World Bank poverty measurement in the Agenda 2030 era

by Zach Christensen

What’s new and what are the implications for the poorest people?

Towards the end of 2016, many of the top thinkers on global poverty gave 21 recommendations on measuring poverty in a report (they authored as the Commission on Global Poverty) published by the World Bank. Monitoring Global Poverty gives a sweeping view of the many challenges to measuring poverty and provides guidance on how to improve poverty measurement, with the World Bank committing to a number of changes (although not all the recommendations) as a result. Now, following the World Data Forum in Cape Town in January 2017, there is real appetite for tackling the significant issues surrounding poverty data and ensuring developing countries are equipped with the data they need. This is essential for driving long-term sustainable improvements in poverty levels and resilience of vulnerable groups. So how does the World Bank poverty measurement, and the changes being adopted, fit in with the more complex and detailed data needs of Agenda 2030?

What’s the World Bank doing to help meet the challenges of Agenda 2030?

The World Bank’s annual estimate of the number of people living in $X day poverty has carried a large amount of political power and provides a compelling narrative for anti-poverty groups. In fact, Goal 1.1 of the Sustainable Development Goals commits to ending extreme poverty by 2030. With the World Bank’s poverty line being the very definition of extreme poverty, here the World Bank’s calculations and monitoring are clearly vital.

The calculations behind this poverty line have been complicated and involve many moving parts and the Bank has now accepted one of the key recommendations, that the line be held constant at $1.90 2011 PPP (purchasing power parity) per person per day. It has also accepted referring to it as the ‘international poverty line’ and that it will be reported in local currencies for each country, making the line more adapted to local circumstances. The Bank has also partly committed to more transparency in the methodology and more input from outside experts and those in poverty. This is an important step towards changing the calculation of global poverty from an exercise carried out opaquely by economists in Washington to one that would genuinely engage with the world. In turn, this gives the goal to end extreme poverty more weight too.

Another promising recommendation taken up is that the Bank will begin to report on indicators that may measure the conditions of the poorest 20% of people globally more effectively than income or consumption do – hence capturing multidimensional poverty better. In our work, we look at nutrition and civil registration figures as two key indicators for the lives of the P20, alongside income.

What does this mean for the lives of the poorest people?

Of course, the outstanding issue is the accuracy of data. The report noted several problems for poverty measurement, for example, the confidence intervals on poverty estimates are as wide as 20–30% for a single computational challenge (international price comparisons). There are also problems with population data, inflation, international comparisons and poverty surveys. The Bank has agreed to address some of these problems but its response has suggested that much of this lies outside its control. It also has rejected the Commission’s call for external reviews of its methodology.

To ensure that no one is left behind, it’s particularly important to accurately measure the status of poorest 20% globally – the P20. The precise location of the international poverty line matters less than policy-makers knowing where people are and what issues matter to them. In particular, having data disaggregated to be able to examine which elements of identity matter most in someone’s economic chances is very important – including a minimum of income quintile, gender, geography, age and disability. The Commission’s report recommends that the Bank disaggregates poverty data to show how many women and children are in poverty. While the Bank has published the number of children living in poverty globally, it says that much further work is needed to measure the data on women. This is due to poverty being defined at household level and thus disguising gender disparities. For its data to be truly useful, the Bank needs to publish the data it holds on children that can be disaggregated at a national level, and to devote more resources to researching and tracking gender and poverty.

Ultimately, there are a number of areas, covered in the Commission’s report which, unless taken up, will severely hinder the Bank’s ability to help ensure the poverty data needed for Agenda 2030 to be delivered will be severely hinder. Most notably these include:

  • identifying those who are not being counted in household surveys, including displaced people and refugees as well as those in informal housing or institutional settings, and to work with partners to fill these data gaps
  • finding rapid, more agile surveys that can more readily be deployed in countries where surveys are lacking
  • making better use of administrative data and explorations, to match national accounts to poverty data.

If these were enacted, they could revolutionise the global data landscape by making what’s now invisible, visible.

This leads onto perhaps one of the most important areas of action that needs to be taken. The World Bank needs to ensure that significant investments are made to improve data systems in countries around the world. The Global Partnership for Sustainable Development Data recently issued a report, to which DI contributed, on the investments needed to finance a data revolution. It found that with relatively modest investments, national governments and the World Bank can ensure that everyone is counted and that the complicated task of assessing poverty can be dramatically improved. Unfortunately, evidence shows  that the World Bank has recently significantly decreased financing for development data. It’s now been over a year since the Sustainable Development Goals were ratified, and as we rapidly move into delivery and action, we need the World Bank and national partners to work together on getting the data we need to leave no one behind.

Image courtesy: Pakistan Strategy Support Program