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.