The Median Is the Message: A Better Measure of Development

Transcription

1 The Median Is the Message: A Better Measure of Development Nancy Birdsall & Global Empowerment Meeting: Trillion Dollar Ideas October 17, 2013 Harvard Kennedy School Cambridge, MA

2 Three points about survey-based median household consumption Simple and understandable Durable over time and across countries Good enough measure of inequality

3 TG O TKM GHA TJ K KHM YE M DJ I KGZ VN M PAK CO G CMR PN G SE N MRT ZMB SD N CI V NI C NG A CP V IN D- U IN D IN D- R SY R DZ A MDA TMP PHL EGY IR Q LK A MAR BT N IRN SWZ GEO BWA ID N- U ID N- R AR M CH N- U CH N CH N- R MDV AG O AL B AZ E FJ I JO R TH A GAB The median: simple, and reflects the poverty rate and much more Median consumption, daily p.c. (2005 PPP$) Low income Lower middle income Upper middle income GNI per capita (current US$) $2 a day poverty line size of circle = poverty rate

4 TGO TK M GHA TJ K KH M YEM DJ I KGZ VN M PA K CO G CMR PN G SE N MRT ZMB SD N CI V NI C NGA CPV IN D- U IND IN D- R SY R DZ A MDA TMP PH L EG Y IR Q LK A MAR BT N IRN SWZ GEO BWA ID N- U ID N- R AR M CHN- U CH N CHN- R MDV AG O AL B AZ E FJ I JO R TH A GAB Median consumption, daily p.c. (2005 PPP$) The median: simple, and reflects the BGD poverty rate and much more PHL developing country median (estimate) $2 a day poverty line GNI per capita (current US$) CHN-U CHN-R MEX

5 The median: in the developing world still below a $10 PV line Median consumption, daily p.c. (2005 PPP$) PHL CHN-U CHN-R MEX POL 10,000 20,000 30,000 40,000 50,000 GNI per capita (current US$) United States <$10 a day Poverty/ Vulnerability line developing country median (estimate)

6 A durable measure of development Median consumption, daily p.c. (2005 PPP$) Lower middle income India China Upper middle income Brazil Russia South Africa Poland 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 GNI per capita (current US$)

7 Ratio of mean to median: A good-enough measure of inequality mean median R 2 = Gini coefficient of income/consumption inequality

8 Growth of the bottom 40% closely tracks growth at the median Uganda Year India Index (1989 = 100) Index (1978 = 100) Bottom 40% Median Bottom 40% Median Year South Africa Year Mexico Index (1993 = 100) Index (1984 = 100) Bottom 40% Median Median Bottom 40% Year

9 A better measure than the World Bank s shared prosperity Median consumption per capita per day (2005 PPP$) 16 India Mexico Chile % Median Poor & Struggling (<$10) Population Median

10 The poor and vulnerable will still account for a large share of the population over the next decades Population below $10 a day, percentage 100 India Mexico Chile % 88% 76% % 65% 60% 50% 40% 30%

11 The median is the message Simple and understandable Durable over time and across countries Good enough measure of inequality Thank you Source: Birdsall and Meyer (2013), based on data from World Bank PovcalNet (iresearch.worldbank.org/povcalnet/) Illustrations by Daniel Hetteix, Jerry Wang, Roman Trilo (The Noun Project)

12 Change in median and mean tells same story as World Bank Shared Prosperity indicator (ca to 2010) Percent change at median Change of survey median (annualized) Change at Median vs. change of mean Zambia Bolivia Mozambique Honduras Indonesia Chile Brazil Mexico India Mali South Africa Swaziland China Vietnam Decrease in Gini Increase in Gini Change of survey mean, total population (annualized) Percent change of mean Percent change of bottom 40% mean Change of survey mean, bottom 40 percent (annualized) Change of Shared Prosperity indicator vs. change of mean Zambia Bolivia Brazil Chile Mozambique Indonesia Mexico India Mali Honduras Vietnam South Africa Swaziland China Decrease in Gini Increase in Gini Change of survey mean, total population (annualized) Percent change of mean

13 Top incomes at the 90 th, 95 th and 99 th pecentile (from PovcalNet) Bangladesh Zambia Pakistan Nigeria India--Urban Egypt, Arab Rep Indonesia--Rural Indonesia--Urban Peru China--Rural China--Urban Tunisia South Africa Russian Federation Turkey Mexico Household consumption per capita per day (2005 PPP) 90 th percentile 95 th percentile 99 th percentile

14 It matters at what point of the distribution we measure growth: Who benefitted between ? South Africa Mexico Cumulative annual growth (% change) % change, annualized change of consumption mean change of GNI change at consumption median Cumulative annual growth (% change) % change, annualized change of consumption mean change of GNI change at consumption median poorest richest poorest richest Percentile of Consumption Distribution percentiles of distribution Percentile of Consumption Distribution percentiles of distribution