Counting the world’s poor: Back to Engel’s law - United Nations Economic and Social Commission for Western Asia

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Counting the world’s poor: Back to Engel’s law

ESCWA Publication: E/ESCWA/CL2.GPID/2022/TP.21


Country: Arab region

Publication Type: Reports & studies

Cluster: Gender Justice, Population and Inclusive Development

Focus Area: Inclusive development, Population dynamics & migration

Initiatives: Addressing multidimensional poverty

SDGs: Agenda 2030, Goal 1: No Poverty

Keywords: Poverty, Population trends, Poverty mitigation, Middle-income countries

Counting the world’s poor: Back to Engel’s law

August 2022

The present paper proposes a new method to count the poor in a way that maintains comparability across countries and over time and is consistent with behavioural tendencies of households as modelled by classical economic theory. To this end, the authors propose a concave poverty line (CPL) that is grounded in theory and backed by empirical evidence on the relation between absolute national poverty lines and income.

The major feature of CPL that separates it from similar measures, notably the World Bank’s societal poverty line (SPL), is that it adjusts in a non-linear fashion to rising income to approach an upper limit. The paper first presents the theoretical foundations of CPL, then demonstrates its empirical robustness compared with alternative parametric and non-parametric approaches. Lastly, it shows the regional and global headcount poverty rates using CPL and alternative poverty lines in 2020 and provides forecasts until 2030. The main finding is that global poverty rates using CPL are slightly lower than using SPL, with one third of the world’s population estimated to be poor in 2020. 

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