The Median Is the Message: A Good-Enough Measure of Material Well-Being and Shared Development Progress
AbstractWe argue that survey-based median household consumption expenditure (or income) per capita be incorporated into standard development indicators, as a simple, robust, and durable indicator of typical individual material well-being in a country. Using household survey data available for low- and middle-income countries from the World Bank’s PovcalNet tool, we show that as a measure of income-related well-being, it is far superior to the commonly used GDP per capita as well as survey-based measures at the mean. We also argue that survey-based median measures are “distributionaware”, i.e. when used as the denominator of various widely available indicators such as mean consumption expenditure per capita they provide a “good-enough” indicator of consumption (or income) inequality. Finally, as a post-2015 indicator of progress at the country-level in promoting shared development and reducing inequality, we propose that the rate of increase in median consumption per capita after taxes and transfers exceed the rate of increase in average consumption in the same period.
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Bibliographic InfoPaper provided by Center for Global Development in its series Working Papers with number 351.
Length: 46 pages
Date of creation: Jan 2014
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Web page: http://www.cgdev.org
welfare measure; median; consumption; inequality; distribution;
Find related papers by JEL classification:
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
- I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-02-15 (All new papers)
- NEP-DEV-2014-02-15 (Development)
- NEP-HAP-2014-02-15 (Economics of Happiness)
- NEP-LTV-2014-02-15 (Unemployment, Inequality & Poverty)
- NEP-SOG-2014-02-15 (Sociology of Economics)
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