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Identifying the Poor — Accounting for Household Economies of Scale in Global Poverty Estimates

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  • Jolliffe,Dean Mitchell
  • Tetteh Baah,Samuel Kofi

Abstract

Estimates of the number of people living in extreme poverty, as reported by the World Bank,figure prominently in international development dialogue and policy. An assumption underpinning these poverty counts isthat there are no economies of scale in household size—a family of six needs three times as much as a family of two.This paper examines the sensitivity of global estimates of extreme poverty to changing this assumption. The analysisrests on nationally representative household surveys from 162 countries covering 98 percent of the populationestimated to be in extreme poverty in 2017. The paper compares current-method estimates with a constant-elasticityscale adjustment that divides total household consumption or income not by household size but by the square root ofhousehold size. While the regional profile of extreme poverty is robust to this change, the determination of whois poor changes substantially—the poverty status of 270 million people changes. The paper then shows that themeasure that accounts for economies of scale is significantly more correlated with a set of presumed povertycovariates (years of schooling, literacy, asset index, working in agriculture, access to electricity, pipeddrinking water, and improved sanitation).

Suggested Citation

  • Jolliffe,Dean Mitchell & Tetteh Baah,Samuel Kofi, 2022. "Identifying the Poor — Accounting for Household Economies of Scale in Global Poverty Estimates," Policy Research Working Paper Series 10209, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10209
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    More about this item

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General

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