Measuring poverty and wellbeing in developing countries.

Author:Arndt, Channing
Position:Policy brief
 
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FINDINGS

Poverty analysis in developing countries is still largely an activity undertaken by technical assistance personnel and consultants based in developed countries

The frequency of income and consumption surveys is insufficient in many countries, and surveys are often too complex

A toolkit developed for rigorous poverty measurement proves valuable

The importance of reducing poverty is universally acknowledged, and represents an important part of the Sustainable Development Goals. However, the appropriate measurement of poverty and wellbeing remains complex and controversial. A UNU-WIDER study addresses means to significantly lower the barriers to entry to the conduct of rigorous poverty measurement and increase the participation of analysts from developing countries in their own poverty assessments. If properly organized, many pointed debates in the literature can be boiled down to remarkably few lines of software code.

Lowering the entry barriers to undertaking poverty assessments

There is a high-level of dependence in many developing countries on external assistance for the conduct of poverty analysis, particularly the analysis of consumption poverty. Even in the cases where local analysts are strongly engaged, the occasional nature of detailed household consumption surveys combined with the complexity of the analysis results in difficulties.

A regular household consumption survey, coming to grips with price trends and differentials, concerted efforts to monitor non-monetary indicators such as those in focus in demographic and health surveys, and a series of more pointed surveys including panel elements--provide ample raw material for the emergence of a healthy and active community of quantitative analysts.

While increasing the frequency of consumption surveys increases costs, the associated call for avoiding excessive complexity reduces costs. In addition, the capacity-building gains associated with greater frequency allow better cost efficiency as well as collection of higher-quality data.

Consumption poverty and multidimensional poverty indicators

There is no single set procedure for estimating absolute poverty lines.

The cost of basic needs (CBN) approach provides a series of valuable guideposts, but in practice, numerous choices must be made. Differing country circumstances will lead to different choices with respect to the overall approach. In addition, past choices often strongly influence current choices due to the desire to...

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