About the PPI: A Poverty Measurement Tool
The Progress out of Poverty Index® (PPI®) is a poverty measurement tool for organizations and businesses with a mission to serve the poor. The PPI is statistically-sound, yet simple to use: the answers to 10 questions about a household’s characteristics and asset ownership are scored to compute the likelihood that the household is living below the poverty line – or above by only a narrow margin. With the PPI, organizations can identify the clients, customers, or employees who are most likely to be poor or vulnerable to poverty, integrating objective poverty data into their assessments and strategic decision-making.
Why measure poverty?
Your organization may operate in a highly-impoverished area, but without objective poverty data on the households you reach, social performance management will rely on assumptions. Organizations that collect poverty data from all or a statistically significant sample of households they reach are able to:
- measure poverty outreach (i.e. the portion of customers, clients, or employees who live below the poverty line or are vulnerable to becoming poor),
- assess the performance of the intervention among the poor and poorest, and
- track poverty levels over time.
With these data, management staff can make informed strategic decisions and can provide stakeholders with objective evidence that the organization is reaching the poor and those vulnerable to poverty.
How does the PPI work?
Unlike other poverty measurement methods, the PPI was designed with the budgets and operations of real organizations in mind; its simplicity means that it requires fewer resources to use. The PPI is a set of 10 easy-to-answer questions that a household member can answer in 5 to 10 minutes. The questions are simple – “What material is your roof made out of? How many of your children are in school?” The scored answers provide the likelihood that the survey respondent’s household is living below the national poverty line and other internationally-recognized poverty lines. The PPI is country-specific. There are PPIs for 45 countries, and a similar poverty scorecard with a different creation methodology exists for use in China. All together, Grameen Foundation offers poverty measurement tools for the countries that are home to 90 percent of the people in the world who fall under $1.25/day 2005 PPP.
The mission of Organization X is to provide discounted vocational training to Colombia’s poorest citizens. The organization uses the PPI for Colombia to determine if they are, in fact, recruiting clients who live below the poverty line.
The organization administers the survey to one client, and that client receives a score of 30. According to the look-up table for the PPI for Colombia, that client’s household has a 42.6% likelihood of living below the $2.50/day 2005 PPP poverty line. After surveying a statistically significant sample of clients, management discovers that the average likelihood of clients living below the $2.50/day poverty line is 60.7%. Therefore, the organization concludes that 60.7% of its clients are living below the $2.50/day poverty line.
Country-specific PPIs can be downloaded from this website at no cost. First, sign in or create an account. By creating an account, you will be able to participate in the online discussion forums, receive important PPI updates, and access all of your downloads in one place. Next, visit Find Your PPI to download the PPI for your country of interest.
Organizations that decide to use the PPI usually make a small, up-front investment in training before they integrate the tool into their operations. The training period teaches the organization how to accurately sample its client base if it will not conduct a census, how to administer the survey properly, why survey questions should not be altered, how to use results to calculate poverty outreach, and other important principals. Grameen Foundation provides instructional and online resources for PPI users:
- The Guide to the PPI explains how to properly undergo the stages of the PPI implementation cycle, including how to abide by the Standards of Use.
- Case studies illustrate how various organizations, with different business models, have used PPI data to assess performance and make informed decisions.
- Still have questions? Post a question to the PPI community forum, read our Frequently Asked Questions (FAQs), or contact us.