Absolute poverty and great inequality are still major
problems in Indonesia in spite of its increase income from oil. As
Indonesia has no regular statistical series on income distribution,
data from surveys the main purpose of which is not income distribution
have had to be used. This fact introduces many problems in addition
to the important theoretical problems of measurement and of lack of
other statistical series against which to test income data. The
Agro-Economic Surveys have...[Show more] collected much information on incomes as
part of their studies of farm institutions and other rural problems.
This study is an assessment of income data from such a study, and
examines the special problems which arise in the use of such income
It was found that the coverage and manner of collecting data
on income had resulted in a high proportion in each sample village (48
and 26 per cent, respectively) of households which reported incomes
insufficient to support life, but that these reported income levels
appear to be the result of anomalies in reporting. It was therefore
concluded that total household income for the period of one year was
not possible to compute for these households and that therefore no
reliance could be placed on income distributions based on these
incompletely recorded incomes.
Each separate source of income was then examine in detail
and tested so far as possible for consistency against other data. To do this, data on area owned and cultivated, assets, household size,
education and employment were examined. It was found that the method
of collection of data by season called forth conflicting responses by
the farmers, particularly for land cultivated. The fact that not all
data on field conditions during interview were available in Canberra
(e.g., bases for imputed prices) made it impossible to check
consistency of income data against yields or prices.
Sophisticated methods of analysis based on such data were
considered inappropriate, so only Gini Coefficients, Lorenz Curves and
some regressions have been applied to the data.
A concept of 'plausible' incomes is developed, in which
households which report incomes insufficient to support life are
considered 'implausible' and excluded from some of the analyses.
Similarly, some sources of income which showed very poor internal
consistency (e.g., poultry and gleaning) were considered
'implausible'. Plausible incomes were not necessarily accurate, and
could also be under-reported, however.
'Plausible' income households were compared to total
households. Exclusion of implausible households made a much greater
difference in the lowland than in the upland village. Inequality
appeared to be far greater in the lowland than in the upland village,
but it is not possible to say for sure whether this conclusion arises
from what appears to be much more thorough and consistent data
collection procedures in the highland village, and to what extent it
reflects real levels of inequality. It was found that the higher the aggregation, the greater the similarity between villages;
disaggregation revealed very wide differences.
The conclusion to this study is that, because income data in
the SAE study were collected as a side-line to the main purpose of the
study, the very difficult conceptual, theoretical and practical
problems associated with income measurement have not been met, and
that consequently, the data on incomes from this study are not
reliable, and not suitable as a basis for policy recommendations on
income levels or income distribution.
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