Measuring Poverty in a Growing World

The extent to which growth reduces global poverty has been disputed for 30 years. 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.