Identifying the Poor : Accounting for Household Economies of Scale in Global Poverty Estimates
Estimates of the number of people living in extreme poverty, as reported by the World Bank, figure prominently in international development dialogue and policy. An assumption underpinning these poverty counts is that there are no economies of scale in household size—a family of six needs three times as much as a family of two. This paper examines the sensitivity of global estimates of extreme poverty to changing this assumption. The analysis rests on nationally representative household surveys from 162 countries covering 98 percent of the population estimated to be in extreme poverty in 2017. The paper compares current-method estimates with a constant-elasticity scale adjustment that divides total household consumption or income not by household size but by the square root of household size. While the regional profile of extreme poverty is robust to this change, the determination of who is poor changes substantially—the poverty status of 270 million people changes. The paper then shows that the measure that accounts for economies of scale is significantly more correlated with a set of presumed poverty covariates (years of schooling, literacy, asset index, working in agriculture, access to electricity, piped drinking water, and improved sanitation).
| Main Authors: | , |
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| Format: | Working Paper biblioteca |
| Language: | English English |
| Published: |
World Bank, Washington, DC
2022-10
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| Subjects: | GLOBAL POVERTY, HOUSEHOLD ECONOMIES OF SCALE, SUSTAINABLE DEVELOPMENT GOALS, EXTREME POVERTY ESTIMATE, POVERTY COVARIANTS, POVERTY MEASUREMENT, POOR HOUSEHOLD SIZE, |
| Online Access: | http://documents.worldbank.org/curated/en/099116210172210147/IDU0d253ce79097d604a370b4dd086b73941ff60 http://hdl.handle.net/10986/38179 |
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| Summary: | Estimates of the number of people
living in extreme poverty, as reported by the World Bank,
figure prominently in international development dialogue and
policy. An assumption underpinning these poverty counts is
that there are no economies of scale in household size—a
family of six needs three times as much as a family of two.
This paper examines the sensitivity of global estimates of
extreme poverty to changing this assumption. The analysis
rests on nationally representative household surveys from
162 countries covering 98 percent of the population
estimated to be in extreme poverty in 2017. The paper
compares current-method estimates with a constant-elasticity
scale adjustment that divides total household consumption or
income not by household size but by the square root of
household size. While the regional profile of extreme
poverty is robust to this change, the determination of who
is poor changes substantially—the poverty status of 270
million people changes. The paper then shows that the
measure that accounts for economies of scale is
significantly more correlated with a set of presumed poverty
covariates (years of schooling, literacy, asset index,
working in agriculture, access to electricity, piped
drinking water, and improved sanitation). |
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