The Median is the Message: A Good-Enough Measure of Material Well-Being and Shared Development Progress

46 Pages Posted: 25 Jan 2014

See all articles by Nancy Birdsall

Nancy Birdsall

Center for Global Development

Christian Meyer

European University Institute - Economics Department (ECO)

Date Written: January 23, 2014

Abstract

We argue that survey-based median household consumption expenditure (or income) per capita be incorporated into standard development indicators, as a simple, robust, and durable indicator of typical individual material well-being in a country. Using household survey data available for low- and middle-income countries from the World Bank’s PovcalNet tool, we show that as a measure of income-related well-being, it is far superior to the commonly used GDP per capita as well as survey-based measures at the mean. We also argue that survey-based median measures are “distributionaware”, i.e. when used as the denominator of various widely available indicators such as mean consumption expenditure per capita they provide a “good-enough” indicator of consumption (or income) inequality. Finally, as a post-2015 indicator of progress at the country-level in promoting shared development and reducing inequality, we propose that the rate of increase in median consumption per capita after taxes and transfers exceed the rate of increase in average consumption in the same period.

Keywords: welfare measure, median, consumption, inequality, distribution

JEL Classification: D31, H22, I32, O15

Suggested Citation

Birdsall, Nancy and Meyer, Christian, The Median is the Message: A Good-Enough Measure of Material Well-Being and Shared Development Progress (January 23, 2014). Center for Global Development Working Paper No. 351. Available at SSRN: https://ssrn.com/abstract=2383977 or http://dx.doi.org/10.2139/ssrn.2383977

Nancy Birdsall (Contact Author)

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Christian Meyer

European University Institute - Economics Department (ECO)

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