expenditure as measure of welfare, partly because nonsampling errors due to under-reporting of income bias reported household income aggregate. This bias may be particularly large when income data is collected on a single visit to households, the frequency of data collection in the PS, see Marchant and Grootaert (1991), Fofack (2000). There are also strong theoretical reasons supporting the use of expenditure over income, even in the presence of more comprehensive surveys which have extensive information of high quality on income and expenditure, see Deaton and Muellbauer (1980).9 The expenditure values are in nominal terms, and may not reflect household composition and regional price differences. To account for these differences, we use adult equivalence scales to correct for household age composition effects. These correction factors are computed endogenously from the survey.<sup>10</sup> The transformed household aggregate per capita expenditure used for welfare inference reflects these corrections. Similarly, price differentials are important between urban and rural areas, and between the different economic regions, and may bias inference on spatial analysis. These differences are accounted for by correcting aggregate expenditure for spatial price effects using the regional price deflators with the "Centre Region" which includes Ouagadougou as reference region." The overtime price effects are captured by changes in the nominal prices of consumption items- reflected by variations in the level of household expenses between 1994 and 1998- and the adjustment to the 1994 poverty line to reflect the revised household consumption baskets and inflation effects, following either adjustment in the costs of living at the regional levels, or shifts in the consumption baskets of the poor, depending on the degree of substitution between the different consumer goods, and price demand elasticity.

This study uses the absolute poverty line for welfare inference. This official line was established at 41,099 CFA Francs in 1994 and corresponded to the minimum amount required to satisfy individual basic needs on food and non food items. The methodology first derives total estimates of basic food items needed to satisfy minimum daily calorie intake valued at market price. A non food consumption estimate is then added to food consumption to derive the poverty line.'<sup>2</sup> The 1998 poverty line uses the same methodology. Accounting for overtime inflation, this line is established at 72,690 CFA Francs in 1998. These lines are used throughout the paper, and the poor represent the proportion of individuals whose total annual expenditures fall below these thresholds.

Table I below shows some empirical distribution characteristics for household per capita expenditure in 1994 and 1998. There has been a persistently large income gap between urban and rural areas. The ratio of urban-to-rural mean per capita expenditure remains high in 1998 (3.2) from (3.4) in 1994, despite the rightward shift in the distribution of household expenditure in the latter round illustrated by the much larger mean. However, this ratio reduces substantially when based on the median, suggesting high income variability due to occurrence of relatively large values at the top of the distribution. The trend towards higher urban income variance is further illustrated by

> 9 Aggregate distributions of household expenditure from more comprehensive surveys are also subject to low bias and non sampling errors because the relatively high frequency of visits to households increases recall and reduces under-reporting.

> 10 A correction factor of .7 is affected to all household members aged less than 15 years, and a factor of I to others.

> " For further details on the estimation of regional price deflators, see INSD (1998).

> 12 The minimum daily calories intake is 2283; it accounts for age structure and composition, and depends on the selected household consumption basket valued at the market prices. For more methodological details, see INSD (1998).

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