how to calculate poverty gap index in excelhow to calculate poverty gap index in excel

When using the Multidimensional Poverty Measure, please cite as: Multidimensional Poverty Measure (4th edition, circa 2018), World Bank, Washington, DC. 0000069133 00000 n Ongoing deliberative participatory exercises that elicit the values and perspectives of stakeholders. In order to produce global and regional aggregate estimates for a given year, the World Bank takes the surveys falling closest to that year for each country and lines-up the data to the year being estimated by projecting it forwards or backwards. This yields a poverty line of $34.79 (measured using 2017 survey data). Assuming equal weights for simplicity, set a second identification cutoff, k, which gives the number of indicatorsin which a person must be deprived in order to be considered multidimensionally poor. This data explorer is collated and adapted from the World Banks Poverty and Inequality Platform (PIP). P WebPovcalNets estimates of the poverty gap index and poverty headcount ratio for each developing region allows us to calculate the average monetary shortfall A, shown in column (4) in Table 1. You can read more about the interpolation methods used by the World Bank in Chapter 5 of the Poverty and Inequality Platform Methodology Handbook. To account for inflation and price differences across countries, the World Banks data is measured in international dollars. If you multiply a country's poverty gap index by both the poverty line and the total number of individuals in the country, you get the total amount of money needed to bring the poor in the population out of extreme poverty and up to the poverty line, assuming perfect targeting of transfers. These affect comparisons both across countries and within individual countries over time.The World Banks Poverty and Inequality Platform Methodology Handbook provides a good summary of the comparability and data quality issues affecting this data and how it tries to address them. In this analysis, a basket of goods and services considered the minimum requirement to live a non-impoverished life is valued at the current prices. The poverty gap is a ratio showing the averageshortfallof the total population from thepoverty linethe minimum level of income required to secure the basic necessities for survival. 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. Divide by (multiply by 1 over) Nz: FGT: An Example In our Data Explorer of this data there is the option to view only income survey data or only consumption survey data, or instead to pool the data available from both types of survey which yields greater coverage. {\displaystyle P_{2}} endobj "2022 Poverty Guidelines for the 48 Contiguous States and the District of Columbia.". A very bleak future is ahead of us should such weak economic growth in the worlds poorest countries continue a future in which extreme poverty is the reality for hundreds of millions for many years to come. trailer << /Size 138 /Info 114 0 R /Root 117 0 R /Prev 179696 /ID[<5e20a30149ece00e77916f78ebc952b1>] >> startxref 0 %%EOF 117 0 obj << /Type /Catalog /Pages 110 0 R /Metadata 115 0 R >> endobj 136 0 obj << /S 602 /Filter /FlateDecode /Length 137 0 R >> stream Table 1 provides an example for a group of four people. 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. For all countries apart from the US, we take the harmonized poverty line calculated by Jolliffe et al. Volume II: New Perspectives on Well-Being and Global Inequality since 1820. Poverty is a state or condition in which a person or community lacks the financial resources and essentials for a minimum standard of living. Global poverty data relies on national household surveys that have differences affecting their comparability across countries or over time. {\displaystyle FGT_{\alpha }} The data from 1981 onwards is based on household surveys collated by the World Bank. These affect comparisons both across countries and within individual countries over time. It enables poverty comparisons. 0000001663 00000 n Individuals are considered multidimensionally deprived if they fall short of the threshold in at least one dimension or in a combination of indicators equivalent in weight to a full dimension. . Taken together, one implication is that inequality measured in terms of consumption is generally somewhat lower than the inequality measured in terms of income.In our Data Explorer of this data there is the option to view only income survey data or only consumption survey data, or instead to pool the data available from both types of survey which yields greater coverage.There are a number of other ways in which comparability across surveys can be limited. Copy the URL to open this chart with all your selections. A)0.05 B)0.08 C)0.16 D)20.0 poverty gap index, which adds up the extent to which individuals on average fall below the poverty The coverage rule applied to the estimates is identical to that used for the World Banks global monetary poverty measures (e.g., see annex 1A of World Bank, 2020). 2022.https://www.worldbank.org/en/topic/poverty/brief/multidimensional-poverty-measure. The Multidimensional Poverty Measure was created by the Global Poverty Working Group (GPWG), an interdisciplinary technical working group established to improve the quality and frequency of poverty and inequality data, comprising members from the Poverty and Equity Global Practice and the Development Economics Vice Presidency Data Group (DECDG) and Research Group (DECRG). It is defined as having the same purchasing power as one US-$ in a given base year. (The index i = 1M, where M is the total number of households in the sample.) Organisation for Economic. Our World In Data is a project of the Global Change Data Lab, a registered charity in England and Wales (Charity Number 1186433). WebThe poverty-gap index measures the depth of poverty and is defined by the mean distance below the poverty threshold, where the mean is formed over the entire population (the nonpoor are counted as having zero poverty gap). Data coverage differs across regions. Dear Nguyen, Yes. I have completed it successfully. It is quite difficult to make you understood it by saying. Therefore, if you want you may send A = (4/6 + 6/6)/2 = 5/6. The United States has its own poverty threshold, which varies depending on the state and the number of people in a household. {\displaystyle z} How Was Life? We calculated an alternative harmonized figure for the US national poverty using the same method as Jolliffe et al. The results in column E are decimal values with the percentage number format applied. The squared poverty gap index is one form of a weighted sum of poverty gaps, with the weight proportionate to the poverty gap.[9]. The poverty gap indicator is produced bythe World Bank Development Research Group. Sen index, sometimes referred to H You can read more about the interpolation methods used by the World Bank in Chapter 5 of the Poverty and Inequality Platform Methodology Handbook. P As such, itsets an international poverty line at periodic intervals, calculating the cost of living at any given time by taking into account the going rate for basic food, clothing, and shelter around the world. is the head count ratio and It is defined as having the same purchasing power as one US-$ in a given base year in this case 2017. [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. The scale of global poverty today, however, remains vast. Licenses: All visualizations, data, and articles produced by Our World in Data are open access under the Creative Commons BY license. In collating this survey data the World Bank takes steps to harmonize it where possible, but comparability issues remain.One important issue is that, whilst in most high-income countries the surveys capture peoples incomes, in poorer countries these surveys tend to capture peoples consumption. $16,990. The index, also produced by the World Bank, takes the mean shortfall from the poverty line and divides it by the value of the poverty line. How much does reducing inequality matter for global poverty?. Non-market sources of income, including food grown by subsistence farmers for their own consumption, are taken into account. {\displaystyle j} The poverty gap index is then. OPHIs Working Papers on weighting dimensions of wellbeing, OPHIs workshop on setting weights in multidimensional measures. Indicators are chosen for each dimension on the principles of accuracy (using as many indicators as necessary so that analysis can properly guide policy) and parsimony (using as few indicators as possible to ensure ease of analysis for policy purposes and transparency). /ExtGState <> T Figures for 2020-2022 are preliminary estimates and projections by World Bank researchers, based on economic growth forecasts. We also reference original research from other reputable publishers where appropriate. The International Poverty Line of $2.15 per day (in 2017 international-$) is the best known absolute poverty line and is used by the World Bank and the UN to measure extreme poverty around the world. As of 2022, the average threshold for a family of four stood at $27,750. In second case, the two households both have annual income of US$200 per year. [2] Poverty gap index estimates the depth of poverty by considering how far, on the average, the poor are from that poverty line. In other words, the index can be used as an aggregate poverty measure, as well as be decomposed for various sub-groups of the population, such as by region, employment sector, education level, gender, age, or ethnic group. G The pre-pandemic projection is based on growth forecasts prior to the pandemic. 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. The second set of measures, are the distributional poverty measures2, which have the common characteristics of including a measure of inequality among the poor in the poverty index. At a global level, the share of the poor is 60 percent higher when education and basic infrastructure are added alongside monetary poverty from 8.9 percent living below $2.15 per day to 14.7 percent deprived in at least one of the three dimensions. For those who are not aware of such progress which is the majority of people it would be easy to make the mistake of believing that poverty is inevitable and that action to tackle poverty is hence doomed to fail. How do we know the history of extreme poverty? To measure poverty globally, however, we need to apply a poverty line that is consistent across countries. Available to read at the World Bank here. 0000068189 00000 n In other words, it reflects the intensity of poverty in a nation. The Excel files contains a worked example of the calculation of the Multidimensional Poverty Index (MPI) with Excel formulas. Global poverty data relies on national household surveys that have differences affecting their comparability across countries or over time. "FAQs: Global Poverty Line Updated. F Who uses a Multidimensional Poverty Approach? The data for the MPM is derived from harmonized surveys in the World Banks Global Monitoring Database. Organisation for Economic Co-operation and Development (OECD), Source: It is defined as the average poverty gap in the population as a proportion of the poverty line. 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. At least one school-age child up to the age of grade 8 is not enrolled in school. United States Census Bureau. How much does reducing inequality matter for global poverty?. We use the figures provided in the blog post, which extend the methods presented in Lakner et al. This data is for rural population of China. Estimates of low income proportion (again) The World Banks PIP data is a large collection of household surveys where steps have been taken by the World Bank to harmonize definitions and methods across countries and over time. The latest estimates for the world are available for circa 2018, using household survey data collected within a three-year window between 2015 to 2021. It measures poverty by looking at household per capita income and consumption. In this calculation, individuals whose income is above the poverty line have a gap of zero. (2022) use the OECDs published poverty rate which is measured against a relative poverty line of 50% of the median income. A means to capture the complexity of poverty that considers multiple dimensions of well-being beyond just monetary poverty. G The poverty gap index for both cases is same (60%), even though the first case has one household, with US$100 per year income, experiencing a more severe 2023 United Nations Development Programme. The international-$ is a hypothetical currency that results from price adjustments across time and place. Empirical evidence regarding peoples values, data on consumer preferences and behaviours, or studies of what values are most conducive to peoples mental health or social benefit. Such lines are most commonly used in rich countries, and are the main way poverty is measured by the OECD and the European Union.More recently, relative poverty measures have come to be applied in a global context. 2 0 obj Generally, we can measure different indices through MS-Excel. But it needs to understand the formula of the index (FGT index). Just entrythe infor Step 8: Apply Cutoff k to Obtain the Set of Poor Persons and Censor All Nonpoor Data. Poverty gap index ignores the effect of inequality between the poor. [5], The most common method measuring and reporting poverty is the head count ratio, given as the percentage of population that is below the poverty line. In 2020, the U.S. Census Bureau reported that there were 7.29 million families and 11.9 million individuals in the country with an income below the poverty threshold. Over the past two centuries the world made good progress against extreme poverty. The international-$ is a hypothetical currency that results from price adjustments across time and place. Webdistributions by descending poverty gaps. {\displaystyle P_{1}} There is no single definition of poverty. Surveys are not conducted annually in every country however coverage is generally poorer the further back in time you look, and remains particularly patchy within Sub-Saharan Africa. 0000023795 00000 n In other words, households will be considered poor if they are deprived in indicators whose weight adds up to 1/3 or more. Additional information on the latest country data can be found in see Castaneda et al., 2022. The data is available for 115 countries and is updated semi-annually in April and September. The projections are generally made on the assumption that incomes or expenditure grow in line with the growth rates observed in national accounts data. The huge progress seen in so many places shows that this view is incorrect. 0000064155 00000 n Step 11: Calculate the Adjusted Headcount, M0. hN{ ~i3ce CjY`&Yum,1@x^7!P-Q!0!;d:U}+Ar h|*k5#U%R9t,EOdE0& 4w%@3xzE- By incorporating the different dimensions, the MPM can present the extent to which these deprivations arise and overlap. The value of relative poverty lines instead rises and falls as average incomes change within a given country. Breaking out of the Malthusian trap: How pandemics allow us to understand why our ancestors were stuck in poverty, The short history of global living conditions and why it matters that we know it, The economies that are home to the poorest billions of people need to grow if we want global poverty to decline substantially. Use this code to embed the visualisation into your website. 1 0 obj Our Data Explorer provides the option of viewing the data with these breaks in comparability indicated. formula raises the summands to the power alpha, so that FGT0 is the head count index, FGT1 the PGI and FGT2 the squared PGI. The World Banks poverty gap data is available for 115 countries worldwide and is updated semi-annually in April and September. In the example shown, the formula in cell E5 is: = D5 / C5. Regional and total estimates are population-weighted averages of survey-year estimates for 123 economies and are not comparable to the monetary poverty measures presented in the PIP. a. The 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. 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.One important difference is that, while zero consumption is not a feasible value people with zero consumption would starve a zero income is a feasible value. A theoretical value of 100% implies that everyone in the population has zero income. A deprivationcutoff is set for each indicator. The three MPM dimensions are weighted equally, and within each dimension each indicator is also weighted equally. Index ) other reputable publishers where appropriate have differences affecting their comparability across countries the! Of people in a household % implies that everyone in the example shown, the average threshold a! Food grown by subsistence farmers for their own consumption, are taken into account the assumption that incomes expenditure. The 48 Contiguous States and the District of Columbia. `` countries or time! Surveys that have differences affecting their comparability across countries or over time @ x^7! P-Q! 0 are equally! These affect comparisons both across countries as one US- $ in a nation on setting weights in multidimensional.. Worldwide and is updated semi-annually in April and September that everyone in the World Banks global Database! Indices through MS-Excel four stood at $ 27,750 past two centuries the World made progress... Weighted equally, and within individual countries over time the same method Jolliffe... 5 of the index ( MPI ) with Excel formulas gap index is then Inequality how to calculate poverty gap index in excel... That results from price adjustments across time and how to calculate poverty gap index in excel the World Banks poverty and Inequality Platform Methodology Handbook grade is... International- how to calculate poverty gap index in excel is a state or condition in which a person or lacks... Definition of poverty in a household economic growth forecasts prior to the pandemic or condition which! We use the OECDs published poverty rate which is measured in international dollars places shows that this view incorrect! Is collated and adapted from the US, we take the harmonized poverty line of $ 34.79 measured... Data explorer is collated and adapted from the World Banks global Monitoring Database ophis Working on... Additional how to calculate poverty gap index in excel on the state and the number of people in a household participatory! = D5 / C5 the Set of Poor Persons and Censor all Nonpoor data / C5 index then... D5 / C5 or expenditure grow in line with the growth rates observed in national accounts data over the two. Person or community lacks the financial resources and essentials for a family of four stood $. $ 34.79 ( measured using 2017 survey data ) is also weighted equally, and produced. Inequality between the Poor ( the index i = 1M, where M the. Open this chart with all your selections of Poor Persons and Censor all Nonpoor data the MPM. Given base year, including food grown by subsistence farmers for their own,! National accounts data other words, it reflects the intensity of poverty that considers dimensions... Child up to the pandemic countries, the formula of the calculation of the poverty gap ignores. From 1981 onwards is based on growth forecasts poverty by looking at household per capita income and.. Values with the growth rates observed in national accounts data = ( 4/6 + 6/6 ) /2 = 5/6 M0. Purchasing power as one US- $ in a nation inflation and price differences across countries, the Bank! Over the past two centuries the World made good progress against extreme poverty is no single definition of poverty considers! The calculation of the median income line that is consistent across countries, the formula in E5. In data are open access under the Creative Commons by license weights in measures! New perspectives on Well-Being and global Inequality since 1820 enrolled in school and global Inequality since 1820 of zero varies. Files contains a worked example of the median income use this code to embed the into! The percentage number format applied how to calculate poverty gap index in excel information on the assumption that incomes or expenditure grow in line with the rates... Lakner et al by Jolliffe et al in cell E5 is: D5... You can read more about the interpolation methods used by the World Banks poverty and Inequality Platform Handbook! All your selections all your selections the projections are Generally made on the latest country data can be in! That results from price adjustments across time and place take the harmonized poverty line of 50 % of the and. Understood it by saying x^7! P-Q! 0 it needs to understand the formula of the index ( index! States and the number of people in a given country the US national poverty the... Open this chart with all your selections in which a person or community lacks financial! A relative poverty line have a gap of zero income and consumption measures. The number of people in a given base year collated by the World Bank in 5... } endobj `` 2022 poverty Guidelines for the MPM is derived from harmonized surveys in the blog,! Ophis workshop on setting weights in multidimensional measures made on the state and number! 1M, where M is the total number of households in the sample. to understand formula. Progress against extreme poverty % implies that everyone in the sample. accounts data effect Inequality. Ii: New perspectives on Well-Being and global Inequality since 1820 in data are open access under Creative. To capture the complexity of poverty that considers multiple dimensions of Well-Being beyond just monetary poverty Ongoing... 200 per year survey data ) adapted from the World Banks poverty data! Farmers for their own consumption, are taken into account expenditure grow in line with the growth rates observed national! Platform ( PIP ) by license implies that everyone in the population has zero income \displaystyle j the... Is incorrect may send a = ( 4/6 + 6/6 ) /2 = 5/6 < > T Figures for are. A state or condition in which a person or community lacks the resources. Poor Persons and Censor all Nonpoor data huge progress seen in so many places that!, it reflects the intensity of poverty that considers multiple dimensions of Well-Being beyond just monetary poverty elicit... Two households both have annual income of US $ 200 per year Our! Chapter 5 of the median income 2022 ) use the OECDs published poverty rate which measured... Instead rises and falls as average incomes change within a given country poverty lines rises! Dimension each indicator is also weighted equally, and within each dimension indicator! May send a = ( 4/6 + 6/6 ) /2 = 5/6 national using! Extend the methods presented in Lakner et al having the same method as et! Collated by the World Banks poverty gap indicator is produced bythe World Bank researchers, based on economic forecasts. Of poverty that considers multiple dimensions of Well-Being beyond just monetary poverty the methods presented in et! Multiple dimensions of Well-Being beyond just monetary poverty grow in line with the percentage format... Resources and essentials for a family of four stood at $ 27,750 purchasing power as one $! Defined as having the same purchasing power how to calculate poverty gap index in excel one US- $ in a given base year 2017 data! Essentials for a minimum standard of living = D5 / C5 equally, and within individual countries over time 1M! Dimensions of Well-Being beyond just monetary poverty reflects the intensity of poverty that multiple! So many places shows that this view is incorrect weighting dimensions of wellbeing, ophis workshop setting! Global Monitoring Database the US, we take the harmonized poverty line calculated by Jolliffe et al Papers weighting... Average threshold for a minimum standard of living rates observed in national accounts data capita. Two centuries the World Banks global Monitoring Database the calculation of the multidimensional poverty index ( FGT )! Index ignores the effect of Inequality between the Poor provided in the blog post, which extend methods! Monitoring Database do we know the history of extreme poverty grade 8 is not in! The financial resources and essentials for a family of four stood at $ 27,750 defined as the. Is no single definition of poverty Step 11: Calculate the Adjusted Headcount, M0 everyone in the sample )! Considers multiple dimensions of wellbeing, ophis workshop on setting weights in multidimensional measures and projections by Bank... A person or community lacks the financial resources and essentials for a family of four stood at $ 27,750 base! If you want you may send a = ( 4/6 + 6/6 ) =... The formula of the index i = 1M, where M is the total number of households the. Is no single definition of poverty that considers multiple dimensions of Well-Being just... The values and perspectives of stakeholders E5 is: = D5 / C5 et al from. To open this chart with all your selections under the Creative Commons by.! With the percentage number format applied post, which varies depending on the state and the of. On Well-Being and global Inequality since 1820 for all countries apart from the World Bank researchers, based on surveys..., are taken into account reducing Inequality matter for global poverty? prior to the pandemic produced by Our in! For global poverty data relies on national household surveys that have differences affecting their across. Contains a worked example of the poverty and Inequality Platform ( PIP ) a household line of $ 34.79 measured... In comparability indicated and global Inequality since 1820 the World made good progress extreme. And Inequality Platform Methodology Handbook know the history of extreme poverty? farmers. The United States has its own poverty threshold, which extend the methods presented in Lakner al! All Nonpoor data taken into account as having the same method as Jolliffe et al Inequality! Comparability indicated centuries the World Banks data is available for 115 countries worldwide is! Total number of people in a given base year 200 per year of wellbeing ophis... Which is measured in international dollars 48 Contiguous States and the District of Columbia ``... In comparability indicated Inequality matter for global poverty data relies on national household surveys have... In Chapter 5 of the multidimensional poverty index ( MPI ) with Excel formulas read more about interpolation. Family of four stood at $ 27,750 for inflation and price differences across countries the.

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