This section contains project documents from the original AMAP Developing Poverty Assessment Tools Project as the tools were conceived, constructed, and tested for accuracy and practicality.
Filmer, Deon, and Lant Pritchett (2001). Estimating Wealth effects without expenditure data - or tears: an application to educational enrollment in India. Demography 38(1): 115-132
Using data from India, the authors estimate the relationship between household wealth and children’s school enrollment. They proxy wealth by constructing a linear index from asset ownership indicators, using principal-components analysis to derive weights. In Indian data this index is robust to the assets included, and produces internally coherent results. State-level results correspond well to independent data on per capita output and poverty. To validate the method and to show that the asset index predicts enrollments as accurately as expenditures, or more so, the authors use data sets from Indonesia, Pakistan, and Nepal that contain information on both expenditures and assets. The results show large, variable wealth gaps in children's enrollment across Indian states. On average a “rich” child is 31 percentage points more likely to be enrolled than a “poor” child, but this gap varies from only 4.6 percentage points in Kerala to 38.2 in Uttar Pradesh and 42.6 in Bihar. [Abstract]
Grootaert, Christiaan and Jeanine Braithwaite (1998). Poverty Correlates and Indicator-Based Targeting in Eastern Europe and the Former Soviet Union. World Bank Policy Research Working Paper No. 1942. [Online]
Grootaert and Braithwaite compare poverty in three Eastern European countries (Bulgaria, Hungary, and Poland) with poverty in three countries of the former Soviet Union (Estonia, Kyrgyz Republic, and Russia). They find striking differences between the post-Soviet and Eastern European experiences with poverty and targeting. To achieve this, the authors constructed a comparative dataset whereby household survey data from the six countries were carefully checked, cleaned, and made comparable.
Baulch, Bob (2002). Poverty Monitoring and Targeting Using ROC Curves: Examples from Vietnam. IDS Working Paper 161. [Online]
This paper suggests a low cost methodology for identifying and assessing the accuracy of poverty monitoring and targeting indicators. It proposes that the non-parametric technique of Receiver Operating Characteristic (ROC) curves be used to assess the accuracy of poverty indicators. Furthermore, it suggests that the best individual indicators can be combined into a composite poverty indicator using a stepwise Probit approach. The composite poverty monitoring indicators so developed are intuitive, parsimonious (involving just six to nine indicators in the examples from Vietnam), and relatively easy to collect data on. A further advantage of the method is that it allows the trade-off between coverage of the poor and exclusion of the non-poor to be quantified in terms that are readily understandable by policy-makers. This methodology (suitably adapted and expanded) could help bridge the gap between the aggregate poverty statistics generated by periodic household surveys and the need for more disaggregated and regular poverty statistics by welfare agencies.
The March 13, 2004 issue of The Economist contained a special report on global economic inequality titled, “"More or less equal."” This article highlights the complexities involved in measuring income levels in a comparable manner across countries and the academic debates concerning this challenge. It points to several of the researchers whose work is highlighted below.
Ravallion, Martin (1998). Poverty lines in theory and practice. Living Standards Measurement Survey Working Paper No. 133. World Bank, Washington, DC. [Online]
As a part of the Living Standards Measurement Study, this paper presents a critical overview of alternative approaches towards setting poverty lines, which: a) define the minimum level of living standards before being considered “poor ; and, b) make comparisons among these minimum levels, for families of different size and/or composition in different locations and time. The paper argues that economists have emphasized the second role, while generally ignoring the first. Experience suggests that the poverty measures obtained, and the inference for policy derived, are affected by the choice made in setting poverty lines. In critically reviewing the methods found in practice, the paper aims to analyze, and attempts to resolve, ongoing debates about poverty measurements, highlighting the issues bearing the most on policy discussions. The paper discusses two methods within objective poverty lines: food-energy intake, and the cost of basic needs. Subjective poverty lines are discussed in the context of minimum income question, used in many developed countries, while pointing out its pitfalls in the context of developing countries. The paper concludes with a discussion of poverty lines found in practice, as opposed to the theoretical ones mentioned above.
Deaton, Angus (2000). Counting the World's Poor: Problems and Possible Solutions. Woodrow Wilson School of Public and International Affairs. [Online]
This paper discusses how the World Bank poverty estimates are constructed, and asks whether they can bear the burden placed on them. One specific difficulty is the use of purchasing power parity (PPP) exchange rates, whose revision induces large changes in poverty estimates for the same countries in the same years. Another area of dispute is the discrepancy in many countries between national accounts statistics, which are used to compute growth rates, and survey estimates, which are used to compute poverty estimates. To a considerable extent, the failure of world poverty to fall in the face of world growth is a failure of household survey data to be consistent with national income data. The details of survey design are also important. In India, changing the reference period for reporting consumption removes around 200 million people, a sixth of the world total, if not from poverty, at least from the poverty counts.
Deaton, Angus (2004). Measuring Poverty in a Growing World (or measuring growth in a poor world). Woodrow Wilson School, Princeton University. [Online]
This paper picks up on previous threads in Deaton’s work and explores the controversies in current methods of measuring poverty. Specifically, he explores differences between using consumption-based measurements based on household survey data and those based on data in national accounts. These two types of measurement lead to different estimates of global poverty and separate conclusions could be drawn about the effects of economic growth on poverty reduction. Deaton concludes that “current statistical procedures in poor countries understate the rate of global poverty reduction, and overstate growth in the world.”
Reddy, Sanjay G. and Thomas W. Pogge (2003). How Not to Count the Poor. [Online]
The estimates of the extent, distribution and trend of global income poverty provided in the World Bank's World Development Reports for 1990 and 2000/01 are neither meaningful nor reliable. The Bank uses an arbitrary international poverty line unrelated to any clear conception of poverty. It employs a misleading and inaccurate measure of purchasing power “equivalence” that creates serious and irreparable difficulties for international and intertemporal comparisons of income poverty. It extrapolates incorrectly from limited data and thereby creates an appearance of precision that masks the high probable error of its estimates. The systematic distortion introduced by these three flaws may have led to an understatement of the extent of global income poverty and to an incorrect inference that it has declined. A new methodology of global poverty assessment, focused directly on the ability of the poor to achieve the most elementary income-dependent human capabilities, is feasible and necessary.
How Not to Count the Poor? A Reply to Reddy and Pogge by Martin Ravallion. [Online]
How Not to Count the Poor! - A Reply to Ravallion by Sanjay Reddy and Thomas Pogge. [Online]
Sillers, Don. National and International Poverty Lines: An Overview. [PDF:68KB]
This paper offers a non-technical introduction to poverty lines, including national lines as well as the international “dollar-a-day” line used to track global progress in reducing poverty. The aim is to provide a basic understanding of (1) how poverty lines are established and used; (2) the major sources of controversy surrounding the measurement and interpretation of poverty data; and (3) possible means of improving the measurement of poverty. In each case, the goal is to promote a broad understanding of the basic issues, rather than to offer a full review of the many technical issues lying beneath the surface. The Annex to that paper provides updated data on the local-currency equivalent of the $1-a-day international poverty line, as well as a simple method for calculating this figure. In addition, a file [Excel: 90KB] shows the data and calculations used to produce the Annex.
In Focus, the United Nations Development Programme (UNDP) International Poverty Center online bulletin, publishes recent poverty and inequality research in the developing world. The September In Focus issue explores the debate on the international dollar a day poverty line. The bulletin features articles from T.N. Srinivasan, Sanjay Reddy and Nanak Kakwani who highlighted the problems and possible solutions to using the dollar a day as a poverty line. The issue includes a response article by Martin Ravallion. To view this edition of In Focus, please go to: www.undp.org/povertycentre/newsletters/infocus4sep04eng.pdf.
Hatch, John and Laura Frederick. Poverty Assessment by Microfinance Institutions: A Review of Current Practice [PDF:745KB]
This paper examines methods used by microfinance institutions (MFIs) to assess the poverty level of their clients. It is based on self-reported information from twelve MFIs, collected and analyzed in 1997 by FINCA International. The paper categorizes different methods of poverty assessment, then evaluates these methods according to six technical criteria that reflect the ease of use of the method for the MFI and strength of the information the method provides. The paper concludes with recommendations to help MFIs select a poverty assessment strategy that is appropriate for their clientele, institutional objectives, and operating conditions.
The SEEP Network Poverty Assessment Working Group Poverty Assessment Survey Results [Online]
This document tabulates and summarizes the responses to SEEP's Poverty Assessment Working Group (PAWG) 2003 survey of cost-effective, easy-to-use management tools that microenterprise institutions are using in assessing the poverty levels of their clients.
Simanowitz, Anton, Ben Nkuna, and Sukor Kasim (2000). Overcoming the Obstacles of Identifying the Poorest Families. Microcredit Summit Campaign, Washington, DC. [Online]
This paper outlines the use of poverty targeting tools such as the Cashpor House Index, Participatory Wealth Ranking, and four others.
Henry, Carla, Sharma, M., Lapenu, C., and Zeller, M. (2000) Assessing the Relative Poverty of Microfinance Clients: A CGAP Operational Tool. CGAP/IFPRI, Washington, DC. [Online]
This manual describes an operational tool for assessing the poverty of clients of microfinance institutions (MFIs). The methodology outlined is intended for use by MFI evaluators as a practical, accurate, and relatively simple means of assessing the extent to which MFI programs reach the poor.
Inserra, Anne (1996). A review of approaches for measurement of microenterprise and household income. USAID AIMS Project. [Online]
The purpose of this background paper is to review selected methods for measuring income at both the level of the microenterprise (ME) and the household that can potentially be used to assess the impact of microenterprise services.
The Microenterprise for Self Reliance and International Anti-Corruption Act of 2000 [PDF]
The Microenterprise for Self Reliance and International Anti-Corruption Act of 2000 authorizes $155 million in fiscal years 2001 and 2002 for USAID microenterprise development programs, particularly those that benefit women and the very poor. Half of all funding is to target the very poor.
Amendment to the Microenterprise for Self-Reliance and International Anti-Corruption Act of 2000 [PDF]
This amendment became public law on June 17, 2003. It authorized $175 million in FY 03 and $200 million in FY 04, while maintaining the target that 50% of all funds benefit the poor. It requires that USAID and its partners develop poverty measurement tools to assess the poverty level of the clients of microenterprise clients.
The Microenterprise Results and Accountability Act of 2004 [PDF:37KB]
This act amends the Foreign Assistance Act of 1961 to improve the results and accountability of microenterprise development assistance programs, and for other purposes. The Act extends from October 2005 to October 2006 the deadline for implementation of poverty assessment tools by USAID-funded microenterprise practitioners.
Chant, Sylvia (2003). New Contributions to the Analysis of Poverty: Methodological and Conceptual Challenges to Understanding Poverty from a Gender Perspective. [Online]
The overall aim of this paper is to outline the major methodological and conceptual challenges to understanding poverty from a gender perspective. The paper is divided into three main sections. Section one reviews the ways in which the frontiers of poverty analysis have been pushed forward and progressively ‘engendered’ during three decades of dedicated feminist research and activism in Latin America and other parts of the South. In section two, the discussion turns to outstanding barriers to understanding poverty from a gender perspective. The third and final section offers thoughts on future directions in research and policy.
SEEP Network (2004). Integrating Poverty Assessment into Client Assessment. Progress Note No.1, August 2004.[PDF]
Microfinance institutions can improve performance by collecting and analyzing information about the poverty level of their clients. Comparing poverty measures with other client assessment information leads to better marketing, targeting, and assessment of financial products.