 120 households were chosen randomly from two enumeration areas within the villages. The general method in the August 1998 round was to add a new enumeration area. Forty new households were then chosen randomly from this new enumeration area. In the two enumeration areas used in the previous survey, eighty households were chosen to be re-interviewed in return visits to the same dwellings. If the households could not be identified at those dwellings, other households from the original 120 interviewed in 1997 were selected and added to keep the sample size at 120. This was the planned methodology but it appears that there were some deviations from this sampling procedure in the field: in some villages more than eighty households were matched and in other villages many fewer than eighty households were matched. Meanwhile, in December 1998 all 120 households from the August 1998 round were supposed to be re-interviewed. Unidentified households were replaced by new, randomly selected households.