How poverty is measured impacts who gets classified as impoverished

Abstract

We test whether the classification of households into poverty categories is meaningfully influenced by the poverty measurement approach that is employed. These classification techniques are widely used by governments, non-profit organizations, and development agencies for policy design and implementation. Using primary data collected in Ethiopia, Ghana, and Uganda, we find almost no agreement in how four commonly used approaches rank 16,150 households in terms of poverty status. This result holds for each country, for urban and rural households, and across the entire socio-economic distribution. Households' poverty rankings differ by an entire quartile on average. Conclusions about progress toward poverty alleviation goals may depend in large part on how poverty is measured.