Definition:

The proportion of people living below 50 percent of median income (or consumption) is the share (%) of a country’s population living on less than half of the consumption/income level of the median of the national income/consumption distribution.

Concepts:

The indicator is measured using per capita welfare measure of consumption or income. The indicator is calculated by estimating the share of the population in a country living on less than 50% of median of the national distribution of income or consumption, as estimated from survey data.

Consumption distributions typically capture household expenditure on a set of items over a given period of time. These usually include purchased, own-produced, exchanged, and gifted food and non-food items (for example clothing, housing—including imputed rent—and the use value of durable consumer goods). Income distributions capture the value of monetary inflow a household receives or earns over a given period of time. Household surveys usually provide information on labor income (salaries, own-business, and self-employment income), as well as non-labor income coming from pensions, subsidies, transfers, property income, scholarships, etc. Income distributions used here aim to measure disposable income defined as the sum of labor and non-labor income (including transfers) less taxes and contributions. The exact definition and operationalization of income aggregates varies across different data sources. Per capita income or consumption is estimated using total household income or consumption divided by the total household size.

The estimation relies on the same harmonized welfare vectors (distributions) that are used for 10.1.1 and 1.1.1. Using the same data and closely related methodologies ensures internal consistency across these closely related indicators. The data is available through the Poverty and Inequality Platform (PIP), the World Bank’s online tool for reporting global poverty and inequality numbers. For details on concepts and standards, refer to documentation available on the PIP website.

The methodology entails measuring the share of people living below 50% of national median. A threshold set at 50% of the median of the income or consumption is used to derive a headcount rate, similar to how monetary poverty is typically measured. The national median is readily available from the distributional data in PIP. The measurement follows a two-step process of first estimating half of the national median income (or consumption) and then the share of people living below this relative threshold.

The indicator uses the same data on household income and consumption that is used for monitoring SDG indicators 1.1.1 and 10.1.1, which have been classified as Tier 1 indicators. The methodology and data are similar to that used in measuring international poverty, which has been tested and vetted over many years, including for the purpose of monitoring Millennium Development Goals (MDG) 1. It is also closely related to a large literature of relative poverty measurement.

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Rætta uppseting: 10.2.1