Progress out of Poverty Index Technical Overview

Understanding the construction of the PPI
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This note gives an overview of the construction, features and statistical principles of the Progress out of Poverty Index (PPI).

The PPI is a user-friendly and objective client poverty assessment tool that estimates the likelihood of an individual falling below the national poverty line. The key elements and steps of PPI construction are as follows:

  • Indicators are derived from most recent national income or expenditure surveys or country-specific World Bank Living Standards Measurement Survey;
  • Indicators are chosen based on simplicity, liability to change with poverty status and correlation with poverty;
  • Indicators are classified into groups and tested for their ability to predict poverty;
  • Each indicator is further selected based on factors such as ability to improve accuracy, likelihood of acceptance by users, ability to change values with change in poverty status, capacity to contribute to question variety and ease of observation/verification;
  • Responses are rated and scores are recorded on a scale of 1 to 100.

The PPI can be photocopied for immediate use. It can also serve as a template for data-entry screens with database software that records indicators, indicator values, scores, and poverty likelihoods.

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