Alternative Estimates of Rural Poverty

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Because of these sources of bias in the offi cial poverty estimates, other

estimates have been made using different methods and data sources. The

main alternative estimates of rural poverty are presented in Table A.4.4.

Because of the potential arbitrariness of choosing any one poverty line,

arguably it is more important to examine trends in poverty over time. All

estimates agree that there was a spectacular reduction in poverty in the

early 1980s. Again all estimates other than the offi cial poverty count show

little or no progress in poverty reduction in the late 1980s. Reductions in the

Table A.4.4 Alternative estimates of rural poverty headcount (proportion

of poor in total population)

Source Sample data Survey 1978 1984 1985

NSB Offi cial National (income groups NBS 30.7 15.1 14.8

and household income)a

World Bank (1992) National (income groups) NBS 33.0 11.0 11.9

World Bank (2001) National (income groups) NBS

World Bank (2001) National (expenditure NBS

groups)b

Khan (1996) National (income groups) NBS 14.0

Khan and Riskin (2001) 19 provinces (household Own survey

income)

Riskin and Li (2001) 19 provinces (household Own survey

income)

Jalan and Ravallion (1998b) 5 provinces (household NBS 28.4

expenditures)

Notes:

a Income groups before 1995, household data from 1995 onwards.

b Expenditure groups constructed from national mean expenditure and income group

distributions.

Source: Park and Wang (2001), World Bank (2001), Wang et al. (2004).

offi cial count are almost certainly due to insuffi cient infl ation of the poverty

line in 1988 and 1989. In the early 1990s, Khan (1996) and the World Bank

(2001) show little change until after 1993. The offi cial poverty count falls

steadily throughout the 1990s. Khan and Riskin (2001) and Riskin and Li

(2001) emphasize the small magnitude of poverty reduction from 1988 to

1995. Riskin and Li (2001) report that using NBS’s own income defi nition

and poverty line, they estimate a poverty headcount of 9.4 per cent, which

is higher than the offi cial fi gure of 7.1 per cent. As mean incomes are the

same in their 19 province sample and the NBS’s national sample, the only

plausible explanation is differences in the distribution of incomes.17

World Bank (2001) uses a constant price US $1 per day poverty line. The

purchasing power parity dollar per day standard was established to facilitate

inter-country comparisons, and is not based on nutritional standards,

consumption patterns, or social norms specifi c to PRC. The offi cial poverty

line is broadly equivalent to 0.67 cents per day and hence the World Bank

poverty estimates are considerably above the offi cial ones. However, what

is striking is the rapid fall in poverty in the mid-1990s reported both by

World Bank (2001) and the offi cial estimates, although they vary in both

the numbers of poor and the headcount.

A further limitation of offi cial poverty estimates is that they draw no

distinction between chronic and transitory poverty. Other estimates suggest

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

15.5 14.3 11.1 12.1 9.5 10.4 8.8 8.2 7.6 7.1 6.3 5.4 4.6 3.7 3.4 3.1 3.0

11.9 11.1 10.4 12.3 11.5

29.1 28.2 27.7 27.1 24.0 20.3 14.0 12.7 10.8 10.5 12.0 10.6 9.4

35.4 40.0 38.0 37.7 37.9 32.3 28.8 22.6 22.7 22.8 23.5 21.0 19.5 17.2

16.1 13.9 13.6 14.1 13.6

32.7 28.6

12.7 12.4

27.5 23.0 22.8 25.3 28.3

that in PRC transitory poverty, those who move above or below the poverty

line, is a signifi cant proportion of the total poor. For example, using panel

data for households in four provinces from 1985–1990, Jalan and Ravallion

(1998a) fi nd that the share of the poor who are not chronically poor varies

from 30 per cent to 46 per cent. McCulloch and Calandrino (2001) fi nd

that in 1991 and 1995, 57 per cent and 46 per cent of the poor in Sichuan

were experiencing transitory poverty. Using data from six poor counties

for 1997 and 2000, Wang and Li (2003) fi nd that around 30 per cent of the

poor are transitory. Given these proportions it is clear that if the goal is to

measure chronic poverty, annual poverty headcounts are likely to overstate

the extent of such poverty substantially.