Statistics: Income share held by lowest 20%
Definition: Income share held by lowest 20%
Percentage share of income or consumption is the share that accrues to subgroups of population indicated by deciles or quintiles. Percentage shares by quintile may not sum to 100 because of rounding.
Development relevance: Income share held by lowest 20%
The World Bank Group’s goal of promoting shared prosperity has been defined as fostering income growth of the bottom 40 per cent of the welfare distribution in every country. Income distribution data and the Gini coefficient measure inequality in income or consumption and important indicators for measuring shared prosperity.
Limitations and Exceptions: Income share held by lowest 20%
Despite progress in the last decade, the challenges of measuring poverty remain. The timeliness, frequency, quality, and comparability of household surveys need to increase substantially, particularly in the poorest countries. The availability and quality of poverty monitoring data remains low in small states, countries with fragile situations, and low-income countries and even some middle-income countries. The low frequency and lack of comparability of the data available in some countries create uncertainty over the magnitude of poverty reduction. Besides the frequency and timeliness of survey data, other data quality issues arise in measuring household living standards. The surveys ask detailed questions on sources of income and how it was spent, which must be carefully recorded by trained personnel. Income is generally more difficult to measure accurately, and consumption comes closer to the notion of living standards. And income can vary over time even if living standards do not. But consumption data are not always available: the latest estimates reported here use consumption data for about two-thirds of countries. However, even similar surveys may not be strictly comparable because of differences in timing or in the quality and training of enumerators. Comparisons of countries at different levels of development also pose a potential problem because of differences in the relative importance of the consumption of nonmarket goods. The local market value of all consumption in kind (including own production, particularly important in underdeveloped rural economies) should be included in total consumption expenditure but may not be. Most survey data now include valuations for consumption or income from own production, but valuation methods vary.
Statistical concept and methodology: Income share held by lowest 20%
Inequality in the distribution of income is reflected in the share of income or consumption accruing to a portion of the population ranked by income or consumption levels. The portions ranked lowest by personal income receive the smallest shares of total income. Data on the distribution of income or consumption come from nationally representative household surveys. Where the original data from the household survey were available, they have been used to directly calculate the income or consumption shares by quintile. Otherwise, shares have been estimated from the best available grouped data. The distribution data have been adjusted for household size, providing a more consistent measure of per capita income or consumption. No adjustment has been made for spatial differences in cost of living within countries, because the data needed for such calculations are generally unavailable. For further details on the estimation method for low- and middle-income economies, see Ravallion and Chen (1996). Survey year is the year in which the underlying household survey data were collected or, when the data collection period bridged two calendar years, the year in which most of the data were collected. Percentage shares by quintile may not sum to 100 because of rounding.