The poverty headcount ratio is the proportion of the national population whose incomes are below the official threshold (or thresholds) set by the national government. National poverty lines are usually set for households of various compositions to allow for different family sizes. Where there are no official poverty lines, they may be defined as the level of income required to have only sufficient food or food plus other necessities for survival.
Goal 1. Eradicate extreme poverty and hunger.
Target 1. Halve, between 1990 and 2015, the proportion of people whose income is less than one dollar a day.
The indicator allows for monitoring the proportion of the national population that is considered poor by a national standard. Most poverty analysis work for countries is based on national poverty lines. National poverty lines tend to increase in purchasing power with the average level of income of a country.
Method of computation
Household income (or consumption) and its distribution are estimated from household surveys (see indicator 1a). The incomes of various household types, by composition, may then be compared with the poverty lines for those types of household. If the poverty lines are expressed in terms of income per adult equivalent or some similar measure, the incomes of the households must be measured on a similar basis. Household income may be converted to income per adult equivalent by using the modified equivalence scale of the Organisation for Economic Co-operation and Development (OECD)—in which the first household member over 16 equals 1, all others over 16 equal 0.5, all under 16 equal 0.3—or some other equivalence scale. Household incomes are then divided by the “equivalized” number of people in the household (two adults would equal 1.5 according to the OECD scale) to establish income per person.
Once the number of households that are below the poverty line has been estimated, the number of people in those households is aggregated to estimate the percentage of the population below the line.
Data collection and source
Data on household income, consumption and expenditure, including income in kind, are generally collected through household budget surveys or other surveys covering income and expenditure.
National statistical offices, sometimes in conjunction with other national or international agencies, usually undertake such surveys.
World Development Indicators, annual, World Bank, notes to table 2.6, www.worldbank.org/data.
Indicators of Sustainable Development: Guidelines and Methodologies, 2001, United Nations Division for Sustainable Development (www.un.org/esa/sustdev/natlinfo/indicators/isd.htm).
Expert Group on Household Income Statistics: Final Report and Recommendations, 2001 (www.lisproject.org/links/canberra/finalreport.pdf).
Poverty Reduction Strategy Sourcebook, “Poverty measurement and analysis”, World Bank, (www.worldbank.org/poverty/strategies/sourcons.htm).
Human Development Report, annual, United Nations Development Programme (www.undp.org).
Engendering Statistics: A Tool for Change, 1996, Statistics Sweden.
Periodicity of measurement
Household budget or income surveys are undertaken at different intervals in different countries. In developing countries they typically take place every three to five years.
Households headed by women tend to have lower incomes and are therefore more likely to have incomes per person below the poverty line. However, this relationship should be carefully studied to take into account national circumstances and the definition of head of household adopted in data collection, which is not necessarily related to being the chief source of economic support. Whether households are headed by women or men, gender relations affect intrahousehold resource allocations and use.
Disaggregation of the poverty headcount index is normally limited by the size of the household survey. It is common, however, for indices to be produced for urban and rural areas and for some subnational levels as the sample allows. Estimates at low levels of disaggregation may be made using “poverty mapping” techniques, which use the lower levels of disaggregation available from population censuses, particularly where the timing of the population census and household survey is relatively close. Wherever household surveys provide income or consumption data disaggregated by gender of household heads, these data should be used.
International data comparisons
World Development Indicators, annual, World Bank (www.worldbank.org/data).
Human Development Report, annual, United Nations Development Programme (www.un.org).
Comments and limitations
The advantage of this indicator is that it is specific to the country in which the data are collected and where the poverty line is established. While the $1 a day poverty line helps in making international comparisons, national poverty lines are used to make more accurate estimates of poverty consistent with the characteristics and level of development of each country. The disadvantage is that there is no universally agreed poverty line, even in principle, and international comparisons are not feasible.
There are also problems in comparing poverty measures within countries, especially for urban and rural differences. The cost of living is typically higher in urban than in rural areas, so the urban monetary poverty line should be higher than the rural monetary poverty line. But it is not always clear that the difference between the two poverty lines found in practice properly reflects the difference in the cost of living.
National statistical offices.