A Measured Approach to Ending Poverty and Boosting Shared Prosperity
International Bank for Reconstruction and Development / The World Bank, 2015
This Policy Research Report is structured in three parts, mirroring the three broad aims of the report.
The first part provides a general overview of the conceptual underpinnings of the two goals and their assessment.
Chapter 1 describes the World Bank’s approach to poverty measurement and assesses what achievement of the poverty goal will require.
Chapter 2 turns to the shared prosperity goal, demonstrating how the goal can be evaluated and highlighting some of the challenges of interpretation.
The second part of the report places the World Bank’s two goals in a wider context. Chapter 3 places the global poverty and shared prosperity goals in a broader framework of poverty and welfare analysis. It shows how the World Bank’s choices of measures are two options from an array of possible indicators, each with different features that provide different insights. Chapter 4 discusses poverty projections in the context of uncertainty about economic growth and large or unusual shocks, which could pose downside risk to achieving the goals and are often not adequately captured by standard economic models. Current debates around climate change and sustainability receive explicit attention in this framework. The chapter demonstrates how confidence in achieving the goals and indeed their very attainment are sensitive to assumptions about the patterns of economic growth and the occurrence of extraordinary shocks.
Finally, while data and measurement issues are discussed throughout, the third part of the report specifically addresses issues related to the empirical monitoring of the goals in greater technical detail.
Chapter 5 discusses the use of household survey data in measuring global poverty and shared prosperity,
highlighting some of the challenges faced in raising the frequency and timeliness of global poverty estimates. Although household surveys are necessary inputs to the measurement of global poverty and shared prosperity, they are not sufficient.Chapter 6 thus turns to some of the key complementary data—population data, purchasing power parity (PPP) indexes that control for the differences in the cost of living across countries, and growth and inflation data—that are needed to support the World Bank’s poverty and prosperity estimates. The discussion on accounting for differences in prices across countries with PPP indexes is particularly extensive, primarily because these data have significant implications for global poverty estimates.