DEVELOPMENT OF POVERTY AND

INEQUALITY MEASUREMENT

METHODOLOGY IN THE CONTEXT OF

TRANSITION TO NEW DATA SOURCES:

EXPERIENCE AND CHALLENGES

T.VelikanovaROSSTAT, Living Standards Statistics and Household Survey

Section

SAMPLE SURVEY ON INCOME AND PARTICIPATION IN SOCIAL SECURITY PROGRAMMES

Purpose of sample survey of income and participation in social security programmes

To collect statistics on:

- employment income

- income from self-employment and property

- pensions and social benefits

- trends of income differentiation and poverty estimates among various population categories

- participation of households in social security programmes, pension and health insurance schemes

- material and social security of poor families

- impact of social policy interventions on wellbeing of poor families

2

SAMPLE SURVEY OF INCOME AND PARTICIPATION IN SOCIAL SECURITY PROGRAMMES

Data collection method

Personal interviews of household members (respondents) at their

place of residence in households selected for a survey

Interviews are to be conducted with respondents aged 16+ as found tobe household members at the time of interview

Respondents are interviewed and questionnaires are filled in byinterviewers as told to by respondents and without requiringdocuments to prove their responses

3

SAMPLE SURVEY OF INCOME AND PARTICIPATION IN SOCIAL SECURITY PROGRAMMES

Reference period, survey period and publication deadline

Reference period – previous calendar year

Survey period – QI of a year following a reference calendar year

Deadline to publish survey results:

• preliminary results (re employment income) - 15 April of a year following a reference year

• final results (all indicators) – December of a year following a reference year

4

TOPICS

5

Level of data collection

Households Household members aged

Under 16 16 +

Population characteristics and

family relationship (sex, age,

family relationship)

+ +

Social and economic

characteristics(highest level of

education attained, participation in

labour force)

+

Employment income +

Pensions and social security (incl.

benefits for children, social

benefits, other assistance to

households)

+ + +

Living conditions +

Property income and taxes,

agricultural activities

+

Financial liabilities, self-

assessment of financial position by

a household

+

SIS DETAILS

2012 2014 2015 2016 2017

Period of conduct April 2012 March 2014 March 2015 February 2016 February 2017

Surveyed households, k. 10.0 45.0 45.0 60.0 160.0

Refusal rate (% of visited households)

14.4 15.1 15.3 15.1 13.6

6

INCOME INDICATORS PRODUCED BASED ON SIS DATA

Employment income Total incomeEmployment income Employment income, incl. monetary valuation of

self-produced goods used for personal consumption

Property income Property income

Income from own production of services for personal consumption (imputed value of net rent)

Monetary transfers Monetary and in-kind (monetary value) transfers received

Social benefits Monetary and in-kind (monetary value) social benefits

Monetary receipts from individuals and organizations, excluding social benefits

Monetary and in-kind (monetary value) receipts from individuals and organizations, excluding social benefits

Transfers given Transfers given

Disposable monetary income Disposable total income

7

Comparison of HBS and SIS results with macroeconomic measures of monetary income

Mean, 95% confidenceinterval (boundaries)

Ratio to macroeconomic measure of (MMI), %

lower upper

vs. mean vs. confidence interval boundaries

lower upper

2013

HBS 18,072.4 17,434.9 18,710.0 70 67 72

SIS 22,912.0 22,166.2 23,657.8 88 85 91

Macroeconomic measure of monetary income (MMI)

25,928.0 -

2014

HBS 19,656.6 18,924.5 20,388.7 71 68 73

SIS 24,228.7 23,568.0 24,889.4 87 85 90

MMI 27,767.0 -

2015

HBS 20,664.8 19,895.3 21,434.3 68 65 70

SIS 25,824.1 25,141.0 26,507.3 85 83 87

MMI 30,467.0 -

X

8

Absolute monetary income poverty rate (% of total population)

2008 2009 2010 2011 2012 2013 2014 2015

Estimate based on SIS … … … 12.4 … 9.6 10.1 13.5

Estimate based on

analytical model 13.4 13.0 12.5 12.7 10.7 10.8 11.2 13.3

Estimate based on HBS 26.9 26.5 23.6 22.7 18.9 20.8 21.3 24.7

9

Absolute poverty rate based on different aggregates of monetary and total income

(% of total population)

2013 2014 2015

Monetary income

before tax and mandatory payments 9.6 10.1 13.5

after tax and mandatory payments 11.2 12.1 16.1before receiving social assistance (cashbenefits) 10.5 11.1 14.5

Total income

before tax and mandatory payments 5.9 6.3 8.5

before receiving social assistance (cashbenefits) 7.7 8.3 11.0

Before imputation of net rent 7.7 8.5 12.0

10

Relative poverty based on equivalized disposable monetary income (Е=0.5)

(% of total population)

2008 2009 2010 2011 2012 2013 2014 2015

Estimate based on HBS

60% of Me 23.5 22.3 22.6 21.9 … … … …

50% of Me 16.6 15.6 15.2 14.6 … … … …

40% of Me 10.3 9.4 8.6 8.2 … … … …

Estimate based on SIS

60% of Me … … … 21.9 … 20.3 20.2 20.9

50% of Me … … … 14.6 … 13.7 13.6 14.0

40% of Me … … … 8.8 … 8.1 8.1 8.1

11

Sustainable Development Goals

Goal 1. End poverty in all its forms and everywhere1.1 By 2030, eradicate extreme poverty for all people everywhere, currently

measured as people living on less than $1.25 a day

1.1.1 Proportion of population below the international

poverty line, by sex, age, employment status and

geographical location (urban/rural)

1.2 By 2030, reduce at least by half the proportion of men, women and children of

all ages living in poverty in all its dimensions according to national definitions

1.2.1 Proportion of population living below the national

poverty line, by sex and age

1.2.2 Proportion of men, women and children of all ages

living in poverty in all its dimensions according to

national definitions

Goal 10. Reduce inequality within and among countries10.1 By 2030, progressively achieve and sustain income growth of the bottom 40

per cent of the population at a rate higher than the national average

10.1.1 Growth rates of household expenditure or

income per capita among the bottom 40 per cent of the

population and the total population

10.2 By 2030, empower and promote the social, economic and political inclusion of

all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or

other status

10.2.1 Proportion of people living below 50 per cent of

median income, by age, sex and persons with disabilities

1.1 By 2030, eradicate extreme poverty for all people everywhere, currently measured as people living on

less than $1.25 a day.

1.1.1 Proportion of population below the international poverty line, by sex, age, employment status and geographical

location (urban/rural)

Proportion of population with income per capita below : FYI : proportion of

population with income

below subsistence

minimum$1.90

a day

$3.90

a day

$5

a day

$10

a day

Russian Federation

2010 0.0 0.5 1.2 8.6 12.5

2011 0.0 0.5 1.1 8.3 12.7

2012 0.0 0.4 1.0 7.7 10.7

2013 0.0 0.4 1.0 7.5 10.8

2014 0.0 0.3 0.8 6.7 11.2

2015 0.0 0.3 0.7 5.9 13.3

PROPORTION OF POPULATION WITH INCOME BELOW THE INTERNATIONAL POVERTY LINE USING PPP

per cent of total population

Source: estimate based on sample household budget survey and macroeconomic measure of monetary income

13

1.2 By 2030, reduce at least by half the proportion of men, women and children of all ages living in

poverty in all its dimensions according to national definitions

1.2.1 Proportion of population living below the national poverty line, by sex and age

2000 2013 2014 2015 2016 (preliminary)

Total population 29,0 10,8 11,2 13,3 13,5

Children under 16 33,7 17,9 18,5 21,5 22,0

Children under 7 26,9 15,6 15,4 17,4 18,6

Children aged 7-16 36,8 20,0 21,4 25,6 25,3

Young adults aged 16-30 28,9 10,8 11,0 13,2 12,9

Male aged 16-30 26,5 10,2 10,3 12,4 12,4

Female aged 16-30 31,2 11,3 11,7 14,0 13,3

Persons of working age over 30 30,5 11,1 11,7 13,9 14,0

Male aged 31-59 27,7 10,5 10,8 12,9 12,9

Female aged 31-54 33,4 11,9 12,7 15,0 15,3

Total elder persons of working age 20,9 5,0 5,3 6,6 7,0

Male aged 60+ 19,6 4,6 5,3 6,4 6,9

Female aged 55+ 21,5 5,2 5,3 6,6 7,1

Source: estimate based on sample household budget survey and macroeconomic measure of monetary income

per cent of total population of a relevant age group

14

POPULATION WITH INCOME BELOW SUBSISTENCE MINIMUM1)

1) Estimate based on sample household budget survey and macroeconomic measure of monetary income per capita. The structure of consumer basket was changed in 2005 for measuring subsistence minimum. The procedure for estimating subsistence minimum was changed in 2013. In 2015, the composition of covered population changed.

The reduction in the poverty rate in 2015 as compared to 2000 based on the actual data was almost 2.2 times, considering comparability of estimation methodology it reduced by 2.8 times. раза.

15

42,3 40,0 35,6 29,3 25,2 25,4 21,6 18,8 19,0 18,4 17,7 17,9 15,4 15,5 16,1 19,5 19,8

29,0

27,5

24,6

20,3

17,6 17,8

15,2

13,3 13,4 13,012,5 12,7

10,7 10,8 11,2

13,3 13,5

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 предв.

Million Per cent of total population

1.2 By 2030, reduce at least by half the proportion of men, women and children of all ages living in

poverty in all its dimensions according to national definitions

1.2.2 Proportion of men, women and children of all ages living in poverty in all its dimensions according to

national definitions

What has been done:

Phase 1 (2015): list of deprivations consisting of 39 items identified.

Phase 2 (2016): empirical data obtained for the above list of deprivations during: Integrated household living conditions survey (2016 round covering over 60,000

households); Sample survey on income and participation in social security programmes (2016 and

2017 rounds covering over 60,000 and 160,000 households respectively).

Phase 3 (2017): non-monetary poverty indices estimation methodologies tested:• Multidimensional poverty index (Multidimensional Poverty Index, MPI and At Risk Of

Poverty Or Social Exclusion, AROPE);• Deprivation index;• Social Exclusion Index

16

Key components of At Risk of Poverty and Social Exclusion indicator (AROPE)

AROPE

С component demonstrating labour market exclusion: severe

low work intensity. It is about persons aged 0-59 living in

households where adults aged 18-59 (excluding students) worked less than 20% of their total work potential during the past year.

А – relative component: relative presentation of risk of

poverty/monetary poverty (AROPE). Proportion of population living in

households with disposable equivalised income below the risk-of-poverty threshold set as 60% of the national median equivalised income (after social transfers). The so-called ‘OECD modified equivalence scale’ is

used.

В – ‘kind of’ absolute component demonstrating severe/standard material deprivation. It is about people who suffer from severe

material deprivation. They experience at least 4 out of the 9

following deprivations items

1) coping with unexpected

expenses;

2) one week annual holiday

away from home;

3) avoiding arrears (in

mortgage or rent, utility bills or

hire purchase instalments);

4) a meal with meat, chicken,

fish or vegetarian equivalent

every second day;

5) keeping the home

adequately warm;

6) a washing machine;

7) a colour TV;

8) telephone;

9) personal car.

17

Preliminary AROPE estimates

0.8%

0.7%

16.8% 1.4%

AROPE – 24.8%

Relative poverty

rate – 22.5%

(60% median,

equivalised scale)

Material deprivation

– 4.6%

Labour market exclusion –

2.6%

2.46%

0.1%2.54%

18

International comparison

AROPE

* No AROPE estimates are available for Russia in 201519

Relative poverty

20

Convergence of AROPE and absolute poverty estimates in Russia, %

Not poor either based on absolute poverty or

AROPE

Poor based on absolute poverty but not AROPE

Poor based on AROPE, but not poor based on

absolute poverty

Poor based on based on both AROPE and absolute

poverty

74.4 0.6 12.3 12.7

Convergence of AROPE and relative poverty estimates in Russia, %

Not poor either based on relative poverty or AROPE

Poor based on relativepoverty but not AROPE

Poor based on AROPE, but not poor based on

relative poverty

Poor based on based on both AROPE and relative

poverty

75.0 0.0 2.3 22.7

21

Goal 10. Reduce inequality within and among countries10.1 By 2030, progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average.

10.1.1 Growth rates of household expenditure or income per capita among the bottom 40 per cent of the population and the total population

Calculation of the indicator is quite simple but strict implementation of the target (income growth of the bottom 40 per cent of the population at a rate higher than the national average) will ultimately result in equal distribution of income which can hardly be considered as a desired outcome, especially if originally differentiation is not strong. Therefore target (acceptable) level of differentiation needs to be set.

22

THANK YOU!

23