# **Appendices**

# **1) Details on food and non-food poverty lines**

The food poverty line each year is computed as follows. The total caloric requirements of a household are the sum of the caloric requirements of its members. These individual requirements differ by age categories and sex and are also separately specified for urban and rural individuals. The price of a calorie is based on a reference food bundle, which corresponds to the average food consumption for the poorest 40 percent of households when ranked by nominal per capita consumption. This reference bundle is thus defined at the national level. The price of purchasing this bundle is then computed in each region (using for each item its median unit values observed in the region, accounting for potential food subsidies). The regional price of a calorie corresponds to the regional cost of this bundle divided by the total calorie content of this bundle.

The non-food poverty line is computed as a given fraction of the food poverty line using the imputed share of food. Following Engel’s law, this imputed share is computed by regressing the _observed_ food shares against the logarithm of total household expenditure relative to the food poverty line and its square, which is O where α is the intercept, shr is the observed share of total consumption spent on food, xhr is the household total consumption, ε is an error term, and dhr is a vector of household demographic characteristics: region, logarithm household size and its square, share of children, share of adult males, share of adult females (and the complement is the share of elderly). The coefficients of this regression are then used to impute the food share shr when assuming that total consumption is equal to the food line.<sup>8</sup> This assumption implies that the imputed food share corresponds to the share of food of households with the same characteristics but whose total consumption corresponds to the food line. These households have a consumption strictly smaller than the poverty line, hence they typically spend a larger share on food, which yields a rather “low” poverty line.<sup>9</sup>

# **2) Details on the measure of household consumption**

# **Total expenditures versus welfare aggregates**

The welfare indicator used in Egypt’s official monetary poverty figures is annual household consumption. The consumption aggregate includes all spending on consumption of goods and services, including food and beverages; clothes and footwear; housing; housing services (water, electricity, gas, and fuel); furniture and household equipment and maintenance; health care; transportation; wired and wireless communication; culture and recreation; education; restaurants and hotels; and miscellaneous goods and services. The implicit value of housing is also added. Food subsidies, which lower the price of a few basic food items, are accounted in the welfare aggregates, while energy subsidies are not.

When performing this analysis, a series of obstacles prevented us from satisfactorily replicating the official poverty figures in 2015 and 2017/18. First, we only have access to half of the sample for HIECS 2015. Second, we do not have information on the exact food subsidy schemes used in 2015 and in 2017/18.

> 8 Under this assumption, the two coefficients β and γ “disappear” because ln(1)=0.

> 9 The alternative is to impute the share of food for households for which food consumption is equivalent to the food line. This alternative requires proceeding by iterations until one reaches a fixed point.

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