International comparisons of poverty in South Asia

This paper explores the methodological differences underlying the construction of the national consumption
aggregates that are used to estimate international poverty
rates for all countries in the South Asia region, including
Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal,
Pakistan, and Sri Lanka. The analysis draws on a regional
dataset of standardized consumption aggregates to assess
the sensitivity of international poverty rates to the items
included in national consumption aggregates. A key feature
of the standardized aggregate is that it includes the reported
value of housing rent for urban Indian homeowners. Using
the standardized consumption aggregates reduces the international poverty rate in South Asia by 1.3 percentage points,
or about 18.5 million people. Comparing standardized and
non-standardized monetary welfare indicators to other
nonmonetary indicators suggests that the latter are more
consistent with the standardized consumption aggregates.
Overall, the results strongly suggest that harmonizing the
construction of welfare measures, particularly the treatment
of imputed rent, can meaningfully improve the accuracy of
international poverty comparisons.