Table 2 Summary of the advantages and limitations of the budget share approach and capacity-to-pay approach

Advantages

Simple to apply and requires less data

Less biased by variation in the purchasing capacity between different income classes

Development of various forms of the approach to adapt to different settings

Sub-methods that account for household size and composition

Limitations

Does not consider variation in the purchasing capacity amongst different income classes

Does not typically account for how household size and composition effects household. spending/income and leads to different degrees of economic capacities

Requires more data and therefore can be challenging to apply in LMICs

Argued that it does not reflect the impact of out-of-pocket payments on the households' ability to purchase non-medical necessities

Uncertainty and controversy regarding what constitutes as “basic needs”