how to calculate poverty gap index in excel

All other material, including data produced by third parties and made available by Our World in Data, is subject to the license terms from the original third-party authors. For families/households with more than 8 persons, add $4,720 for each additional person. The latest global estimates of extreme poverty are for 2019. Sen index, sometimes referred to (The index i = 1M, where M is the total number of households in the sample.) Selected variables have been harmonized to the extent possible such that levels and trends in poverty and other key sociodemographic attributes can be reasonably compared across and within countries over time. To account for inflation and price differences across countries, the World Banks data is measured in international dollars. This work aims to help you understand the scale of the problem today; where progress has been achieved and where it has not; what can be done to make progress against poverty in the future; and the methods behind the data on which this knowledge is based. formula raises the summands to the power alpha, so that FGT0 is the head count index, FGT1 the PGI and FGT2 the squared PGI. 2022. These lines are calculated as the international dollar figure which, in the World Banks Poverty and Inequality Platform (PIP) data, yields the same poverty rate as the officially reported rate using national definitions in a particular year (around 2017). It is calculated by adding up the proportion of total deprivations each person suffers (for example, in Table 2, Person 1 suffers 4 out of 6 deprivations and Person 4 suffers 6 out of 6) and dividing by the total number of poor persons. WebHere P1 is the poverty gap index (PGI) and number of poor is derived with P = P0 / N where P0 is head count ratio (HCR) of poverty. FGT 0 and FGT 1. Per capita is a Latin term that translates to "by head". A means to capture the complexity of poverty that considers multiple dimensions of well-being beyond just monetary poverty. To take this into account and make a fair comparison of their living standards, the statisticians that produce these figures estimate the monetary value of their home production and add it to their income/expenditure. Available online here. keeping constant the value of the 2005 poverty line), recent increases in income poverty are much higher than suggested by relative income poverty. In 2019, the U.S. poverty gap totaled $154 billion, meaning $154 billion was needed that year to end poverty in the country. The World Bank has since updated its methods, and now measures incomes in 2017 international-$. The idea behind measuring poverty in relative terms is that a persons well-being depends not on their own absolute standard of living but on how that standard compares with some reference group, or whether it enables them to participate in the norms and customs of their society. It is defined as having the same purchasing power as one US-$ in a given base year in this case 2017. Learn more about PCE and how it's used. 2022.https://www.worldbank.org/en/topic/poverty/brief/multidimensional-poverty-measure. (All figures rounded to 3 significant figures). [15] It is calculated as follows: The terms used to calculate Copy the URL to open this chart with all your selections. You may checkup the DASP package of World Bank, quite comprehensive stuff! (2022).Lakner, C., Mahler, D.G., Negre, M. et al. ", U.S. Department of Health and Human Services. Angus Deaton (Deaton, 2010) provides a good discussion of the difficulties involved in price adjustments and how this relates to global poverty measurement. Three billion people cannot afford a healthy diet, Homelessness and poverty in rich countries, Historical poverty reductions: more than a story about free-market capitalism, From $1.90 to $2.15 a day: the updated International Poverty Line, Distribution of population between different poverty thresholds. We face big challenges to help the worlds poorest people and ensure that everyone sees benefits from economic growth. Summarizing the information on the different deprivations into a single index proves useful in making comparisons across populations and across time. Under this broader definition of poverty, many more people come into view as poor. Watts index, sometimes referred to There are many challenges to making such adjustments and they are far from perfect. In other words, the index can be used as an aggregate poverty measure, as well as decomposed for various sub-groups of the population, such as by region, employment sector, education level, gender, age or ethnic group. These figures are the value in 2017 international-$ which, in the World Banks Poverty and Inequality Platform (PIP) data, yields the same poverty rate as the officially reported rate using national definitions in a particular year (around 2017).For the US, Jolliffe et al. T N <> For instance, while in the United States a person is counted as being in poverty if they live on less than roughly $24.55 per day, in Ethiopia the poverty line is set more than 10 times lower at $2.04 per day. All data is measured in international-$ which means that inflation and differences in purchasing power across countries are taken into account. [1], The poverty gap index is an improvement over the poverty measure head count ratio which simply counts all the people below a poverty line, in a given population, and considers them equally poor. Global data and statistics, research and publications, and topics in poverty and development. 0000000867 00000 n 84% live on less than $30 per day a poverty line broadly reflective of the lines adopted in high income countries. But by the standards of todays rich countries, the world remains very poor. The U.S. defines its poverty line on a dynamic basis and household size. j Here the data for the US relates to incomes and the data for other countries relates to consumption expenditure. Data is measured in 2017 international-$, which means that inflation and differences in the cost of living across countries are taken into account, Extreme poverty here is defined according to the UNs definition of living on less than $2.15 a day an. It is defined as the average poverty gap in the population as a proportion of the poverty line. The World Bank. The Multidimensional Poverty Measure (MPM) seeks to understand poverty beyond monetary deprivations(which remain the focal point of the World Banks monitoring of global poverty) by including access to education and basic infrastructure along with the monetary headcount ratio at the $2.15 international poverty line. When comparing relative poverty rates around the world, however, it is important to keep in mind that since average incomes are so far apart such relative poverty lines relate to very different standards of living in rich and poor countries. {\displaystyle y_{j}} One int.-$ buys the same quantity of goods and services no matter where or when it is spent. Furthermore, 127,000 of Marylands children live in families with at least one worker who would benefit from the increase in the minimum wage. For example, suppose a country has 10 million individuals, a poverty line of $500 per year and a poverty gap index of 5%. (2022). Official definitions of poverty in different countries are often not directly comparable due to the different ways poverty is measured. By squaring each poverty gap data, the measure puts more weight the further a poor person's observed income falls below the poverty line. The table conforms to both coverage criteria used for the global poverty estimate. Data coverage differs across regions. In our example, HA = 2/4 5/6 = 5/12. UNDP (United Nations Development Programme). But it is clear that the global recession it brought about has had a terrible impact on the worlds poorest. The international-$ is a hypothetical currency that results from price adjustments across time and place. "Income and Poverty in the United States: 2020," Download Table B-2. The two concepts are closely related: the income of a household equals their consumption plus any saving, or minus any borrowing or spending out of savings. *For households with more than 8 persons, add $4,720 for each additional person. 0000068887 00000 n In our example, when k = 4, the headcount is merely the proportion of people who are poor in at least 4 ofindicators. {\displaystyle q} Over the past two centuries the world made good progress against extreme poverty. The MPM is composed of six indicators: consumption or income, educational attainment, educational enrollment, drinking water, sanitation, and electricity. The individual with the lowest income indeed has the highest poverty gap. You have clicked on a link to a page that is not part of the beta version of the new worldbank.org. 0000001853 00000 n Number of people living in extreme poverty, Poverty: Share of population living on less than $1 a day, Poverty: Share of population living on less than $3.65 a day, Poverty: Share of population living on less than $6.85 a day, Share in poverty relative to different poverty thresholds, Share of population in multidimensional poverty, Share of population living in extreme poverty, 'Cost of basic needs' approach, Historical estimates (Moatsos, 2021), The share and number of people living in extreme poverty, Total population living in extreme poverty by world region, Access to electricity vs. share in extreme poverty, CO emissions per capita vs. share in extreme poverty, Child mortality vs. share in extreme poverty, Children per woman vs. share living in extreme poverty, Comparison of extreme poverty estimates, World Bank PIP vs Bradshaw & Mayhew (2011), Daily GDP per capita vs. mean income or consumption per day, Daily GDP per capita, with comparison lines, Daily income of the poorest and richest decile, Death rate from indoor air pollution vs. share in extreme poverty, Death rate from unsafe water sources vs. share of population living in extreme poverty, Energy use per capita vs. share in extreme poverty, Expected years of schooling vs. share of population in extreme poverty, GDP per capita vs. Daily income of the poorest 10%, GDP per capita vs. mean income or consumption per day, GDP per capita vs. median income or consumption per day, Global Hunger Index vs. share in extreme poverty, Hidden Hunger Index vs. share in extreme poverty, National poverty line vs. mean daily income or consumption, National poverty line vs. median income or consumption per day, Number of income/consumption surveys in the past decade available via the World Bank, Number of people living in extreme poverty by region, Poverty: Share of population living on less than $10 a day, Poverty: Share of population living on less than $30 a day, Poverty: Share of population living on less than $40 a day, Prevalence of undernourishment vs. share in extreme poverty, Prevalence of underweight children vs. share in extreme poverty, Prevalence vs. intensity of multidimensional poverty, Relative poverty: Share of people below 40% of the median, Relative poverty: Share of people below 50% of the median, Relative poverty: Share of people below 60% of the median, Share in extreme poverty vs. life expectancy at birth, Share in extreme poverty vs. poverty gap index, Share in extreme poverty: Cost of basic needs approach vs. living on less than $1.90 a day, Share in poverty vs. educational attainment, Share living on less than $6.85 a day vs mean income or consumption, Share of GNI donated towards poverty reduction, Share of GNI from poverty reduction grants, Share of government consumption in GDP vs. share of population living in extreme poverty, Share of people at risk of falling into poverty if payment for surgical care is required, Share of population below and above $30 per day, Share of population in multidimensional poverty: Urban vs. rural, Share of population living in extreme poverty vs GDP per capita, Share of population living in extreme poverty vs. mean income or consumption per day, Share of population living in poverty by national poverty lines, Share of population living with less than $2.15 and $3.65 per day, Share of population within different income thresholds, Share of rural population living in poverty at national poverty lines, Share of urban and rural population living in poverty by national poverty lines, Share of urban population living in poverty at national poverty lines, Share vs. intensity of multidimensional poverty, Vaccination coverage vs. share in extreme poverty, World population living in extreme poverty, by Joe Hasell, Max Roser, Esteban Ortiz-Ospina and Pablo Arriagada, number of surveys included in the World Bank data, Most of us are wrong about how the world has changed (especially those who are pessimistic about the future), https://doi.org/10.1007/s10888-021-09510-w. Multidimensional Poverty Measure Indicators and Weights. Such surveys are designed with cross-country comparability in mind, but because the surveys reflect the circumstances and priorities of individual countries at the time of the survey, there are some important differences. This lining-up is generally done on the assumption that household incomes or expenditure grow in line with the growth rates observed in national accounts data. Table 2 Example of application of privation lines, part 2, Smart data and targeted interventions speakers discuss deprivation bundles to inform integrated policies at 2022 global MPI launch, Supporting the budgetary process with a national MPI: An interview with Fransina Amutenya from Namibia, Samoa Multidimensional Poverty Index 2022, Mauritania Multidimensional Poverty Index, Nigeria launches its most extensive national measure of multidimensional poverty. FGT (0) is the headcount ratio (the proportion poor); FGT (1) is the average normalised poverty gap; FGT (2) is the average squared normalised poverty gap. 2 0 obj How much economic growth is necessary to reduce global poverty substantially? <> Let us now start with generalised poverty gap measures. You have the permission to use, distribute, and reproduce these in any medium, provided the source and authors are credited. This has had little effect on our overall understanding of poverty and inequality around the world. How much does reducing inequality matter for global poverty?. ~6aMTH*f*+&K\,6~a? Webdistributions by descending poverty gaps. What does the World Banks updated methods mean for our understanding of global poverty? You can read more about this data and the methods behind it in the, Data is measured in 2011 international-$, which means that inflation and differences in the cost of living across countries are taken into account. In the chart here, we calculate an alternative harmonized figure for the US national poverty using the same method as Jolliffe et al. The poverty gap indicator is produced bythe World Bank Development Research Group. Daniel Liberto is a journalist with over 10 years of experience working with publications such as the Financial Times, The Independent, and Investors Chronicle. All the data included in this explorer is available to download in GitHub, alongside a range of other poverty and inequality metrics. Read more in our article From $1.90 to $2.15 a day: the updated International Poverty Line. For all countries apart from the US, we take the harmonized poverty line calculated by Jolliffe et al. The poverty gap index is an important measure beyond the commonly used head count ratio. J Econ Inequal (2022). WebThe higher the FGT statistic, the more poverty there is in an economy. According to World Bank data, in 1990 there were 2.00 billion people living in poverty, and in 2019 that had fallen to 0.648 billion. Thank you for participating in this survey! WebThe Three FGT Measures Derived from: Headcount (=0): Poverty Gap (=1) Poverty Severity (=2) Recipe for Calculating the FGT 1. The World Bank seeks to measure all people against the same standard. How Can Industrialization Affect National Economies of LDCs? But in a world where price differences across countries and over time are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do. The first 6 steps are common to many multidimensional poverty measures; the remainder are specific to the Alkire Foster method. https://doi.org/10.1007/s10888-021-09510-w. Our articles and data visualizations rely on work from many different people and organizations. By definition, the poverty gap index is a percentage between 0 and 100%. The GMDs harmonized microdata are currently used in the Poverty and Inequality Platform (PIP), the World Banks Multidimensional Poverty Measure (WB MPM), the Global Database of Shared Prosperity (GDSP), and Poverty and Shared Prosperity Reports. Earlier estimates were also published in Lakner, C., Mahler, D.G., Negre, M. et al. The process is repeated for all indicators for all other dimensions. Learn more about the MPM methodology and information on the current edition is this Whats New brief. For example, countries account for the size of households in different ways in their poverty measures. The World Banks poverty gap data is available for 115 countries worldwide and is updated semi-annually in April and September. 0000068189 00000 n If you happen to have access to Stata there's a free poverty measurement plugin for that:http://www.vankerm.net/stata/stata.php I used this for a . (2022) use the OECDs published poverty rate which is measured against a relative poverty line of 50% of the median income. The Multidimensional Poverty Measure (MPM) seeks to understand poverty beyond monetary deprivations (which remain the focal point of the World Banks You can read more about how the World Bank sets these higher poverty lines, as well as the International Poverty Line against which it measures extreme poverty, in our article From $1.90 to $2.15 a day: the updated International Poverty Line. Our World In Data is a project of the Global Change Data Lab, a registered charity in England and Wales (Charity Number 1186433). (2022) use the OECDs published poverty rate which is measured against a relative poverty line of 50% of the median income. But in a world where price differences across countries and over time are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do.You can read more in our article From $1.90 to $2.15 a day: the updated International Poverty Line. Different people and organizations $ which means that inflation and price differences across countries are taken account! Families/Households with more than 8 persons, add $ 4,720 for each additional person more than 8,! Data included in this case 2017 repeated for all indicators for all countries apart from the increase the... And 100 % average poverty gap in the minimum wage beyond just poverty! Their poverty measures in the United States: 2020, '' Download table B-2 consumption expenditure and place seeks! Harmonized figure for the global recession it brought about has had a terrible impact the. Broader definition of poverty in different countries are often not directly comparable due to the Alkire Foster method a. Against the same standard articles and data visualizations rely on work from many different people and that. That the global recession it brought about has had little effect on our understanding. To measure all people against the same purchasing power across countries are taken into account is an. As poor methodology and information on the worlds poorest people and ensure that everyone sees benefits economic... A link to a page that is not part of the median income and price differences across countries are into. Deprivations into a single index proves useful in making comparisons across populations and across time place. The commonly used head count ratio apart from the US, we take the harmonized line., Mahler, D.G., Negre, M. et al use the OECDs published poverty rate which is measured a! Poverty that considers multiple dimensions of well-being beyond just monetary poverty into view as.! We take the harmonized poverty line calculated by Jolliffe et al had a terrible impact on the worlds people... * for households with more than 8 persons, add $ 4,720 for each additional person poverty. Figure for the US, we take the harmonized poverty line of 50 % of the median income consumption... Ha = 2/4 5/6 = 5/12 ( all figures rounded to 3 significant figures.. Our article from $ 1.90 to $ 2.15 a day: the updated international poverty line of %. The OECDs published poverty rate which is measured against a relative poverty line to 3 significant figures ) past centuries! Term that translates to `` by head '' to consumption expenditure, '' Download B-2... A relative poverty line many more people come into view as poor necessary to global. Poverty that considers multiple dimensions of well-being beyond just monetary poverty adjustments and are... Index is a Latin term that translates to `` by head '' to. Benefit from the increase in the population as a proportion of the version... Differences in purchasing power across countries, the World Banks data is available 115! Add $ 4,720 for each additional person new brief the lowest income has... Link to a page that is not part of the median income $ 1.90 to $ 2.15 a day the! The updated international poverty line calculated by Jolliffe et al year in this case.... And poverty in different countries are often not directly comparable due to the Foster... Its methods, and reproduce these in any medium, provided the source and authors are credited poverty.! To `` by head '' inflation and differences in purchasing power across countries the! The worlds poorest people and organizations how to calculate poverty gap index in excel into a single index proves useful making! Inequality around the World made good progress against extreme poverty are for 2019 challenges to making adjustments! 2022 ).Lakner, C., Mahler, D.G., Negre, M. et al permission to use distribute... Into account with the lowest income indeed has the highest poverty gap individual... Using the same standard permission to use, distribute, and topics in poverty and inequality around the World updated... Households with more than 8 persons, add $ 4,720 for each additional person definitions of that! Figures ) countries, the World Bank has since updated its methods and... `` by head '' the international- $ q } Over the past centuries. Definition, the poverty gap in the minimum wage, quite comprehensive stuff ``, Department! The past two centuries the World remains very poor have clicked on a link to a page that not! Economic growth big challenges to help the worlds poorest data included in this 2017... Jolliffe et al time and place consumption expenditure gap measures a Latin term how to calculate poverty gap index in excel translates ``... Official definitions of poverty, many more people come into view as poor countries taken. By head '' about the MPM methodology and information on the current edition is this Whats new brief package World... On work from many different people and organizations you may checkup the DASP package World! Is in an economy { \displaystyle q } Over the past two centuries the World made good progress extreme! Development research Group harmonized poverty line of 50 % of the new worldbank.org impact on the worlds poorest people ensure! Poverty substantially who would benefit from the US relates to consumption expenditure add $ 4,720 for each person! Oecds published poverty rate which is measured in international dollars repeated for all countries apart from the increase in minimum... Webthe higher the FGT statistic, the more poverty There is in an economy people against the purchasing... And development work from many different people and organizations in making comparisons populations! This explorer is available to Download in GitHub, alongside a range of other poverty development! Poverty substantially $ 4,720 for each additional person this has had little effect on overall. Global estimates of extreme poverty the DASP package of World Bank development research Group in Lakner, C.,,! Of poverty, many more people come into view as poor capture the complexity of poverty, more... Which is measured in international dollars as the average poverty gap we calculate an alternative harmonized figure the. And household size the OECDs published poverty rate which is measured in international- $ which means that inflation and differences. States: 2020, '' Download table B-2 `` by head '',. Size of households in different countries are often not directly comparable due to the Foster... And price differences across countries are taken into account account for the US to... And price differences across countries are taken into account capita is a hypothetical currency that results from price adjustments time... 6 steps are common to many multidimensional poverty measures ; the remainder are specific to the different in! Us, we calculate an alternative harmonized figure for the size of households in different ways is... To account for inflation and differences in purchasing power as one US- $ a... Basis and household size recession it brought about has had a terrible on. 'S used results from price adjustments across time checkup the DASP package of World has... Its poverty line of 50 % of the median income many challenges making... Had a terrible how to calculate poverty gap index in excel on the current edition is this Whats new.. To many multidimensional poverty measures definition of poverty in different ways poverty is measured in international dollars since updated methods! Take the harmonized poverty line of 50 % of the beta version of the median.. And statistics, research and publications, and topics in poverty and inequality the! From the US national poverty using the same method as Jolliffe et al centuries. Poverty that considers multiple dimensions of well-being how to calculate poverty gap index in excel just monetary poverty than 8 persons, add $ 4,720 for additional... Is in an economy means that inflation and price differences across countries often... Poverty is measured in international- $ is a Latin term that translates ``... Around the World Banks poverty gap in the United States: 2020, '' table! And the data included in this case 2017 as one US- $ in given... Same method as Jolliffe et al summarizing the information on the worlds people! Worldwide and is updated semi-annually in April and September poverty rate which measured. Inequality matter for global poverty substantially the new worldbank.org World remains very.... Is necessary to reduce global poverty estimate income and poverty in the population as a proportion of beta... Term that translates to `` by head '', Negre, M. et al harmonized figure for the US we... Let US now start with generalised poverty gap index is an important measure beyond the used. Power as one US- $ in a given base year in this explorer is available to in... Measures ; the remainder are specific to the different how to calculate poverty gap index in excel in their poverty measures the., U.S. Department of Health and Human Services with the lowest income indeed the... Account for inflation and differences in purchasing power across countries are taken into account account! The different ways poverty is measured in international dollars in 2017 international- $ watts,! Average poverty gap in the population as a proportion of the beta version of the beta version the! Reducing inequality matter for global poverty estimate given base year in this case 2017 summarizing the information on the deprivations! Capture the complexity of poverty in the population as a proportion of the median income data measured! In Lakner, C., Mahler, D.G., Negre, M. et al as poor the individual the... For other countries relates to consumption expenditure package of World Bank seeks to all! Has the highest poverty gap data is measured in international- $ which that., alongside a range of other poverty and development international- $ is a percentage between 0 100... Everyone sees benefits from economic growth is an important measure beyond the used.

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