National Poverty Line

Most of the world’s poorer countries determine their national poverty line in absolute terms, typically the monetary value of a basket of basic food and essential non-food items. Some governments work with separate urban and rural poverty lines, recognising that costs are higher in cities.

Many of these countries adopt an austere interpretation of “essential”, restricting non-food items to a minimum. Household surveys carried out to assess national poverty rates focus on consumption as much as income, recognising that goods may be exchanged by barter and that many families grow their own food.

Statistics will highlight the incidence of households that fall just above or below the national poverty line. A high incidence forewarns that a small change in national economic fortunes or in redistribution can have a large impact on poverty figures. Understanding how families are drawn into, and escape from, poverty is invaluable in preparing effective poverty reduction strategies.

The vulnerability of households close to the official poverty line accentuates the importance of accurate data collection. Questioning the validity of poverty figures from poorer countries is often justifiable. Since 2011, both the UN and the World Bank have drawn attention to the low quality and excessive time lag in global poverty statistics, especially the component figures from Africa.

Their concern highlights one important symptom of the global divide – the capacity for timely collection and analysis of data relevant to policymaking. The production of statistics in the poorest countries is impeded by the prohibitive cost, skills and logistics involved in conducting household income and expenditure surveys. Many international aid programmes therefore aim to strengthen government departments responsible for national statistics.

Logistical constraints are frequently aggravated by political factors. The advent of elections is often a reason for delaying the publication of a survey that might reflect poorly on government performance. Disputes over the basis of calculating a poverty line are also inevitable where it dictates the cost of social welfare benefits.

Poverty assessment in richer countries is less likely to focus on the value of an arbitrary basket of goods. Instead, measures of poverty relative to the average income of all citizens are adopted. This method can also detect trends in inequality, overcoming a weakness of the absolute poverty line approach.

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How is poverty measured?
A presentation by the World Bank

more Global Poverty briefings (updated November 2017)
Perceptions of Global Poverty
Global Poverty Statistics
International Poverty Line
Causes of Global Poverty
Should We Care About Poverty?
Sustainable Development Goal for Poverty
Global Poverty Solutions
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