Estimates of Household Consumption Expenditure at Provincial Level in Italy by Using Small Area Estimation Methods: “Real” Comparisons Using Purchasing Power Parities

Household consumption expenditure represents a crucial measure to be used for assessing individuals’ material living conditions and well-being. Indeed, the analysis of household conditions can provide policy makers with a clear picture of the economic and social situation of the area in which they are operating. However, official sample surveys which are generally used for this purpose, such as the Household Budget Survey in Italy carried out by the National Institute of Statistics, do not allow for reliable disaggregated estimates thus hindering appropriate and effective planning and evaluation of political interventions at local level. By referring to the 2012 Italian Household Budget Survey, this paper aims at obtaining reliable provincial estimates of household consumption expenditure in Italy. We use Small Area Estimation methods and we adjust the estimates for spatial differences in price levels by computing and using sub-national Purchasing Power Parities, thus obtaining “real” estimates of consumption expenditure to be used for intra-national comparisons.