This paper focuses on the derivation of a welfare indicator for households from consumption data. The authors refer to data from Ecuador in examining the steps involved in constructing consumption aggregates and highlight some of the principles that should guide the analysis.

The paper demonstrates that the definition of consumption adopted can have a significant bearing on measured poverty. It cautions against poverty comparisons that are based on different underlying consumption definitions. Simple methods are outlined for imputing a hypothetical rent for owner-occupied housing, for including consumption of basic social services, and for calculating a stream of consumption derived from a stock of consumer durables.

52 pages / 8½ x 11 / (ISBN 0-8213-3584-7) / Stock No. 13584 / $7.95 Price code 007

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