Expenditure analysis

1. Expenditure analysis 5th - 9th December 2011, Rome

2. Expenditures Expendituresare useful as a proxy for wider purchasing power, which is another important component of food access. Households that: • devote most of the expenditures to buy food • have low per capita total expenditures (ie, don’t spend a lot) • have debts (especially to satisfy basic needs, not for business) and are not even able to repay them are likely to have difficulties in acquiring adequate amount of food (i.e., poor food access).

3. Concerns • Quality, reliability and accuracy of expenditure data have often been questioned. • Expendituresvary seasonally (i.e., bulk purchases of staple foods). • Cleaning/checking expenditure data is very important especially when it comes to identifying outliers. (consider the per capita values !)

4. Data available – questionnaire module • Household Food expenditure • 7 days one month recall • Household Non food expenditure • 6 months recall • In cash / credit • In kind

5. Expenditure indicators 1. Total monthly household expenditures the total amount used for all possible household expenditures, converted to a monthly basis. 2. Per capita total monthly expenditure the total HH monthly expenditure divided by the number of HH members 3. Per capita monthly food expenditure the total HH monthly food expenditure divided by the number of HH members

6. Expenditure indicators cont’ 4. Expenditure shares on food The proportion (%) of total expenditures to buy food out of the total expenditure. 5. Share of expenditures on specific food and non-food items (i.e., cereals, meat, education, etc.).

7. Expenditure indicators cont’ 6. Expenditure shares on credit • Share (%) of expenditures on credit out of the total expenditure to understand the importance of credit (how much is credit used?) • Share of food expenditures on creditout of total expenditure on credit to understand if credit is more used for food or non-food items

8. Expenditure indicators cont’ 7. Per capita expenditure quintiles “per capita expenditures” are divided into 5 categories, each containing the same percentage (20%) of households. eg. Total population = 100 HHs. We sort (ascending) the variable and form 5 groups, each composed of 20 HHs (20*5=100). The first quintile (20%) is considered to be the poorest in terms of per capita expenditures. The fifth quintile can be considered as the richest 20% of the population.

9. Calculation Steps (1) Total expenditures on food items:sum all the expenditures for the food items (e.g., $wheat + $rice +…+$meat = total food exp). Total expenditures on non-food items (collected on monthly basis):sum of all the expenditures for the non-food items collected on monthly basis (e.g., $kerosene + $rent +…+ $tobacco = total non-food exp short term). • Total expenditures on non-food items (collected on long term period):Divide the long term expenditures by 6 and sum. (e.g., $edu/6 + $health/6 +…+ $ceremonies/6 = total non-food exp long term).

10. Calculation steps (2) • Total monthly household expenditures: monthly total expenditure on food items + monthly total expenditures on non-food item (short term) + monthly total expenditures on non food items (long term)

11. Calculations steps (3) Per capita total expenditure: • total monthly household expenditures divided by total number of household members. Per capita expenditure quintiles: • transform the variable “Per Capita Total Expenditures” -using “Rank” and “Ntiles” commands- in order to obtain the quintiles.

12. Calculations steps (4) Share of Expenditures on Food:Divide the total food expenditures by the total expenditures High Percentage of expenditures on food: the guideline is to recode the above variable into 4 categories: • 75+: very high (very vulnerable to food insecurity) • 65–75: high • 50–65: medium • <50: low Share of Expenditures on non Food:Sum the short term and long term expenditures on non food items. Divide the total non food expenditure by the total expenditures

13. Calculations steps (5) Share of Expenditures on Specific Food Items:divide the expenditure of a specific food item by the total expenditure on all food items. Share of Expenditures on Specific Non-Food Items:divide the expenditure of a specific non food item by the total expenditure on all non food items.

14. Types of variables & Statistics Per capita expenditures and shares of expenditure are continuous variables Analysis is based on: • Means (or medians, if the distribution is not normal) • Means comparisons • by regions • by food consumption groups • by livelihood groups • by wealth quintiles

15. Types of variables & Statistics Expenditure quintiles are categoricalvariables Analysis is based on: • Cross-tabulations • by regions • by food consumption groups • by livelihood groups • by wealth quintiles

16. Expenditure share: example

17. Reporting: Charts • Pie-charts are the recommended when reporting shares (or percentages) of particular expenditures because one unique graph displays expenditure distribution by food and non-food and by specific item.

18. Graphing

19. Expenditure by Consumption group and Asset wealth Consumption Asset wealth

20. Expenditure table