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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.

Goal 3 pursues good health and well-being for all.  The first of its targets seeks a reduction in the proportion of mothers that die in childbirth, and the modelled indicator used to monitor this uses GDP expressed in PPP terms.

Goal 9 has a broad remit, building resilient infrastructure, promoting inclusive and sustainable industrialization, and fostering innovation.  Expenditure on research and development is one tool used to measure the latter and converting this into PPP dollars allows cross-country comparisons.

Goal 10 looks to reduce inequalities, both within and among countries.  Assessing the incomes of different parts of society within a country helps us to measure existing inequality, and the two lowest quintiles in terms of income – the “bottom 40 percent” represent the poorest in many analyses.  Growth in the incomes of the poorest against society as a whole is used in SDG 10 to investigate whether the poorest are “catching up” with the rest of the population, and comparable means of income or consumption for different groups are measured in PPP dollars.