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International Comparison Program (ICP)

Monitoring the SDGs with purchasing power parities

Edie Purdie's picture

The ICP blog series explores ideas and issues under the International Comparison Program umbrella – including innovations in price and data collection, discussions on purpose and methodology, as well the use of purchasing power parities in the growing world of development data. Authors from across the globe, whether ICP practitioners or researchers making use of ICP data, are encouraged to submit relevant blogs for consideration to [email protected].

It has been over three years since countries adopted the UN’s 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals. From the outset, a number of targets were identified to help pinpoint the desired outcomes within these broad areas – 169 in total. Monitoring progress towards each of these targets relies on data originating in countries, and which are often collected in partnership with regional and international organizations. The World Bank’s Atlas of Sustainable Development Goals used such data to visualize trends and comparisons across the globe, drawing on data from World Development Indicators and many other sources.

Purchasing Power Parity (PPP) data, from the International Comparison Program, play an important role in this monitoring: by eliminating the effect of price level differences between countries they allow us to measure living standards and other economic trends in real, comparable terms.  PPPs are utilized in a number of the official SDG indicators, but also in other associated indicators, which help us to explore the underlying issues and impacts of the goals and targets more deeply.  The four charts presented here exemplify the crucial insights PPPs help provide in SDG monitoring and analysis.

Goal 1 seeks to eradicate poverty in all its forms by 2030. Extreme poverty is measured using the international poverty line of $1.90 a day using 2011 PPPs. The use of PPPs ensures that the poverty line represents the same standard of living in every county. Higher poverty lines used by the World Bank better measure poverty in lower-middle and upper-middle income countries.  Using these poverty lines, we can visualize the shifts in population living at various standards of living.

More than money: Counting poverty in multiple forms

Dhiraj Sharma's picture
Also available in: Español | العربية | Français

Consider two households that have the same level of consumption (or income) per person but they differ in the following ways. All the children in the first household go to school, while the children in the second household work to support the family. The first household obtains drinking water from a tap connected to the public distribution network, whereas the second household fetches water from a nearby stream. At night, the first home is illuminated with electricity, whereas the second home is dark. A lay person would easily recognize which of these two families is better off. Yet, traditional measures of household well-being would put the two households on par because conventionally, household well-being has been measured using consumption (or income).

Nearly 1 in 2 in the world lives under $5.50 a day

Dean Mitchell Jolliffe's picture
Also available in: Français | Español | العربية

Today, less than 10 percent of the world population lives in extreme poverty. Based on information about basic needs collected from 15 low-income countries, the World Bank defines the extreme poor as those living on less than $1.90 a day. However, because more people in poverty live in middle-income, rather than low-income, countries today, higher poverty lines have been introduced. These lines are $3.20 and $5.50 a day, which are more typical of poverty thresholds for middle-income countries.

Measuring India’s economy using PPPs shows it surpassed France 25 years ago

Edie Purdie's picture

The ICP blog series explores ideas and issues under the International Comparison Program umbrella – including innovations in price and data collection, discussions on purpose and methodology, as well the use of purchasing power parities in the growing world of development data. Authors from across the globe, whether ICP practitioners or researchers making use of ICP data, are encouraged to submit relevant blogs for consideration to [email protected].

Earlier this summer, new data published by the World Bank showed that the Gross Domestic Product (GDP) of India had recently surpassed that of France, and that it was on track to overtake the UK economy too. Many news outlets jumped upon this new ranking of India’s economy, now sixth from top. But most media articles did not mention that the World Bank’s other measure, which compares GDP across countries using purchasing power parities (PPPs), has placed India ahead of both France and the UK for the last 25 years.

Celebrating 50 years of measuring world economies

Edie Purdie's picture

The ICP blog series explores ideas and issues under the International Comparison Program umbrella – including innovations in price and data collection, discussions on purpose and methodology, as well the use of purchasing power parities in the growing world of development data. Authors from across the globe, whether ICP practitioners or researchers making use of ICP data, are encouraged to submit relevant blogs for consideration to [email protected].

A visitor to the World Bank’s atrium on May 23, 2018 would have seen a who’s who of eminent economists and statisticians congregating to celebrate the 50th anniversary of the International Comparison Program. Organized by the Global ICP Unit based in the World Bank in Washington, D.C, a large local, and virtual, audience gathered to hear the thoughts and reflections of major ICP players at the “50 Years of Measuring World Economies” event.

Event: 50 Years of Measuring World Economies – Wednesday May 23, 2018 at 4pm EST

Nada Hamadeh's picture
Join us live online or in-person on Wednesday at 4pm for "50 Years of Measuring World Economies" event held at the World Bank James D. Wolfensohn Atrium in Washington, DC.
 
The International Comparison Program (ICP) – the world’s largest global data initiative led by the World Bank under the auspices of the United Nations Statistical Commission – is celebrating its 50th anniversary this year. Since the initiation of the ICP as a modest research project at the University of Pennsylvania by Irving Kravis, Alan Heston and Robert Summers in 1968, the Program has grown to cover about 200 countries and 20 global, regional and sub-regional agencies.
 

To commemorate this milestone, World Bank Group Chief Executive Officer Kristalina Georgieva, 2015 Nobel Laureate in economics Sir Angus Deaton, and Georgetown University Provost Robert M. Groves will come together at an event to discuss the challenges and opportunities for investing in evidence for sustainable development. In addition, Lawrence H. Summers, the 71st Secretary of the US Treasury and son of ICP co-founder Robert Summers, will share a recorded tribute. A video produced by the World Bank for the occasion will showcase the history and impact of the ICP.

Can modern technologies facilitate spatial and temporal price analysis?

Marko Rissanen's picture
Also available in: Français

The International Comparison Program (ICP) team in the World Bank Development Data Group commissioned a pilot data collection study utilizing modern information and communication technologies in 15 countries―Argentina, Bangladesh, Brazil, Cambodia, Colombia, Ghana, Indonesia, Kenya, Malawi, Nigeria, Peru, Philippines, South Africa, Venezuela and Vietnam―from December 2015 to August 2016.

The main aim of the pilot was to study the feasibility of a crowdsourced price data collection approach for a variety of spatial and temporal price studies and other applications. The anticipated benefits of the approach were the openness, accessibility, level of granularity, and timeliness of the collected data and related metadata; traits rarely true for datasets typically available to policymakers and researchers.

The data was collected through a privately-operated network of paid on-the-ground contributors that had access to a smartphone and a data collection application designed for the pilot. Price collection tasks and related guidance were pushed through the application to specific geographical locations. The contributors carried out the requested collection tasks and submitted price data and related metadata using the application. The contributors were subsequently compensated based on the task location and degree of difficulty.

The collected price data covers 162 tightly specified items for a variety of household goods and services, including food and non-alcoholic beverages; alcoholic beverages and tobacco; clothing and footwear; housing, water, electricity, gas and other fuels; furnishings, household equipment and routine household maintenance; health; transport; communication; recreation and culture; education; restaurants and hotels; and miscellaneous goods and services. The use of common item specifications aimed at ensuring the quality, as well as intra- and inter-country comparability, of the collected data.

In total, as many as 1,262,458 price observations―ranging from 196,188 observations for Brazil to 14,102 observations for Cambodia―were collected during the pilot. The figure below shows the cumulative number of collected price observations and outlets covered per each pilot country and month (mouse over the dashboard for additional details).

Figure 1: Cumulative number of price observations collected during the pilot