Overview
National governments and their development partners are all working to reduce poverty. Although it is often thought of as a lack of material resources, poverty is correlated closely with all aspects of a person’s life: the world’s poor are more likely to be malnourished, they have less access to services like education, electricity, sanitation and healthcare, and they are more vulnerable to conflict and climate change. Understanding poverty is thus fundamental to understanding how societies can progress.
Reducing poverty and inequality are central to the UN’s Sustainable Development Goals (SDGs) and the World Bank Group’s twin goals for 2030: ending extreme poverty and promoting shared prosperity in every country in a sustainable manner. National statistical systems, household surveys and poverty measurement methodologies are at the heart of tracking these global goals.
Reducing poverty
How poverty is defined and measured varies across the world. The national poverty line for a country is typically a monetary threshold below which a person's minimum basic needs cannot be met, taking into account the country's economic and social circumstances. Poverty lines not only vary widely by country but they are also often revised as countries develop: richer countries typically have higher poverty lines than poorer ones. Governments track how many people are living on less than the national poverty line so that they can monitor their development progress. The national poverty line is also a central indicator for SDG 1, ending poverty "in all its forms."
To aggregate and compare poverty rates across countries, poverty thresholds that reflect the same real standard of living in each country are used. The $2.15 a day poverty line, which reflects the value of national poverty lines in some of the poorest countries, is often referred to as the extreme poverty line. For added perspective, the World Bank also track poverty at $3.65 a day, the typical line for lower-middle-income countries, and $6.85 a day, typical for upper-middle-income countries.
Poverty measured at the international poverty line of $2.15 a day is used to track progress toward meeting the World Bank target of reducing the share of people living in extreme poverty to less than 3 percent by 2030. SDG target 1.1 is even more ambitious: by 2030, it wants all countries, regions, and groups within countries to achieve zero poverty at the same international poverty line.
Inequality and shared prosperity
As with poverty, there are many ways to measure inequality. The World Development Indicators (WDI) databases present a wide range of inequality indicators such as the Gini index and the share of consumption or income held by each quintile. The measures offer different ways to capture and communicate aspects of the income distribution.
To monitor progress against its goal of boosting shared prosperity, the World Bank tracks growth in the consumption or income of the poorest 40 percent of the population in each country—the bottom 40 percent. Similarly, SDG target 10.1 aims for the income of the bottom 40 percent to be growing faster than the national average by 2030. Progress is measured by the difference between growth in the consumption or income of the bottom 40 percent and growth in the consumption or income of the mean of the population as a whole.
Featured Indicators
A selection of relevant indicators is presented below. The table shows, for each featured indicator, time coverage per year, for all countries, for each decade since the 1960s, and regional coverage for each World Bank geographical region since 2010. For detailed thematic lists please refer to the World Development Indicators Statistical Tables.
| Poverty rates at national poverty lines | ||||
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| Indicator | Code | Time coverage | Region coverage | Get data |
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Poverty headcount ratio at national poverty lines (% of population)
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SI.POV.NAHC |
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Urban poverty headcount ratio at national poverty lines (% of urban population)
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SI.POV.URHC |
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Rural poverty headcount ratio at national poverty lines (% of rural population)
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SI.POV.RUHC |
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Poverty gap at national poverty lines (%)
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SI.POV.NAGP |
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Urban poverty gap at national poverty lines (%)
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SI.POV.URGP |
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Rural poverty gap at national poverty lines (%)
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SI.POV.RUGP |
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| Poverty rates at international poverty lines | ||||
| Indicator | Code | Time coverage | Region coverage | Get data |
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Poverty headcount ratio at $2.15 a day (2017 PPP) (% of population)
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SI.POV.DDAY |
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Poverty headcount ratio at $3.65 a day (2017 PPP) (% of population)
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SI.POV.LMIC |
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Poverty headcount ratio at $6.85 a day (2017 PPP) (% of population)
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SI.POV.UMIC |
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Poverty gap at $2.15 a day (2017 PPP) (%)
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SI.POV.GAPS |
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Poverty gap at $3.65 a day (2017 PPP) (%)
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SI.POV.LMIC.GP |
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Poverty gap at $6.85 a day (2017 PPP) (%)
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SI.POV.UMIC.GP |
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| Distribution of income or consumption | ||||
| Indicator | Code | Time coverage | Region coverage | Get data |
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GINI index (World Bank estimate)
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SI.POV.GINI |
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Income share held by lowest 10%
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SI.DST.FRST.10 |
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Income share held by lowest 20%
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SI.DST.FRST.20 |
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Income share held by second 20%
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SI.DST.02ND.20 |
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Income share held by third 20%
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SI.DST.03RD.20 |
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Income share held by fourth 20%
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SI.DST.04TH.20 |
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Income share held by highest 20%
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SI.DST.05TH.20 |
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Income share held by highest 10%
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SI.DST.10TH.10 |
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| Shared prosperity | ||||
| Indicator | Code | Time coverage | Region coverage | Get data |
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Annualized average growth rate in per capita real survey mean consumption or income, bottom 40% of population (%)
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SI.SPR.PC40.ZG |
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Annualized average growth rate in per capita real survey mean consumption or income, total population (%)
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SI.SPR.PCAP.ZG |
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Survey mean consumption or income per capita, bottom 40% of population (2011 PPP $ per day)
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SI.SPR.PC40 |
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Survey mean consumption or income per capita, total population (2011 PPP $ per day)
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SI.SPR.PCAP |
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About the data
National poverty lines
The poverty rate at the national poverty line is country-specific. A country may have a single unique national poverty line, separate lines for rural and urban areas, or separate lines for different geographic areas to take into account differences in the cost of living in different areas of the country or differences in diets and consumption baskets. National poverty lines are thus estimates of poverty that are consistent with each country's specific economic and social circumstances. National poverty lines reflect local perceptions of what is needed to be considered not poor. Because the perceived boundary between poor and nonpoor typically rises with average income, there is no uniform measure for comparing national poverty rates; but although national poverty lines should not be used for comparing poverty rates between countries, they are useful for guiding national poverty reduction strategies and monitoring the results.
Almost all national poverty lines are anchored to the cost of a food basket—what the poor in that country would customarily eat—that provides adequate nutrition for good health and normal activity, plus an allowance for nonfood spending. National poverty lines must be adjusted for inflation to keep them constant in real terms and allow for meaningful comparisons of poverty over time. Because diets and consumption baskets also change over time, countries periodically recalculate their poverty lines based on new survey data.
International poverty lines
The World Bank produced its first global poverty estimates for World Development Report 1990: Poverty (World Bank 1990) using household survey data for 22 countries (Ravallion, Datt, and van de Walle 1991). Today there are many more countries that field household income and expenditure surveys than there were in 1990 and reliable data on price differences across countries is more readily available.
However, there are both conceptual and practical problems in making international comparisons of poverty. Because countries define and measure poverty differently, consistent comparisons can be difficult. National poverty lines tend to have higher purchasing power in rich countries, where standards are more generous, than in poor countries. Measures based on an international poverty line attempt to hold the real value of the poverty line constant across countries, as is done in making comparisons over time within countries. Since World Development Report 1990, the World Bank has tried to apply a common standard in measuring extreme poverty, anchored to what poverty means in the world's poorest countries.
The welfare of people living in different countries can be compared by adjusting for differences in the purchasing power of their currencies. For World Development Report 1990 the common $1 a day standard, measured in 1985 international prices, adjusted to local currency based on purchasing power parity (PPP), was chosen because at the time it was typical of the poverty lines in low-income countries. Early editions of World Development Indicators used PPPs from the Penn World Tables to convert values in local currency to equivalent purchasing power in U.S. dollars. Later editions used 1993 consumption PPP estimates produced by the World Bank. International poverty lines were also revised after the release of PPPs compiled in the 2005, 2011, and 2017 rounds of the International Comparison Program.
The current international extreme poverty line is set at $2.15 a day in 2017 PPP terms, which represents the median national poverty line of 28 low-income countries. The $2.15 a day poverty line therefore uses the same standard for extreme poverty—the poverty line typical of some of the poorest countries in the world—updated by the latest information on the cost of living in low- and middle-income countries (Jolliffe ⓡ al. 2022). PPP exchange rates are used to estimate global poverty because they take into account differences between countries in the prices of goods and services. But PPP rates were designed for comparing aggregates from national accounts, not for making international poverty comparisons. As a result, there is no certainty that an international poverty line measures the same need or deprivation in all the countries compared.
In addition to the poverty estimate at the $2.15/day international poverty line, global and regional poverty estimates at two additional poverty lines, $3.65/day and $6.85/day (both in 2017 PPPs) are reported. The $3.65 line is typical of lower-middle income countries and $6.85/day is typical of upper- middle-income countries (see Jolliffe ⓡ al. 2022).
The World Bank Development Data and Research Groups together with the Poverty and Equity Global Practice maintain the Poverty and Inequality Platform (PIP), an interactive tool that has regional and global poverty estimates since 1981.
PIP users can obtain poverty estimates for countries and regions at different poverty lines and user-friendly dashboards with graphs of trends in poverty and inequality, supported by country briefs.
Inequality and shared prosperity
Inequality is a broader concept than poverty. It is defined in terms of an entire population, not just the portion below a certain poverty threshold. Most inequality measures do not depend on the mean of the distribution. How income is distributed is measured by the share of income or consumption accruing to different groups within the population ranked by income or consumption levels. Those in the group ranked lowest in personal income receive the smallest shares of total income.
The Gini coefficient is a popular summary measure of the degree of inequality. It is derived from the Lorenz curve, which ranks the population from poorest to richest and shows the cumulative proportion of the population on the horizontal axis and the cumulative proportion of expenditure or income on the vertical axis (Haughton and Khandker 2009).
In October 2014, after announcing its new goals of ending extreme poverty and promoting shared prosperity around the world, the World Bank Group introduced the Global Database of Shared Prosperity. To generate measures of shared prosperity that are reasonably comparable, the World Bank Group has a standard approach for choosing time periods, data sources, and other parameters. The purpose of the Global Database is to allow cross-country comparisons and benchmarking.
Promoting shared prosperity is defined as fostering growth of the incomes of the bottom 40 percent of the welfare distribution in every country. The bottom 40 percent differs by country, and over time it can change within a country. Because boosting shared prosperity is country-specific, there is no global numerical target; and at the country level the shared prosperity goal is unbounded (World Bank 2015). Improvements in shared prosperity require both a growing economy and a commitment to equity. Shared prosperity explicitly recognizes that while growth is necessary for improving economic welfare in a society, progress is measured by how those gains are shared with the society's poorest members. Moreover, in an inclusive society, it is not enough to simply get everyone above an absolute minimum standard of living; economic growth must increase the prosperity of poor people over time.
Although the World Bank recognizes that welfare has many dimensions, the decision to measure shared prosperity based on consumption or income was motivated by the need for an indicator that is easy to understand, communicate, and measure—though the choice does not resolve all measurement difficulties. Indeed, shared prosperity comprises many dimensions of the well-being of the less well-off, and when analyzing shared prosperity in a given country, it is important to consider a wide range of indicators of welfare.
In the shared prosperity data growth rates are calculated as annualized average growth rates over about a five-year period. Since many countries do not conduct surveys on a precise five-year schedule, the following rules guided selection of the survey years used to calculate growth rates in the 2022 update: The final year of the growth period (T1) is the most recent year of a survey but no earlier than 2017, and the initial year (T0) is as close to T1 – 5 as possible within a two-year band. Thus, the gap between initial and final surveys ranges from three to seven years. If two surveys are equidistant from T1 – 5, other things being equal the more recent survey year is selected as T0. For every country the comparability of welfare aggregates (consumption or income) for the years chosen for T0 and T1 is assessed. If the two surveys are not sufficiently comparable, the selection criteria are re-applied to select the next best survey year. Once two surveys are selected for a country, the annualized growth of mean real consumption or income per capita is computed by first estimating the mean real consumption or income per capita of the bottom 40 percent in years T0 and T1 and then using a compound growth formula to compute the annualized average growth rate between those years. Growth of mean real consumption or income per capita of the total population is computed in the same way using data for the entire population.
Data availability
Challenges of measuring poverty and inequality remain. The timeliness, frequency, accessibility, quality, and comparability of household surveys are inadequate, particularly in the poorest countries. The availability and quality of poverty monitoring data is low in small countries, countries in fragile situations, low-income countries, and even some middle-income countries. The lack of frequent, timely, and comparable data in some countries creates uncertainty about the degree to which poverty has actually been reduced. Although data coverage is improving in all regions, in Sub-Saharan Africa and in the Middle East and North Africa coverage is still low and variable. Though improvements in household survey programs for monitoring poverty are urgently needed, institutional, political, and financial obstacles continue to limit data collection, analysis, and public access.
PIP draws on income or detailed consumption data from more than 2,000 household surveys in 168 countries. The 2019 estimates are based on surveys of more than 2 million randomly sampled households, representing 85 percent of the total world population. WDI estimates shared prosperity for more than 100 countries. While all countries are encouraged to estimate the annualized growth of mean real consumption or income per capita of the bottom 40 percent, the Global Database of Shared Prosperity covers only countries that meet certain criteria. An important consideration is comparability across time and countries. In most countries household surveys are infrequent and the timing of surveys in different countries is rarely aligned. Comparisons should therefore be made cautiously.
Lack of data is even more problematic for monitoring shared prosperity than for monitoring poverty. To monitor shared prosperity, two surveys of a country must have been conducted within five years or so during a specific period. They have to be reasonably comparable in both design and construction of the welfare aggregates—not every survey that can generate poverty estimates can generate shared prosperity estimates. Since shared prosperity must be estimated and used at the country level, there are good reasons for obtaining a wide coverage of countries, regardless of population size. Moreover, for policy support it is important to have indicators for the most recent period possible for each country.
Data quality
Other data quality issues arise in measuring household living standards. Surveys ask detailed questions on sources of income and how it was spent, responses to which must be carefully recorded by trained personnel. Income is difficult to measure accurately, and consumption comes closer to the notion of living standards. Moreover, income can vary over time even if living standards do not. But consumption data are not always available. Similar surveys may not be strictly comparable because of differences in timing, sample frames, or the quality and training of enumerators. Comparisons of countries at different levels of development also pose problems because of differences in the relative importance of the consumption of nonmarket goods.
Invariably some sampled households do not participate in surveys because they refuse to do so or because nobody is at home during the interview visit, and households with different incomes may not be equally likely to respond. Richer households may be less likely to participate because of the higher opportunity cost of their time or because of privacy concerns. The poorest may also be underrepresented; some are homeless or nomadic and hard to reach in standard household survey designs, and some may be physically or socially isolated and thus less likely to be interviewed. If not corrected for, that can bias both poverty and inequality measurements (Korinek, Mistiaen, and Ravallion 2007). For more on data quality and comparability, see World Bank (2015, 2017).
Data sources
National poverty measures are collected from government sources and national statistical offices and coordinated through the World Bank's Global Poverty Working Group. Poverty estimates at international poverty lines are prepared by the World Bank's Development Data and Research Groups in collaboration with the Poverty and Equity Global Practice. The international poverty rates are based on nationally representative primary household surveys conducted by national statistical offices or by firms or organizations supervised by government or international agencies. The primary source of the inequality indicators is PIP, and for estimates of shared prosperity the Global Database of Shared Prosperity. The choice of consumption or income to measure shared prosperity for a country is consistent with the welfare aggregate used to estimate extreme poverty rates in PIP unless there are strong arguments for using a different aggregate.