This note contains a brief description of how the
consumption and income aggregates were created.
The file consmap.txt contains a list of the
constructed data files along with a list of
the program files used to create them.

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1. Calculation of Welfare measures - Total Consumption
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The measure of welfare used in this report is based on total
Consumption, calculated as the sum of all expenditures in
cash and kind that were reported.  They include:

a) Food: Includes the values of quantities purchased,
produced or received from other sources that were consumed
during the previous week or month.  They were evaluated at
the last market price paid or known by the respondent.

b) Non food items: includes expenses for monthly commodities
(such as soaps and cigarettes) evaluated at cost, and yearly
expenses (such as clothing, health and vacations) evaluated
at the current known cost.

c) Expenses for Education: Includes cost for training
courses taken during the previous 12 months, estimated at
current costs; and expenses for tuition (last 12 months),
books, meals and transport (last month) for household
members currently in school.

Seasonally adjustment
Expenses were seasonally re-adjusted using estimates derived
from the 1994 Household budget survey.  Monthly expenditure
pattern fluctuations were analyzed for 25 commodity groups
in three regions (Sofia, other urban and rural areas) for
the bottom two, the middle 6 and the top 2 deciles. (For
details see Skoufias paper)

Price and regional adjustment
This welfare measure was adjusted using regional price
deflators for urban and rural areas.  The reason is that
households in different part of the country face a different
price structure which should be taken into account when
comparing their level of welfare. Otherwise households
living in the more expensive part of the country will always
appear to be better of than those living in poorer areas for
a comparable level of standard of living.  The approach that
has been taken here has been to use one poverty line for the
whole country and to adjust the level of welfare to take
into account the different price structures.


       Price Indices by Region and Location

          Region   Urban  Rural Total

          Sofia    1.17   1.09  1.17
          Bourgas  1.07   0.97  1.04
          Varna    1.03   0.97  1.01
          Lovech   0.99   0.95  0.97
          Montana  1.03   0.99  1.01
          Plodviv  1.04   1.06  1.05
          Russe    1.07   0.96  1.02
          Sofia R  1.02   0.93  0.98
          Haskovo  0.95   0.92  0.94

          Total    1.06   0.97  1.03


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2. Calculation of Total Income
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Total income has been calculated as the sum of  net
agricultural incomes, wage income, self employment income,
social benefit income, child allowance, net remittances,
other revenue and rents from real estate assets.

a) Agriculture income has been calculated as the sum of
agricultural revenue and consumption from agricultural
production less costs.  Agricultural revenues include sale
and consumption of crops and animal products, evaluated at
resale prices.  When prices were not available median prices
by commodity and area were used.  The revenue from the
production of livestock included the net value of purchases,
sales and consumption.  The value of the change in the heard
would have been too difficult with the data available and
was not taken into account.  Costs for input and other
revenue have been added to the total calculation.

b) Incomes from dependent jobs include the take home pay
(i.e. net of taxes, in most cases it was equivalent to gross
income less taxes) plus the value of benefits received.

c) Revenues from business were only calculated for a few
households.

d) Incomes from social services were mostly payments for
social old age pension programs.  The other components were
very small.  Child allowance was extracted from different
sections of the questionnaire, since was reported in
combination with a salary, or a social program.

e) Other incomes includes the value of net remittances, and
actual and potential revenues from owned properties and
other minor revenues.  Net remittances have been calculated
as the difference between amounts received and sent.
Amounts remitted to other households are not part of the
disposable income and including would create a bias in the
total calculations.  Revenues from owned properties included
the actual amounts receive and the estimates of the
potential revenue (using the median of the rental value of
each unit
by location - in 320 out of 642 cases) if not rented.


Comparing Income with Consumption
From the analysis we noticed that income is definitely lower
than expenditure.  There are several reasons that could help
to explain this difference.  Both incomes and expenditures
include only current transactions.  Current or past
expenditures for the purchases of durables or investments
have been included nor the value of their use. Likewise
income transactions involving savings or dissavings have not
been included either.  It is expected that in a period of
decrease of the income earning that occurred during the last
5 years that a large part of the consumption stream, which
was already reduced a great deal, has been financed by
drawing on savings.   This hypothesis can also be confirmed
by the fact that in a period of high inflation savings can
be eroded rapidly.

