employment, ownership and access to durable goods, purchase of household durables, over the past 12 months, access to production assets, nutrition and fertility status, sources of income and transfers.* The diary sheet was the principal instrument used for collecting expenditures on a detailed set of food and nonfood items during the month preceding the interview. For food items, although both quantity and value were listed for each item in the diary sheet, only the values of items were recorded in the two surveys, Thus, it is not possible to derive unit costs of individual food items. This, together with the lack of price information in the village questionnaire, has some important implications for the calculation of poverty lines (see below). Most importantly, it limits the extent to which cost of living differentials can be spatially disaggregated. In this study, however, we computed the regional costs of living indices based on the monthly average prices that were available for 5 cities in 1997-98, Thus, we could to some extent take account of regional costs of living differences that exist in the country. 3. Measure of welfare We chose per capita consumption as the measure of individual welfare. While both income and consumption are plausible measures of welfare, the latter is often considered preferable for both theoretical and practical considerations, especially for developing countries (Deaton, 1997). For Lag PDR in any case, LECS I did not collect information on incomes, and hence consumption was the only feasible option for this, study. We also use a per capita normalization which assumes that household needs increase proportionally with household size. This rules out scale economies in consumption and treats all members as adult equivalent. We use the per capita normalization not because either of these is a realistic assumption, but because there do not exist any ctedible estimates of the scale economies or adult equivalence parameters. Nor is it possible to uniquely identify these parameters from observed demand behavior (Deaton, 1997). ‘Thus, rather than use more or less ad hoe values of these parameters, we prefer to use the per capita normalization that is both simple and transparent. This “Data on incomes were not collected in LECS I (1992-93). Further information on the surveys can be found in Lundgren and Safstrom (1991) and Backstrom and Safstrom (1997).