Nepal - Poverty headcount ratio at $1.90 a day (2011 PPP) (% of population)

Definition: Poverty headcount ratio at $1.90 a day is the percentage of the population living on less than $1.90 a day at 2011 international prices. As a result of revisions in PPP exchange rates, poverty rates for individual countries cannot be compared with poverty rates reported in earlier editions.

Source: World Bank, Development Research Group. Data are based on primary household survey data obtained from government statistical agencies and World Bank country departments. Data for high-income economies are from the Luxembourg Income Study database. For mor

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Development Relevance: The World Bank Group is committed to reducing extreme poverty to 3 percent or less, globally, by 2030. Monitoring poverty is important on the global development agenda as well as on the national development agenda of many countries. The World Bank produced its first global poverty estimates for developing countries for World Development Report 1990: Poverty (World Bank 1990) using household survey data for 22 countries (Ravallion, Datt, and van de Walle 1991). Since then there has been considerable expansion in the number of countries that field household income and expenditure surveys. The World Bank's Development Research Group maintains a database that is updated annually as new survey data become available (and thus may contain more recent data or revisions) and conducts a major reassessment of progress against poverty every year. PovcalNet is an interactive computational tool that allows users to replicate these internationally comparable $1.90, $3.20 and $5.50 a day global, regional and country-level poverty estimates and to compute poverty measures for custom country groupings and for different poverty lines. The Poverty and Equity Data portal provides access to the database and user-friendly dashboards with graphs and interactive maps that visualize trends in key poverty and inequality indicators for different regions and countries. The country dashboards display trends in poverty measures based on the national poverty lines alongside the internationally comparable estimates, produced from and consistent with PovcalNet.

Limitations and Exceptions: Despite progress in the last decade, the challenges of measuring poverty remain. The timeliness, frequency, quality, and comparability of household surveys need to increase substantially, particularly in the poorest countries. The availability and quality of poverty monitoring data remains low in small states, countries with fragile situations, and low-income countries and even some middle-income countries. The low frequency and lack of comparability of the data available in some countries create uncertainty over the magnitude of poverty reduction. Besides the frequency and timeliness of survey data, other data quality issues arise in measuring household living standards. The surveys ask detailed questions on sources of income and how it was spent, which must be carefully recorded by trained personnel. Income is generally more difficult to measure accurately, and consumption comes closer to the notion of living standards. And income can vary over time even if living standards do not. But consumption data are not always available: the latest estimates reported here use consumption data for about two-thirds of countries. However, even similar surveys may not be strictly comparable because of differences in timing or in the quality and training of enumerators. Comparisons of countries at different levels of development also pose a potential problem because of differences in the relative importance of the consumption of nonmarket goods. The local market value of all consumption in kind (including own production, particularly important in underdeveloped rural economies) should be included in total consumption expenditure but may not be. Most survey data now include valuations for consumption or income from own production, but valuation methods vary.

Statistical Concept and Methodology: International comparisons of poverty estimates entail both conceptual and practical problems. Countries have different definitions of poverty, and consistent comparisons across countries can be difficult. Local poverty lines tend to have higher purchasing power in rich countries, where more generous standards are used, than in poor countries. Since World Development Report 1990, the World Bank has aimed to apply a common standard in measuring extreme poverty, anchored to what poverty means in the world's poorest countries. The welfare of people living in different countries can be measured on a common scale by adjusting for differences in the purchasing power of currencies. The commonly used $1 a day standard, measured in 1985 international prices and adjusted to local currency using purchasing power parities (PPPs), was chosen for World Development Report 1990 because it was typical of the poverty lines in low-income countries at the time. As differences in the cost of living across the world evolve, the international poverty line has to be periodically updated using new PPP price data to reflect these changes. The last change was in October 2015, when we adopted $1.90 as the international poverty line using the 2011 PPP. Prior to that, the 2008 update set the international poverty line at $1.25 using the 2005 PPP. Poverty measures based on international poverty lines attempt to hold the real value of the poverty line constant across countries, as is done when making comparisons over time. The $3.20 poverty line is derived from typical national poverty lines in countries classified as Lower Middle Income. The $5.50 poverty line is derived from typical national poverty lines in countries classified as Upper Middle Income. Early editions of World Development Indicators used PPPs from the Penn World Tables to convert values in local currency to equivalent purchasing power measured in U.S dollars. Later editions used 1993, 2005, and 2011 consumption PPP estimates produced by the World Bank. The current extreme poverty line is set at $1.90 a day in 2011 PPP terms, which represents the mean of the poverty lines found in 15 of the poorest countries ranked by per capita consumption. The new poverty line maintains the same standard for extreme poverty - the poverty line typical of the poorest countries in the world - but updates it using the latest information on the cost of living in developing countries. As a result of revisions in PPP exchange rates, poverty rates for individual countries cannot be compared with poverty rates reported in earlier editions. The statistics reported here are based on consumption data or, when unavailable, on income surveys. Analysis of some 20 countries for which income and consumption expenditure data were both available from the same surveys found income to yield a higher mean than consumption but also higher inequality. When poverty measures based on consumption and income were compared, the two effects roughly cancelled each other out: there was no significant statistical difference.

Unit of Measure: %

Periodicity: Annual

General Comments: The World Bank’s internationally comparable poverty monitoring database now draws on income or detailed consumption data from more than one thousand six hundred household surveys across 164 countries in six regions and 25 other high income countries (indu

Classification

Topic: Poverty Indicators

Sub-Topic: Poverty rates