Measuring chronic poverty without a panel

A new method of decomposing cross-sectional poverty estimates into chronic and transient components is demonstrated using data from a recent household survey in Papua New Guinea. This method is simpler than previously used panel methods because it does not require data on every household in every period. The only requirement is that a subset of the surveyed households have a repeat observation made on their welfare indicator some time after the initial observation. In the setting considered, the chronic and transient components of headcount poverty are roughly equal, while three-quarters of the mean poverty gap is transient-in the sense of being due to within-year fluctuations in expenditures. (C) 2001 Elsevier Science B,V, All rights reserved.