Share of the poorest quintile in national consumption is the income that accrues to the poorest fifth of the population.
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 provides information about the distribution of consumption or income of the poorest fifth of the population. Because the consumption of the poorest fifth is expressed as a percentage of total household consumption (or income), this indicator is a “relative inequality” measure. Therefore, while the absolute consumption of the poorest fifth may increase, its share of total consumption may remain the same (if the total goes up by the same proportion), decline (if the total goes up by a larger proportion) or increase (if the total goes up by a smaller proportion).
Method of computation
Household income and its distributions are estimated from household surveys. Household income is adjusted for household size to provide a more consistent measure of per capita income for consumption. Household income is divided by the number of people in the household to establish income per person. The population is then ranked by income. The income of the bottom fifth is expressed as a percentage of aggregate household income. The calculations are made in local currency, without adjustment for price changes or exchange rates or for spatial differences in cost of living within countries, because the data needed for such calculations are generally unavailable.
Data collection and source
For international purposes, this indicator is calculated by the World Bank, but it may also be calculated by national agencies. The World Bank Group’s Development Research Group produces the indicator based on primary household survey data obtained from government statistical agencies and World Bank country departments.
Data on household income or consumption come from household surveys. Because underlying household surveys differ across countries in methods and type of data collected, the World Bank tries to produce comparable data for international comparisons and for analysis at the aggregated level (regional or global). Survey data provide either per capita income or consumption. Whenever possible, consumption data are used rather than income data. Where the original household survey data are not available, shares are estimated from the best available grouped data.
World Development Indicators, annual, World Bank (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).
“What Can New Survey Data Tell Us about the Recent Change in Living Standards in Developing and Transitional Economies?” 1996, Martin Ravallion and Shaohua Chen, World Bank Policy Research Department.
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 may be concentrated in the bottom fifth. 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 the chief source of economic support. Whether households are headed by women or men, gender relations affect intrahousehold resource allocation and use.
International data comparisons
Because the underlying household surveys differ in method and type of data collected, the distribution indicators are not easily comparable across countries. These problems are diminishing as survey methods improve and become more standardized, but achieving strict comparability is still impossible (see “Comments and limitations” for indicator 1a).
Comments and limitations
Two sources of non-comparability should be noted. First, the surveys can differ in many respects, including whether they use income or consumption as the indicator of living standards. The distribution of income is typically more unequal than the distribution of consumption. In addition, the definitions of income usually differ among surveys. Consumption is normally a better welfare indicator, particularly in developing countries (see “Comments and limitations” for indicator 1a).
Second, households differ in size (number of members), extent of income sharing among members, age of members and consumption needs. Differences among countries in these respects may bias comparisons of distribution.
The percentile chosen here is the bottom fifth (quintile). The proportionate share of national household income of this group may go up while the proportionate share of some other percentile, such as the bottom tenth (decile), may go down, and vice versa.
National statistical offices.