• Sunday, December 17, 2017

Rising Share of Income Of Poorest 20% Pakistani Households

Discussion in 'Pakistan Economy' started by RiazHaq, Dec 6, 2017.

  1. RiazHaq

    RiazHaq SENIOR MEMBER

    Messages:
    4,920
    Joined:
    Oct 31, 2009
    Ratings:
    +57 / 4,855 / -0
    Country:
    Pakistan
    Location:
    United States
    http://www.riazhaq.com/2017/12/rising-share-of-income-for-poorest-20.html

    The share of national income of Pakistan's poorest 20% of households has increased from 8.1% to 9.6% since 1990 , according to the United Nations Economic and Social Commission for Asia and Pacific (NESCAP) Statistical Yearbook for 2015. It's the highest share of income for the bottom income quintile in the region.

    Income Share Change in Asia's Poorest Quintile:

    The countries where people in the poorest income quintile have increased their share of total income include in Kyrgyzstan (from 2.5 per cent to 7.7), the Russian Federation (4.4 per cent to 6.5), Kazakhstan (7.5 per cent to 9.5) and Pakistan (8.1 per cent to 9.6). India's bottom income quintile has seen its share of income drop from 9% to 7.8%.

    [​IMG]
    Bottom Quintile Income Share Change. Source: UNESCAP Statistical Yearbook

    Although more people in China have lifted themselves out of poverty than any other country in the world, the poorest quintile in that country now accounts for a lower percentage of total income (4.7 per cent) than in the early 1990s (8.0 per cent). The same unfortunate trend is observed for a number of other countries, including in Indonesia (from 9.4 per cent to 7.6) and in the Lao People’s Democratic Republic (from 9.3 per cent to 7.6).

    Credit Suisse Wealth Report 2017:

    Data released by Credit Suisse with its Global Wealth Report 2017 shows that Pakistan is the most egalitarian nation in South Asia. It also confirms that the median wealth of Pakistani households is three times higher than that of households in India.

    Here is per capita wealth data for India and Pakistan as of mid-2017, according to Credit Suisse Wealth Report 2017 released recently.

    Pakistan average wealth per adult: $5,174 vs India $5,976
    Pakistan median wealth per adult: $3,338 vs India $1,295

    Average household wealth in Pakistan is $15,522 (3 adults) vs India $14,940 (2.5 adults)
    Median household wealth in Pakistan is $10,014 (3 adults) vs India $3,237 (2.5 adults)

    Pakistan Gini Index 52.6% vs India 83%

    World Bank Update on Pakistan:

    A November 2016 World Bank report says that Pakistan has successfully translated economic growth into the well-being of its poorest citizens. It says "Pakistan’s recent growth has been accompanied by a staggering fall in poverty".

    Rising incomes of the poorest 20% in Pakistan since 2002 have enabled them to enhance their living standards by improving their diets and acquiring television sets, refrigerators, motorcycles, flush toilets, and better housing.

    Another recent report titled "From Wealth to Well Being" by Boston Consulting Group (BCG) also found that Pakistan does better than India and China in translating GDP growth to citizens' well-being.

    One particular metric BCG report uses is growth-to-well-being coefficient on which Pakistan scores 0.87, higher than India's 0.77 and China's 0.75.

    Big Poverty Decline Since 2002:

    Using the old national poverty line of $1.90 (ICP 2011 PPP) , set in 2001, the percentage of people living in poverty fell from 34.7 percent in FY02 to 9.3 percent in FY14—a fall of more than 75 percent. Much of the socioeconomic progress reported by the World Bank since 2000 has occurred during President Musharraf's years in office from 2000-2007. It has dramatically slowed or stagnated since 2010.

    [​IMG]
    Source: World Bank Report Nov 2016

    Using the new 2016 poverty line of $3.50 (ICP 2011 PPP), 29.5 percent of Pakistanis as poor (using the latest available data from FY14). By back casting this line, the poverty rate in FY02 would have been about 64.3 percent.

    Pakistan's new poverty line sets a minimum consumption threshold of Rs. 3,030 or $105 (ICP 2011 PPP) per person per month or $3.50 (ICP 2011 PPP) per person per day. This translates to between Rs. 18,000 and Rs. 21,000 per month for a household at the poverty line, allowing nearly 30% of the population or close to 60 million people to be targeted for pro-poor and inclusive development policies—thus setting a much higher bar for inclusive development.

    Multi-dimensional Poverty Decline:

    A UNDP report released in June 2016 said Pakistan’s MPI (Multi-dimensional poverty index) showed a strong decline, with national poverty rates falling from 55% to 39% from 2004 to 2015. MPI goes beyond just income poverty.

    The Multidimensional Poverty Index uses a broader concept of poverty than income and wealth alone. It reflects the deprivations people experience with respect to health, education and standard of living, and is thus a more detailed way of understanding and alleviating poverty. Since its development by OPHI and UNDP in 2010, many countries, including Pakistan, have adopted this methodology as an official poverty estimate, complementing consumption or income-based poverty figures.

    Rising Living Standards of the Poorest 20% in Pakistan:

    According to the latest World Report titled "Pakistan Development Update: Making Growth Matter" released this month, Pakistan saw substantial gains in welfare, including the ownership of assets, the quality of housing and an increase in school enrollment, particularly for girls.

    [​IMG]


    First, the ownership of relatively more expensive assets increased even among the poorest. In the bottom quintile, the ownership of motorcycles increased from 2 to 18 percent, televisions from 20 to 36 percent and refrigerators from 5 to 14 percent.

    In contrast, there was a decline in the ownership of cheaper assets like bicycles and radios.

    [​IMG]


    Housing quality in the bottom quintile also showed an improvement. The number of homes constructed with bricks or blocks increased while mud (katcha) homes decreased. Homes with a flush toilet almost doubled in the bottom quintile, from about 24 percent in FY02 to 49 percent in FY14.

    Dietary Improvements for the Poorest 20% in Pakistan:

    Decline in poverty led to an increase in dietary diversity for all income groups.

    For the poorest, the share of expenditure devoted to milk and milk products, chicken, eggs and fish rose, as did the share devoted to vegetables and fruits.

    In contrast, the share of cereals and pulses, which provide the cheapest calories, declined steadily between FY02 and FY14. Because foods like chicken, eggs, vegetables, fruits, and milk and milk products are more expensive than cereals and pulses, and have lower caloric content, this shift in consumption also increased the amount that people spent per calorie over time.

    For the poorest quintile, expenditure per calorie increased by over 18 percent between FY02 and FY14. Overall, this analysis confirms that the decline in poverty exhibited by the 2001 poverty line is quite credible, and that Pakistan has done remarkably well overall in reducing monetary poverty based on the metric it set some 15 years ago, says the World Bank.

    Summary:

    Pakistan is among the most economically egalitarian nations in the world. In spite of the country's many challenges on multiple fronts, it has successfully translated its GDP growth into the well-being of its poorest citizens. The share of national income of Pakistan's poorest 20% of households has increased from 8.1% to 9.6% since 1990, according to the United Nations Economic and Social Commission for Asia and Pacific (NESCAP) Statistical Yearbook for 2015. It's the highest share of income for the bottom income quintile in the region. "Pakistan’s recent growth has been accompanied by a staggering fall in poverty", says a November 2016 World Bank report. An earlier report by Boston Consulting Group reached a similar conclusion.

    Related Links:

    Haq's Musings

    Credit Suisse Wealth Report 2017

    Pakistan Translates GDP Growth to Citizens' Well-being

    Rising Motorcycle Sales in Pakistan

    Depth of Deprivation in India

    Chicken vs Daal in Pakistan

    China Pakistan Economic Corridor

    ADB Raises Pakistan GDP Growth Forecast


    http://www.riazhaq.com/2017/12/rising-share-of-income-for-poorest-20.html
     
    • Thanks Thanks x 9
  2. SoulSpokesman

    SoulSpokesman FULL MEMBER

    Messages:
    747
    Joined:
    Dec 1, 2016
    Ratings:
    +0 / 408 / -3
    Country:
    India
    Location:
    India
    Good news Brofessor sb. Hopefully this trend will continue along with economic growth post CPEC.

    Regards
     
    • Thanks Thanks x 1
  3. Kambojaric

    Kambojaric SENIOR MEMBER

    Messages:
    3,631
    Joined:
    Apr 6, 2010
    Ratings:
    +5 / 5,465 / -0
    Country:
    Pakistan
    Location:
    Sweden
    In most South Asian countries the inverse seems to be true. Sri Lanka, India, Bangladesh have all seen a decline in the share of the bottom quintile. Strange.
     
  4. ziaulislam

    ziaulislam SENIOR MEMBER

    Messages:
    4,982
    Joined:
    Apr 22, 2010
    Ratings:
    +7 / 2,618 / -1
    Country:
    Pakistan
    Location:
    United States
    because they have outposted magnificent growth
    and growth is usually not proportional

    this is on way to look at it but is highly flawed if you count countries like china, and may be bangaldesh

    in long run its important a shows distribution of wealth and income equality
     
    • Thanks Thanks x 1
  5. Talwar e Pakistan

    Talwar e Pakistan SENIOR MEMBER

    Messages:
    4,793
    Joined:
    Dec 30, 2014
    Ratings:
    +8 / 6,433 / -1
    Country:
    Pakistan
    Location:
    United States
    This corresponds with my own personal experience, with hard work - poor people are rapidly rising up financially.
     
    • Thanks Thanks x 1
  6. RiazHaq

    RiazHaq SENIOR MEMBER

    Messages:
    4,920
    Joined:
    Oct 31, 2009
    Ratings:
    +57 / 4,855 / -0
    Country:
    Pakistan
    Location:
    United States
    Per Capita income in #Pakistan grew 22% since 2012, half of the 43% growth in #India during the same period. #China topped with 48%

    China: 48%
    India: 43%
    Turkey: 32%
    Indonesia: 29%
    Pakistan: 22%
    UK: 15%
    US: 15%
    Japan: 15%
    Germany: 13%
    Canada: 13%
    France: 11%
    Saudi Arabia: 10%
    Greece: 9.5%
    Russia: 8%
    Italy: 8%
    Nigeria: 7.5%
    Brazil: 0%

    Source:
     
    • Thanks Thanks x 1
  7. Nilgiri

    Nilgiri ELITE MEMBER

    Messages:
    14,705
    Joined:
    Aug 4, 2015
    Ratings:
    +32 / 26,802 / -9
    Country:
    India
    Location:
    Canada
    Yeah lets do serious median wealth comparison when all kinds of swings/huh?-moments happening over the years from Credit Suisse data for developing countries in general:

    https://defence.pk/pdf/threads/aver...shi-credit-suisse.460337/page-11#post-8898077

    https://defence.pk/pdf/threads/aver...shi-credit-suisse.460337/page-12#post-8898177

    https://defence.pk/pdf/threads/aver...shi-credit-suisse.460337/page-14#post-8898253

    Want to know something that adds even more "credibility" to this credit suisse data (as far as socioeconomic analysis based on claimed median goes)?

    Last year (2016) credit suisse put India at 3835 USD average wealth per adult (Pakistan was 4600)

    This year (2017) it shot up to nearly 6000 USD average wealth per adult. (Pakistan is 5200)

    We are supposed to seriously believe average wealth per adult in India seriously increased 60% in just one year? (In combination to the other clear issues present previously in the report series)

    Or are there faulty accounting standards (with relation to developing countries especially) that are in transition right now?...and have been since the analysis started and will stay in large part as well known liquidity%/GDP (wealth is basically accumulated GDP) is low in developing countries.

    If so how do we know it doesn't affect the median as well?...and thus how relevant is it all to further genuine socioeconomic analysis (median/mean, Gini etc etc).

    You do realise implementing OECD style data gathering (for wealth aggregating, average, median or otherwise) to developing countries carries much uncertainty+massive potential flaws in the first place?

    So how many of your previous "musings" are now in tatters regarding MPI given India survey data was updated from 2005 to 2011 so there is no longer a 7+ year gap in comparing (and India as result does better in global MPI now)?

    http://ophi.org.uk/multidimensional-poverty-index/global-mpi-2016/

    Lower the number in everything, the better:

    Indians in multipoverty = 41.3% (Intensity = 46.3), MPI = 0.191 (2011/12 reference)

    Pakistanis in multipoverty = 44.2% (Intensity = 52.1), MPI = .230 (2012/13 reference)

    Hope you stay consistent to your earlier arguments now ;)

    There is reason why such basic things like infant mortality in Pakistan lags India by like 15 years:

    https://data.worldbank.org/indicator/SP.DYN.IMRT.IN?locations=IN-PK

    @ranjeet @gslv mk3
     
    • Thanks Thanks x 7
  8. Syed.Ali.Haider

    Syed.Ali.Haider ELITE MEMBER

    Messages:
    31,015
    Joined:
    Sep 29, 2010
    Ratings:
    +52 / 27,054 / -4
    Country:
    Pakistan
    Location:
    United States

    Sir, one must read the methodology portion of the CS report before drawing any conclusions from it.
     
  9. RiazHaq

    RiazHaq SENIOR MEMBER

    Messages:
    4,920
    Joined:
    Oct 31, 2009
    Ratings:
    +57 / 4,855 / -0
    Country:
    Pakistan
    Location:
    United States

    Multiple data points from diverse sources all point to one fact: Pakistan has much lower levels of economic inequality than its neighbors. Anecdotal evidence also supports this.

    Pakistan
    Country Indicators

    Poverty headcount ratio at $1.90 a day (2011 PPP) (% of population)
    7.9% 2011 6.1% 2013
    Shared Prosperity: Annualized growth in per capita real survey mean consumption or income (%), circa 2009 - 2014
    2.8% bottom 40% 2.5% total
    Population, total (millions)
    189.4 2015 193.2 2016
    GNI per capita, Atlas method (current US$)
    $1,430 2015 $1,510 2016
    GDP growth (annual %)
    4.7% 2015 5.7% 2016

    http://povertydata.worldbank.org/poverty/country/PAK


    India
    Country Indicators

    Poverty headcount ratio at $1.90 a day (2011 PPP) (% of population)
    31.1% 2009 21.2% 2011
    Population, total (millions)
    1,309.1 2015 1,324.2 2016
    GNI per capita, Atlas method (current US$)
    $1,600 2015 $1,680 2016
    GDP growth (annual %)
    8% 2015 7.1% 2016

    http://povertydata.worldbank.org/poverty/country/IND
     
    • Thanks Thanks x 2
  10. Nilgiri

    Nilgiri ELITE MEMBER

    Messages:
    14,705
    Joined:
    Aug 4, 2015
    Ratings:
    +32 / 26,802 / -9
    Country:
    India
    Location:
    Canada
    Oh I have lol. Just checking if anyone else has :)
     
  11. Syed.Ali.Haider

    Syed.Ali.Haider ELITE MEMBER

    Messages:
    31,015
    Joined:
    Sep 29, 2010
    Ratings:
    +52 / 27,054 / -4
    Country:
    Pakistan
    Location:
    United States
    I did. :D
     
    • Thanks Thanks x 1
  12. Nilgiri

    Nilgiri ELITE MEMBER

    Messages:
    14,705
    Joined:
    Aug 4, 2015
    Ratings:
    +32 / 26,802 / -9
    Country:
    India
    Location:
    Canada
    Reduces even further for India under MMRP compared to URP:

    http://www.isbtonline.com/current-a...k-India’s-poverty-rate-decreased-:-World-Bank

    Original WB report:

    http://pubdocs.worldbank.org/en/109701443800596288/PRN03Oct2015TwinGoals.pdf

    (MMRP on page 12)

    So 12.4% as of 2011....broady the same magnitude as Pakistan claim for itself. Now how accurate are Pakistan poverty figures (or India's for that matter in more absolute argument) really...or more precisely whats the credibility of measuring poverty by just one consumption metric in the first place?

    Its really anyone's guess given the quite different story several socioeconomic indicators (infant mortality, life expectancy, literacy rate, function literacy, school attendance etc) shows in Pakistan case compared to India.....and Pakistan corruption and institution indices (CPI, Cato for example respectively) being worse than that of India (but better and thus more believeable than Bangladesh though).

    Given MPI is clearly worse in Pakistan compared to India (which is much more broad measurement of poverty and its intensity compared to purely consumption based level which hedges fully on just one paradigm), and was used by a whole number of you (ignoring the data for India back then was from 2005 several years before the one used by Pakistan)....all I'm asking for is using your same consistent argument you used back then now that India's MPI data is more up to date.....rather than ignore/change that argument because its no longer convenient.

    Will you admit India is doing better than Pakistan when compared year to year for multidimensional poverty (MPI). Simple question....should be simple answer given the pages expended on it before to make your arguments earlier. But let's see if you conflate it or deflect :)
     
    • Thanks Thanks x 2
  13. RiazHaq

    RiazHaq SENIOR MEMBER

    Messages:
    4,920
    Joined:
    Oct 31, 2009
    Ratings:
    +57 / 4,855 / -0
    Country:
    Pakistan
    Location:
    United States
    Here's an excerpt of UNDP MPI Pakistan report published in 2016:

    "Applying this (OPHI MPI) measure to data from the Pakistan Social and Living Standards Measurement (PSLM) survey for the 2014/15 period, we found that the country's Multidimensional Poverty Index stands at 0.197. This indicates that poor people in Pakistan experience 19.7% of the deprivations that would be experienced if all people were deprived in all indicators. Secondly, it must be noted that the MPI is a product of two essential components: the poverty “headcount” and the “intensity” of deprivation. Using the same data from the 2014/15 PSLM survey, the country's multidimensional poverty “headcount ratio” was estimated at 38.8% of the population. This means that 38.8% of the population of Pakistan are poor according to the MPI. The average intensity of deprivation, which reflects the share of deprivation which each poor person experiences on average, is 50.9%."

    "Over Time Since 2004/05, multidimensional poverty has continuously declined in Pakistan. The MPI fell from 0.292 in 2004/05 to 0.197 in 2014/15, while the poverty headcount ratio fell from 55.2% to 38.8%. The intensity of deprivation also declined over the same period, falling from 52.9% to 50.9%."


    http://www.pk.undp.org/content/paki...ids/Multidimensional-Poverty-in-Pakistan.html

    And from 2017 report that you cite, income poverty (7%) and destitution level (20%) in Pakistan is significantly lower than in India (22% income poverty, 23% destitution) :

    http://www.ophi.org.uk/wp-content/uploads/B47_Global_MPI_2017.pdf
     
    • Thanks Thanks x 1
  14. Nilgiri

    Nilgiri ELITE MEMBER

    Messages:
    14,705
    Joined:
    Aug 4, 2015
    Ratings:
    +32 / 26,802 / -9
    Country:
    India
    Location:
    Canada
    And again we are moving the year comparison (Is there any equivalent study done for India in 2014/15 in apples to apples way to compare?). No doubt Pakistan and India get better as time goes on in MPI. But I'm asking for same year - year comparison. 2011, 2012 (on main standardised global MPI released this year) is the closest snapshot we got to it for India and Pakistan given its first year that uses Indian data from 2011 rather than 2005.

    So you are going to cherry pick two subcomponents (which very importantly doesnt even use the World Bank revised and up to date Indian income poverty of 12% for 2011 in the first place) and say that subjectively means more than the rest of the components?

    I am talking about the full MPI score compared on year to year basis. 2012 Pakistan data shows worse than 2011 India data (even with the earlier income poverty rate for that year using the worse URP method, as described by world bank itself) used on the same logic you guys were using (cross country analysis) till now.
     
  15. Syed.Ali.Haider

    Syed.Ali.Haider ELITE MEMBER

    Messages:
    31,015
    Joined:
    Sep 29, 2010
    Ratings:
    +52 / 27,054 / -4
    Country:
    Pakistan
    Location:
    United States

    The basic disease on display here is impossible to cure by logical arguments, that of making a conclusion and then seeking only the data that can be made to fit it, rather than looking at the data in its entirety to arrive at a conclusion.
     
    • Thanks Thanks x 1