Person:
Chen, Shaohua

Poverty and Inequality Unit, Development Research Group, The World Bank

Fields of Specialization

Poverty measurement

Departments

Poverty and Inequality Unit, Development Research Group, The World Bank

Last updated: January 31, 2023

Biography

Shaohua Chen is a Lead Statistician in the Development Research Group of the World Bank. She manages the Global Poverty database and all developing countries’ poverty, inequality estimations at the World Bank since 1991. Her research has focused on poverty and inequality measurement, and program/policy impacts evaluation. Before joining the World Bank, she was the lecturer of business school of Huazhong University of Science and Technology in China. She received her Master's Degree in Statistical Computing from American University.

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Publication Search Results

Now showing 1 - 10 of 26

Welfare-Consistent Global Poverty Measures
(World Bank, Washington, DC, 2017-08) Ravallion, Martin; Chen, Shaohua
The paper provides new measures of global poverty that take seriously the idea of relative-income comparisons but also acknowledge a deep identification problem when the latent norms defining poverty vary systematically across countries. Welfare-consistent measures are shown to be bounded below by a fixed absolute line and above by weakly-relative lines derived from a theoretical model of relative-income comparisons calibrated to data on national poverty lines. Both bounds indicate falling global poverty incidence, but more slowly for the upper bound. Either way, the developing world has a higher poverty incidence but is making more progress against poverty than the developed world.
A Global Count of the Extreme Poor in 2012: Data Issues, Methodology and Initial Results
(World Bank, Washington, DC, 2015-10) Dikhanov, Yuri; Ferreira, Francisco H. G.; Hamadeh, Nada; Chen, Shaohua; Dabalen, Andrew; Prydz, Espen Beer; Jolliffe, Dean; Sangraula, Prem; Narayan, Ambar; Serajuddin, Umar; Yoshida, Nobuo; Revenga, Ana
The 2014 release of a new set of purchasing power parity conversion factors (PPPs) for 2011 has prompted a revision of the international poverty line. In order to preserve the integrity of the goalposts for international targets such as the Sustainable Development Goals and the World Bank’s twin goals, the new poverty line was chosen so as to preserve the definition and real purchasing power of the earlier $1.25 line (in 2005 PPPs) in poor countries. Using the new 2011 PPPs, the new line equals $1.90 per person per day. The higher value of the line in US dollars reflects the fact that the new PPPs yield a relatively lower purchasing power of that currency vis-à-vis those of most poor countries. Because the line was designed to preserve real purchasing power in poor countries, the revisions lead to relatively small changes in global poverty incidence: from 14.5 percent in the old method to 14.1 percent in the new method for 2011. In 2012, the new reference year for the global count, we find 12.7 percent of the world’s population, or 897 million people, are living in extreme poverty. There are changes in the regional composition of poverty, but they are also relatively small. This paper documents the detailed methodological decisions taken in the process of updating both the poverty line and the consumption and income distributions at the country level, including issues of inter-temporal and spatial price adjustments. It also describes various caveats, limitations, perils and pitfalls of the approach taken.
Benefit Incidence with Incentive Effects, Measurement Errors and Latent Heterogeneity
(World Bank, Washington, DC, 2013-08) Ravallion, Martin; Chen, Shaohua
Empirical studies of tax and benefit incidence routinely ignore behavioral responses and measurement errors. This paper offers an econometric method of estimating the mean benefit withdrawal rate (marginal tax rate) allowing for incentive effects, measurement errors, and correlated latent heterogeneity in incidence. Under the method's identifying assumptions, a feasible instrumental variables estimator corrects for incentive effects and measurement errors, and provides a bound for the true value when there is correlated incidence heterogeneity. A case study for a large cash transfer program in China indicates that past methods of assessing benefit incidence using either nominal official rates or raw tabulations from survey data are deceptive. The program entails a nominal 100 percent benefit withdrawal rate -- a poverty trap. However, the paper finds that the actual rate is much lower, and clearly too low in the light of the literature on optimal income taxation. The paper discusses likely reasons based on the qualitative observations.
More Relatively-Poor People in a Less Absolutely-Poor World
(World Bank, Washington, DC, 2012-07) Chen, Shaohua; Ravallion, Martin
Relative deprivation, shame and social exclusion can matter to the welfare of people everywhere. The authors argue that such social effects on welfare call for a reconsideration of how we assess global poverty, but they do not support standard measures of relative poverty. The paper argues instead for using a weakly-relative measure as the upper-bound complement to the lower-bound provided by a standard absolute measure. New estimates of global poverty are presented, drawing on 850 household surveys spanning 125 countries over 1981-2008. The absolute line is $1.25 a day at 2005 prices, while the relative line rises with the mean, at a gradient of 1:2 above $1.25 a day. The authors show that these parameter choices are consistent with cross-country data on national poverty lines. The results indicate that the incidence of both absolute and weakly-relative poverty in the developing world has been falling since the 1990s, but more slowly for the relative measure. While the number of absolutely poor has fallen, the number of relatively poor has changed little since the 1990s, and is higher in 2008 than 1981.
Weakly Relative Poverty
(MIT Press, 2011-11) Ravallion, Martin; Chen, Shaohua
Prevailing measures of relative poverty are unchanged when all incomes grow or contract by the same proportion. This property stems from seemingly implausible assumptions about the disutility of relative deprivation and the cost of social inclusion. We propose ‘‘weakly relative’’ lines that relax these assumptions. On calibrating our measures to national poverty lines and survey data, we find that half the population of the developing world in 2005 lived in poverty, only half of whom were absolutely poor. The total number of poor rose over 1981 to 2005 despite falling numbers of absolutely poor. With sustained economic growth, the incidence of relative poverty became less responsive to further growth. The number of relatively poor rose, just as the numbers of absolutely poor fell.
The Developing World Is Poorer Than We Thought, but No Less Successful in the Fight against Poverty
(2010) Chen, Shaohua; Ravallion, Martin
A new data set on national poverty lines is combined with new price data and almost 700 household surveys to estimate absolute poverty measures for the developing world. We find that 25% of the population lived in poverty in 2005, as judged by what "poverty" typically means in the world's poorest countries. This is higher than past estimates. Substantial overall progress is still indicated--the corresponding poverty rate was 52% in 1981--but progress was very uneven across regions. The trends over time and regional profile are robust to various changes in methodology, though precise counts are more sensitive.
Dollar a Day Revisited
(World Bank, 2009-06-30) Ravallion, Martin; Chen, Shaohua
The article presents the first major update of the international $1 a day poverty line, proposed in World Development Report 1990: Poverty for measuring absolute poverty by the standards of the world's poorest countries. In a new and more representative data set of national poverty lines, a marked economic gradient emerges only when consumption per person is above about $2.00 a day at 2005 purchasing power parity. Below this, the average poverty line is $1.25, which is proposed as the new international poverty line. The article tests the robustness of this line to alternative estimation methods and explains how it differs from the old $1 a day line.
Weakly Relative Poverty
(2009-02-01) Chen, Shaohua; Ravallion, Martin
Prevailing measures of relative poverty put an implausibly high weight on relative deprivation, such that measured poverty does not fall when all incomes grow at the same rate. This stems from the (implicit) assumption in past measures that very poor people incur a negligible cost of social inclusion. That assumption is inconsistent with evidence on the social roles of certain private expenditures in poor settings and with data on national poverty lines. The authors propose a new schedule of "weakly relative" lines that relax this assumption and estimate the implied poverty measures for 116 developing countries. The authors find that there is more relative poverty than past estimates have suggested. In 2005, one half of the population of the developing world lived in relative poverty, half of whom were absolutely poor. The total number of relatively poor rose over 1981-2005, despite falling numbers of absolutely poor. With sustained economic growth, the incidence of relative poverty becomes less responsive to further growth. Slower progress against relative poverty can thus be seen as the "other side of the coin" to success against absolute poverty.
Are There Lasting Impacts of Aid to Poor Areas?
(2009) Chen, Shaohua; Ravallion, Martin
The paper re-visits the site of a large, World Bank-financed, rural development program in China, 10 years after it began and four years after disbursements ended. The program emphasized community participation in multi-sectoral interventions (including farming, animal husbandry, infrastructure and social services). Data were collected on 2000 households in project and non-project areas, spanning 10 years. A double-difference estimator of the program's impact (on top of pre-existing governmental programs) reveals sizeable short-term income gains that were mostly saved. Only small and statistically insignificant gains to mean consumption emerged in the longer-term--though in rough accord with the average gain to permanent income. The use of community-based beneficiary selection greatly reduced the overall impact, given that the educated poor were under-covered. The main results are robust to corrections for various sources of selection bias, including village targeting and interference due to spillover effects generated by the response of local governments to the external aid.
The Developing World is Poorer Than We Thought, but No Less Successful in the Fight Against Poverty
(Washington, DC: World Bank, 2008-08) Chen, Shaohua; Ravallion, Martin
The paper presents a major overhaul to the World Bank's past estimates of global poverty, incorporating new and better data. Extreme poverty-as judged by what "poverty" means in the world's poorest countries-is found to be more pervasive than we thought. Yet the data also provide robust evidence of continually declining poverty incidence and depth since the early 1980s. For 2005 we estimate that 1.4 billion people, or one quarter of the population of the developing world, lived below our international line of $1.25 a day in 2005 prices; 25 years earlier there were 1.9 billion poor, or one half of the population. Progress was uneven across regions. The poverty rate in East Asia fell from almost 80 percent to under 20 percent over this period. By contrast it stayed at around 50 percent in Sub-Saharan Africa, though with signs of progress since the mid 1990s. Because of lags in survey data availability, these estimates do not yet reflect the sharp rise in food prices since 2005.