Global Poverty Monitoring Technical Note 2 Public Disclosure Authorized September 2018 PovcalNet Update What’s New Shaohua Chen, Dean M. Jolliffe, Christoph Lakner, Kihoon Lee, Daniel Gerszon Mahler, Rose Mungai, Minh C. Nguyen, Public Disclosure Authorized Espen Beer Prydz, Prem Sangraula, Dhiraj Sharma, Judy Yang and Qinghua Zhao September 2018 (Updated March 2019*) Public Disclosure Authorized Keywords: What’s new; September 2018; India; LIS; API Public Disclosure Authorized Development Data Group Development Research Group Poverty and Equity Global Practice Group Abstract The September 2018 update to PovcalNet involves several changes to the data underlying the global poverty estimates. Some welfare aggregates have been changed for improved harmonization, and some of the CPI, national accounts, and population input data have been revised. This document explains these changes in detail and the reasoning behind them. Emphasis is given to the updates to the Indian poverty estimates. In addition to the changes listed here, 24 new country-years have been added, bringing the total number of surveys to 1601. All authors are with the World Bank. Corresponding authors: Christoph Lakner ([email protected]) and Minh C. Nguyen ([email protected]). The authors are thankful for comments and guidance received from Aziz Atamanov, Joao Pedro Azevedo, R. Andres Castaneda Aguilar, Paul A. Corral Rodas, Reno Dewina, Carolina Diaz-Bonilla, Francisco Ferreira, Jose Montes, Laura Moreno Herrera, Rinku Murgai, David Newhouse, and Ayago Esmubancha Wambile, and to Ruoxuan Wu for excellent research assistance. This note has been cleared by Francisco Ferreira. *March 2019 update: • Appendix with the CPI source for each country-year has been added (Table A.1). This refers to the CPIs used for the September 2018 PovcalNet update. The Global Poverty Monitoring Technical Note Series publishes short papers that document methodological aspects of the World Bank’s global poverty estimates. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. Global Poverty Monitoring Technical Notes are available at http://iresearch.worldbank.org/PovcalNet/. Contents 1. Introduction ............................................................................................................................. 1 2. Changes to welfare aggregates ................................................................................................ 3 2.1. Bhutan 2003 .................................................................................................................... 3 2.2. EU-SILC data.................................................................................................................. 3 2.3. LIS data ........................................................................................................................... 3 2.4. Fiji 2013.24 ..................................................................................................................... 4 2.5. Kenya .............................................................................................................................. 4 2.6. Malaysia 2008.25 ............................................................................................................ 4 2.7. Rwanda 2010.83 and 2013.75 ......................................................................................... 4 3. Changes to CPI data ................................................................................................................ 5 4. Changes to national accounts data ........................................................................................... 6 5. Changes to population and survey coverage data .................................................................... 7 6. Revisions to India’s poverty estimates .................................................................................... 8 6.1. CPI revisions ................................................................................................................... 8 6.2. Revisions to line-up after 2011.5 .................................................................................... 8 7. Country-years added .............................................................................................................. 12 8. Estimating shared prosperity in China................................................................................... 12 9. Other changes ........................................................................................................................ 13 References ..................................................................................................................................... 14 Appendix ....................................................................................................................................... 15 1. Introduction The September 2018 global poverty update from the World Bank presents new poverty estimates for 2015, and revises the previously published global and regional estimates from 1981 to 2013. The update includes new surveys that have been received and processed, as well as several changes to the existing data. Some changes reflect improvements in the welfare aggregate based on new harmonization efforts and more available information. This document outlines the changes made to the underlying data by country, and explains the reasons why the changes have been made. Table 1 shows the global and regional poverty estimates for 2015, which are presented in more detail in the 2018 Poverty and Shared Prosperity report (World Bank, 2018). In 2015, an estimated 736 million people were living below the international poverty line, currently set at $1.90 in 2011 purchasing power parity (PPP) U.S. dollars. The global poverty rate, the share of the world’s population living below the international poverty line, stands at 10%, while 26% live on less than $3.20 and 46% live on less than $5.50. Sub-Saharan Africa accounts for more than half of the world’s population below the international poverty line and has the highest regional poverty rate, at 41%. Table 1. Poverty estimates for reference year 2015, different poverty lines $1.90 $3.20 $5.50 Survey Head- Num- Head- Num- Head- Num- Region coverage count ber of count ber of count ber of (%) ratio poor ratio poor ratio poor (%) (mil) (%) (mil) (%) (mil) East Asia and Pacific 97.6 2.3 47 12.5 254 34.9 710 Europe and Central Asia 89.9 1.5 7 5.4 26 14.0 68 Latin America and the Caribbean 89.8 4.1 26 10.8 68 26.4 165 Middle East and North Africa 64.6 5.0 19 16.3 61 42.5 158 South Asia 21.4 n/a n/a n/a n/a n/a n/a Sub-Saharan Africa 52.7 41.1 413 66.3 667 84.5 849 Other High-Income Economies 71.7 0.7 7 0.9 10 1.5 16 World Total 66.7 10.0 736 26.3 1933 46.0 3386 Source: PovcalNet Note: Survey coverage is assessed within a two-year window either side of 2015, i.e. including surveys that were conducted between 2013 and 2017 (see section 5 below). The estimates for South Asia are not displayed since the region has a survey coverage less than 40%. 1 Table 2 illustrates the impact of the data updates on global poverty for the reference year 2013. The estimates for 2013 were first published in October 2016, and have since been revised in October 2017 and April 2018. With the new data, the estimate of the global $1.90 headcount ratio increased from 10.9% to 11.2% and the number of poor increased from 783 million to 804 million people. The additional 21 million poor people at the global level can be largely explained by a revision of the line-up methodology in India (see section 6.2 for details), which increases the estimated number of poor in India by 17 million (from 210 to 227), and increases the headcount ratio in South Asia from 15.1% to 16.2%. The remaining change is mostly explained by a new survey in Kenya in 2015.67.1 This new survey adds more than 2 million poor people in Kenya compared to the previous estimate, which was based on an extrapolation of the 2005.38 survey. Apart from India and Kenya, no country had its estimate change by more than half a million poor people. Table 2. Poverty at reference year 2013: Comparison of April and September 2018 versions $1.90: $1.90: $3.20: $3.20: $5.50: $5.50: Headcount Number of Headcount Number of Headcount Number of ratio (%) poor (mil) ratio (%) poor (mil) ratio (%) poor (mil) Region Apr Sep Apr Sep Apr Sep Apr Sep Apr Sep Apr Sep 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 East Asia and 3.6 3.6 73 73 17.6 17.5 352 352 42.5 42.4 853 852 Pacific Europe and Central 1.6 1.6 7.7 8 5.8 5.8 28 28 14.1 14.1 68 68 Asia Latin America and 4.5 4.6 28 28 11.3 11.4 69 70 27.1 27.2 166 167 the Caribbean Middle East and 2.7 2.6 9.6 9 14.5 14.4 52 51 42.7 42.3 153 152 North Africa South Asia 15.1 16.2 257 274 52.6 53.9 894 916 83.5 84.2 1418 1431 Sub-Saharan 42.3 42.5 401 405 67.5 67.8 639 645 85.2 85.4 807 813 Africa Other High-Income 0.6 0.6 6.4 6 0.9 0.8 9.5 8.9 1.5 1.5 16 16 Economies World Total 10.9 11.2 783 804 28.6 28.8 2044 2072 48.7 48.7 3481 3498 Source: PovcalNet Note: The increase in the number of poor at the $5.50 line, without any change in the headcount ratio, can be explained by rounding