consumption. This is because these are likely to be publicly provided goods and, as such, the imputation of values is not straightforward.

- _“Lumpy” items and occasional expenditures._ The exclusion of lumpy items and relatively infrequent expenditures is recommended because they can introduce noise to the consumption aggregate (Deaton and Zaidi, 2002). We hence exclude expenditures made on ceremonies, jewelry, property, vehicles, and construction. There are a few other categories that are composed of both items that rather qualified as durables and items that could be purchased more frequently; these categories are toys and recreational goods and services, domestic electrical appliances, domestic nonelectrical appliances, and furniture. Given the large number of items (496) in these four categories, instead of determining case by case whether a certain item would be included, we take the following approach. We apply a visual inspection of the distribution of expenditures for all items in these categories. Then, we define a threshold for expenditure above which items would be considered lumpy. This threshold, R$500, is roughly equivalent to half a minimum wage in Brazil in 2018 and generally does a good job at categorizing the items in these categories. For instance, in the “toys and recreational goods and services” category, we classify as lumpy musical instruments like pianos, violoncellos, and gym equipment, but we keep in the consumption aggregate items like board games and strings. Appendix A provides a list of the items that were excluded using this rule.<sup>11</sup>

- As far as durable goods are considered, instead of including expenditures reported on these in the reference period, it is recommended to calculate the flow of services that they yield over the reference period. For this, a detailed inventory of durable goods is needed, including information on their value (either original purchase date and value, or current replacement value). POF, however, collects information only on quantity, mode of acquisition, year, and state (new or used) in its durable goods inventory, but not on values. Therefore, an estimate of flow of services cannot be reliably obtained for durable goods owned by the household.<sup>12</sup> For the calculation of poverty rates, however, the omission of the flow of services from a number of durable items from the consumption aggregate may be of relatively little concern (World Bank, 2007).

- _Other miscellaneous items._ In addition, following the guidelines in Deaton and Zaidi (2002), we excluded loan and interest payments, other capital account transactions, remittances and other transfers (for instance, child support), and property-related taxes that do not bear any relation to services provided. A list of the excluded items is provided in Appendix B.

- 3) _Housing._ The consumption aggregate also includes the value of rent for households that rent their dwelling. For households that own their house or do not pay rent for any other reason, we include implicit rent in the consumption aggregate. There are different ways to arrive at a value for housing services consumed by nonrenters, which have different advantages and disadvantages (see Deaton and Zaidi, 2002). In POF, households that own their dwelling (even if still paying the mortgage) or that

> 11 In a variation of the main specification, we exclude all toys and recreational goods and services; domestic electrical appliances; domestic nonelectrical appliances; and furniture, regardless of the average amount spent on these. Results are presented in section 4.

> 12 Oliveira et al. (2016) calculate and include in their aggregate the value of services provided by the following durable goods: Goods in modules “Machines, equipment and household utilities acquisition” and “Vehicles acquisition.” However, the estimation is only partial (i.e., goods need to be registered in the inventory of durable goods) and potentially biased (as all valuations are from items acquired in the last 12 months prior to the survey).

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