Monitoring Poverty Without Consumption Data : An Application Using the Albania Panel Survey

In developing countries, poverty is generally measured with expenditure data, which are normally available only every three to five years. In between surveys, there is a clear need to provide policy makers with information for the monitoring of poverty trends. This paper reviews several methods with which to perform this monitoring and compares the poverty estimates and trends resulting from their application to a panel data set for Albania. The results are broadly consistent across methods and point to an overall improvement in welfare conditions over time, concentrated in urban areas. Lacking a gold standard measure, the use of a suite of welfare indicators, if duly validated, can be a viable approach to monitor poverty trends. Caution should be exercised in drawing conclusions about the actual magnitudes of the changes.