## Consumption without rent

Deaton and Zaidi (2002) advert to the fact that implicit rent, as elicited in POF and used here, is a hypothetical concept that could lead to estimations that are not usable. In the survey, heads of the household estimate their implicit rent themselves. There are also a few cases where IBGE imputed values in certain households in which values were not in line with similar dwelling characteristic combinations of other households, which happened in about 5 percent of the households with implicit rent.

Given this possibility and the fact that other methods to estimate a value of rent for nonrenters are not ideal either, we also calculate a variant of the poverty line in which we exclude this implicit rent as well as explicit rent. We exclude explicit rent (i.e., rent actually paid by renters) as a way to maintain consistency across households. That is, if we would exclude only implicit rent for owners and in-kind dwellers while keeping explicit rent for renters, we would mechanically make the first group relatively poorer because we are neglecting housing services in their welfare aggregate. We recognize that this approach is not necessarily ideal, but we present the results here as a further robustness check. Table 14 shows the results, which remain similar.

**Table 14. Poverty lines using consumption without rent**

|**Total Poverty**|**Food**|**Lower Total**|
|---|---|---|
|**Estimation**|**Poverty**|**Poverty**|
|Parametric|R$264|R$449|
|Nonparametric|R$264|R$451|

_Source:_ Own calculations using POF 2017/18.

# 5. Final remarks

In this paper we have presented our estimate of a poverty line for Brazil, using the CBN approach and based on the most recent data (POF 2017/18). Our preferred specification results in a food poverty line, accounting only for nutritional requirements, of R$258 (in 2018 Southeast urban prices) per person per month. The total poverty line – which accounts for other nonfood necessities as well – is estimated at R$455 in our preferred specification.

The estimation of a poverty line as presented here is an academic exercise that requires a range of decisions at different steps of the procedure. As such, it could be argued that our preferred results for the food and total poverty line depend on the specific choices taken and assumptions made along the estimation process. We aim to be transparent about the assumptions and choices made in the estimation of our poverty line, as well as about the sequencing of it. Moreover, we conduct a series of checks that allow us to test how modifying assumptions at different stages of the implementation of the methodology would affect our estimates. Results remain qualitatively similar, showing that our preferred poverty lines are robust to alternative choices and assumptions regarding the preferred specification. These include (a) increasing the number of food items in the calculation of the average cost per calorie by adding an additional step to the assignment of calorie intake to food items, (b) using a nonparametric approach to estimate food shares used to estimate the lower and upper poverty lines, (c) excluding from the estimation all items in categories that at least partially include lumpy and infrequently purchased items, (d) using a higher energy requirement, (e) assigning a higher cost per calorie to FAFH, (f) using a different 21