Data from the recently completed 2014-15 Timor-Leste Survey of Living Standards (TLSLS-3) show a significant reduction in poverty in the country since 2007. At the national poverty line, which represents the cost of meeting basic needs in relation to food, shelter and non-food items in Timor-Leste, the proportion of Timorese living in poverty declined from 50.4% in 2007 to an estimated 41.8% in 2014. At the internationally comparable extreme poverty line of $1.90 (in 2011 purchasing power parity dollars), poverty in Timor-Leste fell from 47.2% to 30.3% over the same period. This Executive Summary provides an overview of:
1) key design features of the household survey;
2) the main steps used in arriving at the above estimates; and
3) key findings on poverty in Timor-Leste.
TIMOR-LESTE SURVEY OF LIVING STANDARDS-3 TLSLS-3
is the third in the series of nationally representative surveys conducted by the General Directorate of Statistics (DGE). These surveys are designed to help measure and monitor living standards in Timor-Leste. They do this by collecting information on a broad range of topics including consumption expenditures, health, education, employment, housing and access to services. A total of 5,916 households were interviewed by trained and closely supervised enumerators over 12 consecutive months from April 2014 to March 2015, and the sample was distributed across the country so as to obtain reliable district-level poverty estimates. The survey was deliberatively designed such that poverty estimates could be directly compared with those estimated from TSLSS-2, the household survey conducted in 2007.
METHODOLOGICAL STEPS IN POVERTY ESTIMATION
Even though the understanding of poverty generally differs across people, places, and social contexts, it is based on some underlying notion of deprivation. That is, poverty is defined as having fewer resources than would be needed to meet basic human needs, even though what are considered “basic needs” might differ across countries and across people. Deprivations also exist in different dimensions (e.g. food, shelter, health, education etc.), and for practical purposes, there is need for a summary measure that captures these multiple dimensions.
This report provides key results using
(i) a consumption-based indicator that aggregates deprivations in multiple dimensions in monetary terms and
(ii) a set of non-monetary indicators that directly capture specific deprivations in key dimensions.
A consumption-based rather than income-based measure is used because information on consumption is more easily and accurately collected than information on income given the large subsistence and informal sectors in the economy. In addition, non-monetary indicators are used to assess deprivations in specific dimensions that are not completely captured by monetary measures, such as health, education, and ownership of essential assets. Consumption-based poverty measures. The consumption-based indicator is per capita total household expenditure which consists of three key components:
1) the value food expenditures (purchased as well as own-produced);
2) the rental value of dwellings (actual or imputed); and
3) the value of all other non-food, non-rent expenditures.
The values of food and non-food consumption were directly computed from TLSLS-3 responses. For rent, as most dwellings are owner-occupied and few people actually pay rent, the value of rent is imputed with the commonly-used hedonic regression approach. The hedonic model uses the relationship between respondents’ estimates of actual rent paid (when available) or how much their dwelling could be rented for and the characteristics of the dwelling to estimate market values of dwellings with specific characteristics. The consumption-based poverty line is the sum of three components:
1) the food poverty line;
2) the rental poverty line; and
3) the non-food non-rent poverty line.
The food poverty line is derived as the cost of the typical local food basket that yields a nutrient value of 2,100 calories per person. The rental poverty line is the average estimated rental cost of a reference dwelling that has 2 rooms, good external walls, proper sanitation and access to electricity. Finally, the non-food poverty line is specified as the average non-food expenditure