Regional Workshop on Poverty Statistics in the ESCWA Region

1. Regional Workshop on Poverty Statistics in the ESCWA Region Amman – November 25,27,28 2004 United Nations Statistics Division http://unstats.un.org/unsd/methods/poverty/default.htm

2. Challenges of poverty statistics the UN Statistical Commission framework and in the present context of the UN Millennium Development Goals Gisele Kamanou, Ph.D. Office of the Director United Nations Statistics Division New York

3. Poverty reduction: A key objective of the Millennium Development Goals. • Yet, no consensus on a consistent approach to identify the poor within and across countries and over time • First target of the MDGs: To half the proportion of people living in extreme poverty by 2015

4. Road-map indicators to monitor target 1 • Proportion of people below $1 per day • Poverty gap ratio • Share of poorest quintile in national consumption

5. The World Bank has the mandate to produce all 3 indicators • The World Bank methodology judges poverty by standards common in South Asia and much of Sub-Saharan Africa • The World Bank method estimates poverty incidence using national accounts and household expenditures surveys • The PPP-based international poverty lines are required only to allow comparisons across countries. Other poverty assessments should be based on national poverty lines

6. The demands for national poverty data At the International level: Indicators for monitoring implementation of the MDG should be constructed on the basis of established data sources of the national statistical services (MDGs Road Map)

7. At the national level, poverty data are necessary : • To differentiate the poor individuals or groups from the non poor • To monitor poverty incidence across space and across time • To develop poverty profiles • To define thresholds for government transfers • To identify the vulnerable groups and those at greatest risk to falling into poverty

8. Two prominent approaches to defining and measuring poverty : • The Monetary approach • The Capability (and/or Basic Needs) approach

9. The Monetary approach • Most commonly used approach to identify and measure poverty • Defines poverty with a shortfall in monetary income (consumption) from some poverty line. • (Relatively) simple to operationalize • Enables inter-country comparisons – at least on the conceptual basis • Easy to explain to some extent • Creates awareness among the international community

10. The Capability (and/or Basic Needs) approach • Focuses on failure of some basic capabilities of functioning (Sen, 1985) • Emphasis on the outcome measures of well being (achievements), as opposed to the monetary approach • Non-monetary aspects of poverty essential to analyze the dynamics of income poverty

11. Outstanding methodological and empirical challenges in the two approaches • Monetary Approach - 2 main issues • Choice of the indicator of welfare • Choice of the poverty line • Capability (BN) Approach - 3 main issues • Definition of basic capabilities • Measurement of these capabilities • Aggregation

12. Monetary Approach:Choice of the indicator of welfare • Whether consumption or income is a better approximation of welfare and which of the two is more reliable • Whether the shortfall in monetary expenditures (income) encompasses all elements on poverty • How to value the different components of income/consumption in particular subsistence production, public goods; • Both income and consumption include only private resources and omit social income and benefits

13. Monetary Approach:Choice of the poverty threshold • Two methods most widely used: (1) the Nutritional poverty line and (2) the cost of basic needs line or a combination of both. • Important basic principles/assumptions for poverty line proven difficult to meet in practice and in a consistent manner within and across countries: • Equivalence scales  • Intra household resource allocation • Regional differences in costs of living • Consistency versus specificity of poverty line • Consistency over time through use of true cost of living index.

14. Capability (BN) Approach - Definition of basic capabilities • Methods of defining basic capabilities invariably amount to the establishment of a list of essential Basic Needs • Most techniques have led to similar interpretation of minimal essential capabilities as being constituted by health, nutrition and education.

15. Capability (BN) Approach -Measurement of the capabilities In practice, capabilities are measured through functioning (life expectancy, morbidity, nutrition levels)

16. Capability (BN) Approach -Aggregation • aggregation conceals important information, for an analytical and policy perspective. • Reduction of large amount of information is also desirable, e.g. for comparisons. • Union approach (poor if deprived in any dimension) • Overlapping approach (poor only if deprived from all dimensions) also suggested

17. Data Sources for Poverty estimates and assessments • Wide consensus on household surveys as the only tool that can provide information on income/consumption distribution for the purpose of measuring poverty (Deaton, 2003). • Surveys (income and expenditures surveys, labor force surveys, demographic and health surveys) provide a wide array of information that could be used to better understand the nature of poverty (Glewwe, 2003).

18. Data Requirements for Poverty monitoring • Poverty monitoring requires comparisons of poverty profile across time, within and across countries. • Thus Data capture methods must be consistent to the extent possible across space and across time

19. Data requirements for Poverty monitoring • International agencies and other organization should give high priority to develop global standards for harmonized household surveys as a tool that could generate reliable estimates for poverty consistent across countries and across time. • Only then global poverty measurement and monitoring would be put a sound basis.

20. Non-survey Sources for Poverty Measurements • National accounts estimates of household final consumption, as used in the current procedures to estimate poverty, is not appropriate for poverty measures (Kamanou, Havinga and Vu, 2003) • Line Ministry data can provide a better insight into the “whys” and the “wherefores” of poverty

21. Non-survey Sources for Poverty Measurements • However – the relevance (and usefulness) of administrative data for poverty measurements is questionable as the primary objectives of the compilers is to monitor administrative actions – rather than poverty • Need to reconcile the numbers from the surveys and those from administrative sources

22. UNSD poverty statistics project • Objective: To prepare a handbook on poverty statistics.

23. UNSD poverty statistics project • Purpose: To assist countries in designing and implementing their system of poverty measurements • To satisfy national policy needs • To respond to the increasing international demand for poverty statistics. • To help share experience on the collection and analysis of poverty statistics across different regions, • To provide countries with an overview over the extensive literature on poverty and put forward the options available at the country level

24. A Broad consultative process • A Steering Committee established to oversee the preparation of the Handbook • A website established to report on the progress and intermediate outputs http://unstats.un.org/unsd/methods/poverty/ • A panel discussion organized at the United Nations on “Global Poverty measures and International Poverty Comparison” (February 2004)

25. A Broad consultative process • Regional workshopsinvolving regional and national stakeholders and other international agencies (Brazil- May 2004; Nigeria-July 2004; Manila- October 2004 and Jordan – December 2004) • Outline of the handbook to be presented at regional workshops in an effort to incorporate regional perspectives • An Expert Group Meeting to be held in New York to review the entire volume before publication (September 2005)

26. Duration and intermediate products • Working Title: “Handbook on Poverty Statistics: Concepts, Methods and Policy Use” • Expected date for the submission of the manuscript for printing - December 2005 • Intermediate outputs available on the project website

27. Table of Contents • Chapter 1. Preface and introduction • Chapter 2. Overview of concepts and fundamentals of poverty measurements • Chapter 3. Practices of poverty measurements • Chapter 4. Statistical tools and estimation methods for poverty measures based on household surveys

28. Table of Contents (cont.) • Chapter 5. Statistical issues in measuring poverty from non-survey sources • Chapter 6. Poverty analysis for national policy use: poverty profiles, mapping and dynamics • Chapter 7. Conclusions and recommandations • Addendum: Some comparative statistics on poverty indicators across regions

29. Chapter 1. Preface and introduction • To set the scope of the publication, what it includes and what it does not include • To explain what types of poverty statistics are needed for what purpose • To make clear the distinction between national and global poverty estimates and to address the role of inter-country comparisons • To specify the target users of the publication

30. Chapter 2. Overview of concepts and fundamentals of poverty measurements • To review the pros and cons of the main conceptual approaches to defining and measuring poverty • To review methods for constructing poverty lines and poverty indices (aggregates) • To provide references for an in-depth study of these topics

31. Chapter 3. Practices of poverty measurements Based in part on the experiences accumulated by the Rio Group and the regional workshops organized in connection with the project: • to discuss the data availability and quality of existing poverty statistics • to review country practices • to understand the difficulties/barriers (institutional/technical/financial) countries face • to pay attention to the rapid changing international and global context and its effect on poverty measurement.

32. Chapter 4. Statistical tools and estimation methods for poverty measures based on household surveys • To discuss Surveys as sources of data for poverty assessments based on monetary as well as non-monetary approaches (income and expenditure surveys, LSMS, time-use surveys, DHS, labour surveys, appraisal surveys) • To highlight practical difficulties in surveys: definition of terms, sampling, periodicity, frequency, regional differences and other sources of non-random error 

33. Chapter 4. Statistical tools and estimation methods for poverty measures based on household surveys • To offer options to address specific survey design issues that could potentially affect the interpretation - or bias • To address specific statistical and data issues in longitudinal analyses - attrition of the sample over time; high mobility among specific groups • To address the need for developing gender-specific data collection instruments

34. Chapter 5. Statistical issues in measuring poverty from non-survey sources • To review other sources of data for poverty assessments • National Accounts • population censuses • administrative records from line ministries • qualitative data from participatory techniques

35. Chapter 5. Statistical issues in measuring poverty from non-survey sources • To address the current debate on the (mis) use of national accounts for poverty estimations • to discuss alternatives for reconciling the survey and national accounts estimate of household consumption through a harmonized approach to household surveys and national accounts;

36. Chapter 6. Poverty analysis for national policy use: poverty profiles, mapping and dynamic • To guidance the user in addressing questions such as : what are the characteristics of poor households, who are poor, how long does it take them to exit poverty, is poverty transient or persistent; • to provide guidance for the analysis of the pattern and change in poverty • To discuss the use of combined data sources for poverty assessments – e.g. merging household surveys and population censuses to construct poverty maps.

37. Chapter 7. Conclusions & recommandations • Recommendations for international plan for improving poverty statistics. A harmonized approach for collecting poverty data to enable comparisons through space and over time • To recommend an international action plan to assist countries and international organizations in responding to the growing demand on poverty statistics; • To recommend the use of a harmonized approach for collecting poverty data to enable poverty comparisons through time and space;

38. Addendum: Some comparative statistics on poverty indicators within and across selected regions • To present comparative data on selected indicators of poverty including monetary poverty • To describe existing approaches to measuring global poverty and to poverty comparison across countries - method based on the 1 dollar per day per person and to present data on the global poverty • To explore other complementary approaches to the existing approach to international comparisons of poverty (based on the 1$ per day)