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Estimating Poverty Levels and Sustainable Development in Rural
Pakistan
by
Abdul Hameed
and
Ihtsham ul Haq Padda
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Introduction • Poverty reduction is key to attaining sustainable
development
• Approximately 1.02 billion people can’t afford basic needs
and go to bed hungry each night
• Pakistan is ranked 149th out 188 economies in the world
in terms of poverty
• 29.5 percent (60 million) people are living below the
poverty line according to official government data (poverty
line Rs.3030 per month; almost equal to $1 per day)
• World Bank estimates (poverty line = $1.25 per day) would suggest that 52 percent Pakistanis live is below the poverty line
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Study objectives
Construct socioeconomic score for rural Pakistan
Estimate level of poverty and disaggregate it at district level
Correlate poverty with household characteristics
Compare sustainable development between poorest and richest areas
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Data and Methodology
Pakistan Rural Household Survey (PRHS, 2013)
The survey was administered in 19 districts
Data from 1937 out of 2090 households
Principle Component Analysis (PCA)
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Variables Description
• Agriculture and non-agriculture assets
• Main source of drinking water
• Drainage facility
• Toilet facility
• Type for dwelling, roof, floor and outer wall material
• Number of rooms used for sleeping purposes
• Livestock and poultry (NUMBER)
• Agriculture Land (Per Acre)
• Energy sources ( Electricity, wood, natural gas, dung cake etc.)
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Results • 6.7 (almost 7) average household size
• 14% households have access to high quality
(piped/ bottle) water for drinking
• Only 7% have drains linked with pacca
covered/open piped
• 40% do not have toilet facilities
• 52% have roofs made of concrete, iron sheets, or
t-iron guarder with tiles
• 36% have floors with cement, tiles, and chips
• 12% have outer wall made of cement and stone
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• 88% have electricity
• 77% have used wood, dung cake, agriculture waste
and coal for cooking purposes
• Average 2 rooms available for sleeping purposes
• Average 2 acre agricultural land per household
• Average 2 large and 2 small animals per household
• Average 1 poultry/bird per household
Results/
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Poverty Cut-off
Quintile Wealth index score minimum Wealth Index score maximum
Poorest (1st) -5.813667 -2.744665
Poor (2nd) -2.73076 -1.123294
Medium (3rd) -1.121825 0.6237519
Wealthy (4th) 0.631431 2.635582
Wealthiest (5th) 2.645651 10.60718
Source : Pakistan Rural Household Survey, 2013
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Poverty Levels in Rural Pakistan
• 44% households are living below
the poverty level
• 19% households living as a
medium/ middle man status
• 37% households living above the poor and medium status
• 26% (out of 44%) households living as a poorest status
26
18 19 17
20
0
5
10
15
20
25
30
Poorest Poor Medium Wealthy Wealthiest
PER
CEN
TAG
E
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Household Size, Head Age and Poverty Level
• Average household size and
household head age have changed
slightly in the household poverty
status
• Average household head age has
changed between poorest and
poor, wealthy and wealthiest
levels
6.2 6.5 6.9 7.4 7.8
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
Poorest Poor Medium Wealthy Wealthiest
Aver
age
Hou
shold
Siz
e
44 46 47 48 51
0
10
20
30
40
50
60
Poorest Poor Medium Wealthy Wealthiest
Ave
rage
Ho
use
ho
ld H
ead
Age
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Household Head Gender, school years and Poverty Level
26
18 19 17 20
9 14
23
16
37
0
5
10
15
20
25
30
35
40
45
Poorest Poor Medium Wealthy Wealthiest
Per
cen
tage
Male Head Female Head
• PRHS results show that there is lot of
variation between household head
gender and poverty levels
• Female-headed households seem to
be less poor than male-headed
households in rural Pakistan • In most countries, poverty
fell faster for FHHs (( world
Bank,2015), (Ayodeji et al, 2013),
(IFAD, 1999))
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• There is a statistically significant
correlation between the average
household head’s education and
poverty levels
• Poverty decreases with increasing
household head education levels
4
6 7
7
9
0
1
2
3
4
5
6
7
8
9
10
Poorest Poor Medium Wealthy Wealthiest
Aver
age
Yea
rs o
f S
chooli
ng
Continued
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Rural Microcredit and Poverty
47
22
31
42
18
40
0
5
10
15
20
25
30
35
40
45
50
Poor Medium Rich
Per
cen
tage
Microcredit Without Microcredit
• Households that have received microcredit in rural Pakistan tend to be poorer
• This is because households mostly failed to utilize loans properly to generated trade as they promised when accepting loans
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District Wise Poverty Level in Rural Pakistan District Name Rank
Poorest
( %) Rank
Poor
(% ) Rank
Medium
( %) Rank
Wealthy
( %) Rank
Wealthiest
( %) Total
Kasur 12 12 6 28 4 30 10 13 9 16 100.0
Bhakkar 14 8 8 24 6 27 6 22 6 19 100.0
Khanewal 10 16 12 15 11 20 4 24 4 25 100.0
Attock 16 0 18 0 17 1 14 11 1 88 100.0
Vehari 10 16 10 22 1 34 13 12 8 17 100.0
Jhang 11 14 11 18 3 30 5 23 10 15 100.0
D G Khan 4 40 1 35 14 14 16 9 16 3 100.0
Bahawal Nagar 9 21 7 25 5 28 11 13 11 13 100.0
Rahim Yar Khan 14 8 13 14 9 23 3 29 3 26 100.0
Multan 8 29 4 31 12 19 8 17 13 4 100.0
Faisalabad 7 29 5 31 13 19 9 17 14 4 100.0
Sargodha 13 10 2 34 7 26 7 18 12 12 100.0
Thatta 2 93 16 7 18 0 19 0 18 0 100.0
Dadu 6 32 3 33 10 22 15 10 15 3 100.0
Sanghar 3 58 15 10 16 7 17 7 7 19 100.0
Jaccobabad 5 40 9 23 8 24 12 12 17 1 100.0
Hyderabad 1 95 17 4 19 0 18 1 19 0 100.0
Nowshera 15 1 14 14 2 31 2 30 5 24 100.0
Mansehra 16 0 19 0 15 8 1 49 2 43 100.0
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Poorest Richest
Hyderaba
d (%)
Thatta
(%)
Sangher
(%)
D G
Khan(%)
Attock
(%)
Mansehr
a (%)
Rahim Yar
Khan (%)
Khanewal
(%)
low quality drinking
water 10 7 22 2 2 15 8 0
Low quality drainage 73 99 82 11 1 19 14 38
Low quality toilet 54 89 63 58 1 5 22 18
Low quality roof 92 93 70 54 0 6 8 30
Low quality floor 98 95 69 87 5 15 64 46
Low quality outer
wall 94 54 68 58 0 11 31 32
Sustainable Development Comparison b/w Poorest & Richest Area
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Conclusions • 44% households are living below the poverty level
• The major causes of poverty in the study area are low asset base
(household assets, livestock, poultry, agriculture land etc.),
employment opportunities, poor sanitation facilities, and lack of
pure drinking water
• Average household head’s education is significantly related to poverty
• Households receiving microcredit in rural Pakistan tend to be
poorer because of poor utilization of the credit
• Female-headed households tend to be less poor than male-headed
households in rural Pakistan
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• Improving education, women empowerment and awareness about rural micro credit policies to reduce rural poverty levels
• Socioeconomic policies aimed at reducing poverty must focus on improving housing and sustainable development conditions (sanitation, drinking water, toilet etc.) and reducing regional level inequalities through pro-rural development
• Income of majority of rural population is based on agriculture. Pro-farmer agriculture policies leading to increased incomes are therefore crucial
• District level polices can help in reduction in poverty and sustainable development
The way forward
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