Working Paper: NBER ID: w9822
Authors: Angus Deaton
Abstract: The extent to which growth reduces global poverty has been disputed for 30 years. Although there is better data than ever before, controversies are not resolved. A major problem is that consumption measured from household surveys, which is used to measure poverty, grows less rapidly than consumption measured in national accounts, in the world as a whole, and in large countries, particularly India, China, and the US. In consequence, measured poverty has fallen less rapidly than appears warranted by measured growth in poor countries. One plausible cause is that richer households are less likely to participate in surveys. But growth in the national accounts is also upwardly biased, and consumption in the national accounts contains large and rapidly growing items that are not consumed by the poor and not included in surveys. So it is possible for consumption of the poor to grow less rapidly than national consumption, without any increase in measured inequality. Current statistical procedures in poor countries understate the rate of global poverty reduction, and overstate growth in the world.
Keywords: Poverty; Growth; Household Surveys; National Accounts
JEL Codes: O1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| economic growth (O49) | reduction in poverty (I32) |
| distribution of income relative to poverty line (D31) | reduction in poverty (I32) |
| growth benefits all income levels equally (F62) | reduction in poverty (I32) |
| discrepancies between survey data and national accounts (E01) | understate rate of global poverty reduction (F63) |
| growth in national accounts (E01) | overestimated poverty reduction (I32) |
| actual growth experienced by the poor lags behind average population growth (O15) | poverty reduction (I32) |