International Comparisons of Poverty in South Asia

Abstract

This paper explores the methodological differences underlying the construction
of the national consumption aggregates that are used to estimate international
poverty rates for South Asian countries. The analysis draws on a regional dataset
of standardized consumption aggregates to assess the sensitivity of international
poverty rates to the items included in the national consumption aggregates.
A key feature of the standardized aggregate is that it includes the reported
value of housing rent for urban Indian homeowners. Using the standardized
consumption aggregates reduces the international poverty rate in South Asia
by 1.3 percentage points, impacting the status of about 18.5 million people.
Comparing standardized and nonstandardized monetary welfare indicators to
other nonmonetary indicators suggests that the latter are more consistent
with the standardized consumption aggregates. Overall, the results strongly
suggest that harmonizing the construction of welfare measures, particularly
the treatment of imputed rent, can meaningfully improve the accuracy of
international poverty comparisons.

Keywords: Bangladesh, consumption aggregate, imputed rent, India, poverty measurement, South Asia

JEL Classification: I32