Poverty: How can we improve what we don't measure well?

In Honduras, 7 out of every 10 people are classified as poor because their income falls below set poverty lines. This metric is used to target, monitor, and evaluate social programs. In 2025, the government allocated one third of its budget to programs and projects aimed at reducing poverty. However, the current methodology is outdated, which can lead to inefficient use of these public resources. The new Household Income and Expenditure Survey presents an opportunity to update poverty measurement and establish a more realistic — and necessary — benchmark for designing more effective and better-targeted poverty reduction policies.

• Incidence is especially high among the rural population, which accounts for more than half of those classified as extremely poor (Figure 1).
• Currently, one third of the government's budget — equivalent to 9% of GDPFootnote 1^[1] — is allocated to programs and projects under the Estrategia para la Reducción de la Pobreza (ERP) (Poverty Reduction Strategy)Footnote 2^[2].
• This indicator is one of the main metrics for identifying where and to whom program benefits should go, as well as for monitoring and evaluating whether said interventions are workingFootnote 3^[3].

Measuring poverty well matters if these resources are to reach those who need them most.

• To compare poverty across countries and over time, the World Bank's international poverty lines are used:
  • $3.00 per day for global extreme poverty
  • $4.20 per day for lower-middle-income countries
  • $8.30 per day for upper-middle-income countries
• In Honduras, the official lines exceed the reference value for lower-middle-income countries, and the general poverty line is very close to the threshold used for upper-middle-income countries such as Brazil, Argentina, and Mexico (Figure 3).

• The basic food basket is a set of 30 products considered essential to meet a household's minimum caloric requirementsFootnote 7^[7].
• In Honduras, the products that make up the basic food basket — and therefore the poverty lines — were defined using data from the 1978 Encuesta de Ingresos y Gastos de Hogares (ENIGH). That means the underlying data are 47 years old, and Honduran consumption patterns have certainly changed in the interimFootnote 8^[8].
• Urban prices are also used to adjust the value of the basket annually for inflation, which can introduce biases in the poverty lines for rural areas that face different prices (BCH, 1999; Gasparini et al. 2012).

• In Honduras, implicit rent — the value a household would pay if it had to rent its own home — is not added to household incomeFootnote 10^[10].
• More than 1.7 million Hondurans (equivalent to 67% of households) report owning their home. Of these, 20% belong to the lowest income quintilesFootnote 11^[11].
• Excluding this component can underestimate household income and affect poverty estimatesFootnote 12^[12]. Implicit rent accounts for one third of income among lower-income households, compared to 10% among higher-income onesFootnote 13^[13] (Figure 4).

Implicit rent represents a larger share of income for lower-income households.

• Honduran consumption patterns have changed — and so has the field. New methodological developments and international standards for measuring poverty are now available. Methodological updates are necessary, though not frequent, given their complexity and sensitivityFootnote 16^[16].
• The ENIGH 2023-24 offers a new opportunity to update Hondurans' consumption and spending patterns and improve poverty measurement in the country.
• This could allow for more precise poverty estimates and the design of more effective and better-targeted public policies.

  Figure 5

  Current Poverty vs. 2019 Revision (% of individuals)

  This visualization is currently only available in Spanish.

• Alkire, S., & Santos, M. E. (2014). Measuring acute poverty in the developing world: Robustness and scope of the multidimensional poverty index. World Development, 59, 251–274.
• World Bank. (2021). A roadmap for countries measuring multidimensional poverty.
• World Bank. (2025, June 5). June 2025 update to global poverty lines.
• World Bank. (2025). Measuring poverty.
• Foster, J., Jolliffe, D., Mahler, D., et al. (2025). Global poverty revisited using 2021 PPPs and new data on consumption. World Bank.
• United Nations Development Programme (UNDP). (2024). Sobre la pobreza multidimensional y pobreza por ingresos.
• Robayo-Abril, M.; Rude, B.; Cadena, K.; Espino, I. (2023). Honduras Poverty Assessment: Toward a Path of Poverty Reduction and Inclusive Growth. World Bank.