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Poverty and Inequality Analysis

Poverty analysis is a key step in designing poverty reduction strategies and programs. It deals with how we understand its different dimensions and how we measure and monitor progress. At the same time, it helps us understand the factors that are most powerful to improve lives in a given context.
Poverty is pronounced deprivation in well-being, and comprises many dimensions. It includes low incomes and the inability to acquire the basic goods and services necessary for survival with dignity. Poverty also encompasses low levels of health and education, poor access to clean water and sanitation, inadequate physical security, lack of voice, and insufficient capacity and opportunity to better one’s life. Learn more
Inequality is a broader concept than poverty in that it is defined over the entire population, not just for the portion of the population below a certain poverty threshold. Whereas poverty may be defined in absolute terms (e.g., living on less than $1/day) or relative terms (e.g., the poorest 20% of the population), inequality is inherently relative. Poverty and inequality can change in different directions. For example, over the past decade poverty has fallen in both Brazil and China, but inequality has increased in China while it has decreased in Brazil. Learn more
Vulnerability is the risk of falling into poverty in the future, even if the person is not necessarily poor now. Vulnerability is often associated with the effects of "shocks" such as a drought, a drop in farm prices, or a financial crisis. Vulnerability is a key dimension of well-being since it affects individuals’ behavior in terms of investment, production patterns, and coping strategies, and in terms of the perceptions of their own situations. Learn more
This handbook provides tools to measure, describe, monitor, evaluate, and analyze poverty. It provides background materials for designing poverty reduction strategies. This book is intended for researchers and policy analysts involved in poverty research and policy making.
Measuring poverty involves two fundamental steps. The first step is identifying the poor within a given population. This first step requires two sub-steps, (a) defining a measure of individual welfare, and (b) defining a poverty threshold for this welfare measure, below which an individual would be considered poor. The second step is constructing a measure or index of poverty using the available information on poor people. Learn more
From 1981 to 2005 (the most recent year for which comprehensive estimates are available), the number of people living on less than $1.25 per day (PPP adjusted in 2005 US$) has fallen from 1.9 to 1.4 billion. During this same period, the proportion of the world’s population living below the $1.25 poverty line has declined from 52% to 26%. It is estimated that the number of people living on less than $2 per day has increased slightly over this period, from 2.5 to 2.6 billion people, although the proportion living below the poverty line has declined from 70% to 48%. Learn more
Most poverty information in low- and middle-income countries comes from household surveys, which provide detailed information on a representative sample of households. Using a technique known as small area estimation, poverty maps combine the depth of information in a survey (information on consumption and/or income) with the complete spatial coverage available from a census, which typically does not include detailed information on welfare. Many countries have used small area estimation to create local welfare estimates and poverty maps. Learn more
At the Millennium Summit in September 2000, building upon a decade of major United Nations conferences and summits, world leaders adopted the United Nations Millennium Declaration, committing their nations to a new global partnership to reduce extreme poverty and setting out a series of time-bound targets - with a deadline of 2015 - that have become known as the Millennium Development Goals (MDGs). Learn more
Poverty studies typically focus on people who live below the poverty line. Few studies have examined how people are able to not only move out of but also stay out of poverty. The global Moving out of Poverty study, carried out in 15 countries, is one of the few large-scale comparative research attempts to analyze mobility out of poverty rather than poverty alone. Learn more

Last updated: 2010-05-05