Identifying the poor – Accounting for household economies of scale in global poverty estimates

Dean Jolliffe and Samuel Kofi Tetteh Baah

World Development, 2024, vol. 179, issue C

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 is that 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 analysis rests on nationally representative household surveys from 162 countries covering 97.5 percent of the population estimated to be in extreme poverty in 2019. We compare current-method estimates with a constant-elasticity scale adjustment that divides total household consumption or income not by household size but by the square-root of household size. While the regional profile of extreme poverty is robust to this change, the determination of who is poor changes substantially – the poverty status of 264 million people changes. We then discuss evidence suggesting that the assumption of economies of scale more closely aligns with non-consumption measures of poverty. Specifically, we draw from existing literature of subjective assessments of poverty and wellbeing, along with new empirical evidence from examining the partial correlation (conditional on household size) between the two measures of poverty and a set of presumed poverty covariates (i.e., years of schooling, literacy, asset index, working in agriculture, access to electricity, piped drinking water, improved sanitation).

Keywords: Global poverty; Household economies of scale; Sustainable development goals (search for similar items in EconPapers)
JEL-codes: I32 O10 O20 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0305750X24000639
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Identifying the Poor – Accounting for Household Economies of Scale in Global Poverty Estimates (2022)
Working Paper: Identifying the Poor — Accounting for Household Economies of Scale in Global Poverty Estimates (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:179:y:2024:i:c:s0305750x24000639

DOI: 10.1016/j.worlddev.2024.106593

Access Statistics for this article

World Development is currently edited by O. T. Coomes

More articles in World Development from Elsevier
Bibliographic data for series maintained by Catherine Liu ().