Implications of Using Nonstandard Poverty Lines: An Illustration Using the Case of the Arab Republic of Egypt

Benoit Marie A Decerf, Maria Eugenia Genoni, Imane Abdelfattah Ahmed Refaat Helmy and Guillermo Federico Sanz

No 10437, Policy Research Working Paper Series from The World Bank

Abstract: Many developing countries’ official poverty methodologies rely on nonstandard poverty lines, which complicate poverty comparisons across space or time. The paper considers the case of the Arab Republic of Egypt, whose official poverty lines have two important nonstandard features. First, the line is neither absolute nor relative, but rather hybrid or “weakly relative.” Second, the poverty line’s implicit equivalence scales are not fixed, but are rather endogenous. This paper provides a conceptual and quantitative understanding of these two nonstandard features. The results reveal that the equivalence scale implicit in the official methodology is quantitatively very similar to the (simpler) per capita equivalence scale. Switching to a per capita equivalence scale would help address an implicit gender bias that the paper identifies in Egypt’s official poverty lines. The analysis shows that the official distribution of poverty across regions is very similar to that associated with a purely absolute line. In addition, the change in official poverty rates over the period analyzed (2015 to 2017/18) lies halfway between the larger increase captured by a purely absolute line (10 percentage points) and that captured by a purely relative measure (1 percentage point). However, the results show that these more standard poverty lines do not systematically perform better than the official methodology with respect to the identification of disadvantaged households.

Date: 2023-05-08
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