poverty measures essay introduction

Measuring Poverty

The World Bank Group’s mission is to end extreme poverty and promote shared prosperity. In order to monitor progress and understand the types of poverty reduction strategies that could work, it is important to measure poverty regularly.

The international poverty line is set at $2.15 per person per day using 2017 prices. This means that anyone living on less than $2.15 a day is in extreme poverty. About 648 million people globally were in this situation in 2019.

The COVID-19 pandemic dealt the biggest setback to global poverty-reduction efforts since 1990, increasing the number of people in extreme poverty by about 70 million, to 719 million people. Rising energy and food crises, caused in part by the war in Ukraine, and the effects of climate change contribute to an uneven recovery.

To better understand whether the world is on track to end extreme poverty, and how individual countries are faring, we must regularly measure progress. Poverty measurement and analysis have been a key aspect of the World Bank’s mission for years, as is our work to share knowledge and methods for how to measure poverty more accurately and more frequently.

By measuring poverty, we learn which poverty reduction strategies work, and which do not. Poverty measurement also helps developing countries gauge program effectiveness and guide their development strategy in a rapidly changing economic environment.

Last Updated: Nov 30, 2022

Measuring poverty and communicating poverty reduction results are long-standing priorities for the World Bank. In 2015, we set up a Commission on Global Poverty to provide recommendations on how to measure and monitor global poverty more comprehensively. The Commission provided 21 recommendations. They included broadening the scope of poverty measurements to include non-monetary measures, introducing a societal headcount measure of global poverty, and publishing a global profile of the poor.

The World Bank Group has committed to adopting most of these recommendations. In 2017, we introduced two complementary global poverty lines, which can be used as a benchmark for countries across the world whose level of development makes the International Poverty Line — $2.15 per day — not relevant. The $3.65 and $6.85 per person, per day poverty lines complement, not replace, the International Poverty Line.

In 2018, the World Bank report Piecing Together the Poverty Puzzle broadened the ways we define and measure poverty, by:

Twice a year, the World Bank Group produces Poverty and Equity Briefs that highlight poverty, shared prosperity, and inequality trends in each country. In September 2019, the country Poverty Briefs also began to report data on multidimensional poverty indicators and progressively increased coverage to 144 countries (which appear in the latest PSPR).

In 2020, COVID-19 posed a new challenge to measuring the impact of the devastating pandemic, particularly on the poor and vulnerable. Surveys based on face-to-face interviews were hindered by social distancing protocols and limitations on mobility. Policy makers needed timely and relevant information on the impacts of the crisis as well as the effectiveness of their policy measures to save lives and support livelihoods. World Bank-supported phone surveys to monitor the impacts of COVID-19 on households and individuals were then implemented in 89 countries across all developing regions.

We are also working with country statistical offices to build local capacity and to help nations develop and implement their poverty surveys, as well as assess results.

On monitoring project impacts, the Bank Group has two main tools to improve and measure results in real-time: Survey of Well-being via Instant Frequent Tracking (SWIFT) and Iterative Beneficiary Monitoring (IBM) . These tools rely on mobile technology, and big and small data to produce information on specific project results and on consumption/income of project beneficiaries. IBM is currently mainstreamed in [more than 40] operations in FCV and non-FCV contexts. SWIFT plays an important role in linking poverty and sector-specific indicators through affordable data collection and analysis.

Together with our country clients, we are now developing and testing high-frequency survey methods that rely on mobile technology or prediction methods. Working with national statistical offices and non-governmental organizations, our Listening to Africa initiative is piloting the use of mobile phones to regularly collect information on living conditions in [six] African countries.

Official global, regional, and country poverty results are based on data that the World Bank compiles and disseminates through our Poverty and Inequality Platform .

The World Bank's advisory and technical support has led to survey and methodological improvements in many countries. Here are a few examples:

By combining population census and household surveys, we worked with the statistical office of the Republic of Serbia to develop a set of poverty maps that show variability in welfare across the country and estimate the poverty rates for small geographic areas, such as districts and municipalities. Similar efforts were carried out in Croatia .

Poverty in Tajikistan is seasonal and is linked to farm work and remittances. Given this nuance, the country introduced a new approach to assess and measure poverty that is based on international best-practices and relies on quarterly household budget survey. The new measure helps the government report on poverty both on a quarterly and annual basis.

Interactive poverty maps are a useful tool to visualize and compare poverty rates across geographic areas. Using three different datasets, the World Bank rolled out the interactive poverty maps for Bangladesh , which explore and visualize socioeconomic data at the district and the sub-district levels of the country. The World Bank has also produced a spatial database of Afghanistan , which visualizes data from reliable sources at the province and district level. And the World Bank partnered with the National Statistics and Information Authority of Afghanistan to produce the first set of poverty maps for Afghanistan for the provinces of Kabul and Herat.

Decades of civil war and political fragmentation have made Somalia one of the poorest countries in Sub-Saharan Africa. To better understand the impact of economic hardship on the lives of ordinary Somalis, the World Bank, together with the Somali statistical authorities created the Somali High Frequency survey and published the recent Somali Poverty and Vulnerability Assessment , which analyzes data and provides valuable insights about the underlying causes of poverty and the best strategies for fighting it. Voluntary video testimonials of Somalis were recorded and complemented the quantitative date to further zoom into their lives.

To fill the lack of reliable data in South Sudan, we have used an innovative questionnaire design for a high frequency survey to document the livelihoods, consumption patterns and perceptions of the people. In addition, we have started to collect video testimonials from people to capture the situation on the ground.

Last Updated: Apr 16, 2021

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How is poverty measured?

Poverty is measured in the United States by comparing a person’s or family’s income to a set poverty threshold or minimum amount of income needed to cover basic needs. People whose income falls under their threshold are considered poor.

The U.S. Census Bureau is the government agency in charge of measuring poverty. To do so, it uses two main measures, the official poverty measure and the Supplemental Poverty Measure, both of which are described in this FAQ.

Official Poverty Measure

The Census Bureau determines poverty status by using an official poverty measure (OPM) that compares pre-tax cash income against a threshold that is set at three times the cost of a minimum food diet in 1963 and adjusted for family size.

The OPM uses calculations of these three elements—income, threshold, and family—to estimate what percentage of the population is poor.

The official poverty estimates are drawn from the Current Population Survey Annual Social and Economic Supplement (CPS ASEC), which is conducted in February, March, and April with a sample of approximately 100,000 addresses per year.

In 2016, the most recent year for which data are available, the OPM national poverty rate was 12.7 percent. There were 40.6 million people in poverty.

The CPS ASEC questionnaire asks about income from more than 50 sources and records up to 27 different income amounts. Income is defined by the OPM to include, before taxes, the following sources:

The OPM does not include as income noncash government benefits such as Supplemental Nutrition Assistance Program (SNAP) benefits and housing assistance.

Poverty thresholds, the minimum income needed to avoid poverty, are updated annually for inflation using the Consumer Price Index , and adjusted for family size, composition, and age of householder.

OPM thresholds do not vary geographically.* In 2016, the OPM poverty threshold for a family of four was $24,339.

Poverty thresholds serve different purposes, including tracking poverty over time, comparing poverty across different demographic groups, and as the starting point for determining eligibility for a range of federal assistance programs.

(To learn more about using the poverty thresholds, or their administrative counterpoint, the poverty guidelines, for determining program eligibility, see FAQ: What are poverty thresholds and poverty guidelines? )

* The Census Bureau cautions that the thresholds should be interpreted as a “statistical yardstick” rather than as a complete accounting of how much income people need to live. They were intended to define and quantify poverty in America and to record changes in the number of persons and families in poverty and their characteristics over time.

Family is defined by the OPM as a group of two people or more (one of whom is the householder) related by birth, marriage, or adoption who reside together. All such people (including related subfamily members) are considered as members of one family.

In 1959, when the official government poverty series began, poverty was estimated at 22 percent. Before that time, unofficial estimates by researchers found a poverty rate in 1914 of 66 percent; 78 percent in 1932; 32 percent in 1947; and 24 percent in 1958.**

Figure 1 shows more recent poverty rates, in 1968, 1990, and 2016, by age, race, and Hispanic origin, using the OPM.

Figure 1. Official U.S. poverty rates in 1968, 1990, and 2016 show variation by age and racial/ethnic group and over time

** R. D. Plotnick, E. Smolensky, E. Evenhouse, and S. Reilly, “The Twentieth-Century Record of Inequality and Poverty in the United States,” in The Cambridge Economic History of the United States, Vol. 3, eds. S. L. Engerman and R. E. Gallman (Cambridge: Cambridge University Press, 2000), 249-299; G. Fisher, “Estimates of the Poverty Population under the Current Official Definition for Years before 1959,” mimeograph, Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services, 1986.

The Census Bureau releases the results of their analysis using the OPM every year in a report called Income and Poverty in the United States . The report includes charts and tables on information such as the following:

To learn more about the official poverty measure, see the Census Bureau discussion, “How the Census Bureau Measures Poverty,” and the infographic, “ How Census Measures Poverty .”

Researchers and policymakers have long called for changes to the official poverty measure for a number of reasons. However, in spite of its shortcomings, detailed below, its salience in policymaking is noted by the economists Bruce D. Meyer and James X. Sullivan:

Few economic indicators are more closely watched or more important for policy than the official poverty rate. The poverty rate is often cited by policymakers, researchers, and advocates who are evaluating social programs that account for more than half a trillion dollars in government spending.

Principal criticisms of the OPM include:

While the official measure remains the official national poverty statistic, the Census Bureau has been estimating poverty using a number of experimental measures as well, since the mid-1990s. See Poverty: Experimental Measures on the Census Bureau’s website for more about these approaches.

The most recent and prominent experimental measure, the Supplemental Poverty Measure—a work-in-progress that supplements but does not replace the official measure—is discussed below.

Supplemental Poverty Measure

The Census Bureau introduced the Supplemental Poverty Measure or SPM in 2010 to provide an alternative view of poverty in the United States that better reflects life in the 21st century, including contemporary social and economic realities and government policy.

As its name suggests, the SPM supplements but does not replace the official poverty measure, which remains the nation’s source for official poverty statistics and for determining means-tested program eligibility.

In a side-by-side comparison of the official poverty measure and the SPM, the Census Bureau notes their differences in measurement units, poverty threshold, threshold adjustments (e.g., by family size), updating thresholds, and what counts as resources, summarized in Table 3 below.

Source: L. Fox, “The Supplemental Poverty Measure: 2016,” Current Population Reports P60-261 (RV), Revised September 2017.

Note: “Family” as defined by the Census Bureau is “a group of two people or more (one of whom is the householder) related by birth, marriage, or adoption and residing together; all such people (including related subfamily members) are considered as members of one family.”

A comparison of official and SPM poverty rates in 2016 for the total population and among three age groups: under age 18, adults ages 18 to 64, and elders age 65 and over, is shown in Figure 2.

For most groups, SPM poverty rates were higher than official poverty rates; children are an exception with 15.2 percent poor using the SPM and 18.0 percent poor using the official measure. Analysts attribute the lower SPM child poverty rate largely to the measure’s inclusion of noncash benefits such as Supplemental Nutrition Assistance Program (SNAP, formerly Food Stamps) benefits.

The much higher SPM poverty rates for people age 65 and older—14.5 percent vs. 9.3 percent using the OPM—partially reflect that the official thresholds are set lower for families with householders in this age group, while the SPM thresholds do not vary by age.

In addition, the SPM rate is higher for people age 65 and older because it includes out-of-pocket medical expenditures, which are typically high for the elderly, whereas the official measure does not take them into account.

Figure 2. Poverty rates using OPM and SPM measures for total population and by age group, 2016, show a higher OPM child poverty rate and higher SPM elderly poverty rates.

Module 13: Income Distribution

Introduction to poverty, what you’ll learn to do: explain poverty and the poverty trap.

Firms hire workers because they value the workers’ productivity. Employees get paid based on the value of their productivity to their employer. Labor productivity depends on a worker’s talents, skills and abilities. This means that people who lack marketable skills tend to be qualified only for low wage jobs, if they are employed at all.

Poverty is what we call the condition of people who do not earn enough income to be able to afford the necessities of life, which is measured by the poverty line. The poverty rate is what percentage of the population lives below the poverty line. In this section, we will examine poverty. Later we will take a closer look at income inequality, which refers to the disparity between those with higher and lower incomes.

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Poverty in the US: Causes and Measures Essay

Introduction, measures of poverty, causes of poverty, fight against poverty.

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The existence of poverty in the United States (U.S.) is considered a paradox. The U.S. is one of the world’s richest countries and is regarded as the only economic superpower. Despite such lofty distinctions, poverty in the U.S. exists. The government has recognized this reality and is doing measures to reduce the figures. In addition, the entities in the country work hand in hand to ensure that poverty is reduced. Programs and projects are created to address the specific needs of poor communities. The fight against poverty is an unending task. It requires policies, cooperation, and sustenance. Poverty in the U.S. is referred to a household that accumulates income below the poverty level (U.S. Census, 2003). In essence, poverty is a condition that deprives individuals of acquiring the necessities required to meet the minimum standard of well-being and life. The government has set a poverty line that measures the capacity of families to satisfy their daily needs. This line is equated with other economic indicators such as price and inflation. The measurement determined by the government is equal to three times the annual cost of a nutritionally sufficient diet. At present, the poverty rate in the U.S. is estimated at approximately 12.3%. This means that 36.5 million Americans are classified as poor. But the parameters used by the United Nations measure poverty in the U.S. at around 17%. The incidence of poverty among individuals below 18 years old is high compared with individuals who are 18 to 64 years old. In 2006, the poverty rates for the respective age groups are 17.4% and 10.8% (CIA Factbook, 2007).

The government uses three measures to determine the poverty level. The Census Bureau is tasked to provide the poverty threshold. These figures are used for statistical analysis. Usually, the Bureau uses the data to classify the clusters and areas where poverty exists. Moreover, the Department of Health and Human Services handles the poverty figures for administrative purposes (Health and Human Services, 2007). The agency determines the individuals in dire need of assistance from the government. Both offices work to ascertain the accuracy of the information and the extent of aid needed. Another measure of poverty is used by the Office of Management and Budget. The agency derives its figures from the “Orshansky Poverty Threshold”. This was developed by Mollie Orshansky who once worked for the Social Security Administration (Social Security Agency, 2007). The data is used to determine the budget to be allocated to fight poverty. The Department of Agriculture also has its version of the poverty level. The agency develops the economy food plan which determines the least costly food plans. This is vital because it is used as the basis for food creation. Food security is a major issue attached to poverty. In 2002, the U.S. stated that 89% of the population has full access to food. The other households were determined to have inconsistent food sources throughout the year. The incidence of poverty in the U.S. is at times cyclical. Some families earn income only at certain periods. This means that the distribution of the resources is an imbalance to satisfy the needs of the families.

There are several reasons why poverty exists. The most common cause is the individual’s lack of skills to acquire employment. An individual must have a job to earn. Aside from the skills, educational attainment is another major consideration. Education is often a requirement when looking for employment. In addition, disability can also cause an individual to experience poverty. Disabled individuals are more often segregated from the physically capable. This form of social bias deprives physically impaired individuals of acquiring the same privileges enjoyed by others. One of the most talked-about issues in the U.S. is the prevalence of illegal immigration (Rector, 2006). For some foreigners, U.S. is viewed as the “land of milk honey”. Hence several foreign individuals try to transfer to the U.S. hoping to uplift their lives. Unfortunately, this has become a big problem for the government. The increase in population has also stretched the budget requirements needed to address poverty. Some foreigners are perceived to take away the services provided by the government to the locals. Instead of changing their statuses, these immigrants worsen their already poor state. The social condition is also linked to the existence of poverty. Communities with high crime rates are usually occupied by poor families. Crime is considered an option for individuals who find it difficult to earn in conventional ways (Harris, 2006). Discrimination is another social issue that causes poverty. Preference of race and religion can often determine the jobs that most individuals try to acquire.

Solving poverty requires solid programs and sustained efforts. One of the most used methods to solve poverty is to increase the wages received by individuals. This will expand their buying power and allow households to purchase their necessities. In addition, the government can also reduce the tax rates on households receiving low income. The government needs to sacrifice the income from taxes and directly give the benefits to earners. Aside from the income tax, the government can also reduce the tax imposed on basic goods and services that are usually acquired by low-earning households. The government has to extend its social services and focus on these poor individuals. Provision of necessities such as free education and healthcare are musts (Center for American Progress, 2007). Allocating a huge chunk of the budget on poverty alleviation has to be done. The government can temporarily alter its funds for non-priorities to fights against poverty. The government needs to address fiscal balance to ensure that poverty is addressed. It has to be noted that resources are needs to ensure that social services are delivered. Moreover, the government has to start pushing on job creation. It has to start by making policies that provide incentives for companies that will expand in depressed areas. The government can facilitate industrial growth through the provision of infrastructures and the expansion of communication arteries. Communities must be developed and made accessible to these firms. Employing these poor individuals is a good start to address poverty. This will allow these households to participate in the actual economic process. Aside from fiscal policies, there are certain monetary policies that the government can pursue. The reduction of the interest of government loans is a good option. This will allow poor individuals to have access to government financing. Apart from being employees, poor households can plan of being entrepreneurs. Although the government is not advised to intervene on prices, it can provide measures to limit the exposure of poor households to high-priced commodities (Walls, 2007). The government can provide its goods that can compete against commercially produced products.

Poverty is undeniably a concern for the U.S. Despite the daunting task head, poverty can be reduced and eventually eliminated. Several strategies can be manifested. But these strategies have to revolve around the social, political, and economic aspects of the country. The social issues involve the elimination of prejudices related to race and religion. All American has to gain equal access to basic services regardless of ethnic origin. In the economic aspect, the government has to provide both fiscal and monetary measures to strengthen the distribution of wealth. Politically, leaders have to manifest their full power to ensure that equality is present in their respective jurisdictions. But the government needs help in fighting against poverty. The private sector has to continually expand and create more employment opportunities. In addition, all Americans have to cooperate with these policies. The synergy of these aspects is needed to finally end the incidence of poverty in the U.S.

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COMMENTS

Measuring Poverty Overview
Poverty measurement and analysis have been a key aspect of the World Bank’s mission for years, as is our work to share knowledge and methods for how to measure poverty more accurately and more frequently. By measuring poverty, we learn which poverty reduction strategies work, and which do not.
How is poverty measured?
Poverty is measured in the United States by comparing a person’s or family’s income to a set poverty threshold or minimum amount of income needed to cover basic needs. People whose income falls under their threshold are considered poor. The U.S. Census Bureau is the government agency in charge of measuring poverty.
Introduction to Poverty
Poverty is what we call the condition of people who do not earn enough income to be able to afford the necessities of life, which is measured by the poverty line. The poverty rate is what percentage of the population lives below the poverty line. In this section, we will examine poverty. Later we will take a closer look at income inequality ...
Poverty Measures
3.1 Desirable features of poverty measures Poverty measures are used first and foremost to monitor social and economic conditions and to provide benchmarks of progress or failure. Here, poverty measures are indicators by which policy results are judged and by which the impact of events (e.g.,
Poverty Essay for Students and Children
How Poverty is Measured? For measuring poverty United nations have devised two measures of poverty – Absolute & relative poverty. Absolute poverty is used to measure poverty in developing countries like India. Relative poverty is used to measure poverty in developed countries like the USA.