What it means
Counting the poor tells you how many; it says nothing about how poor. Two countries can have the same poverty rate while one clusters people just below the line and the other leaves them far beneath it.
The poverty gap captures that depth. For each person below the line, it measures how far below, then averages the shortfall across the whole population, counting the non-poor as zero.
The World Bank publishes the measure in its World Development Indicators, defining the poverty gap at its international line as the mean shortfall in income or consumption from the poverty line, expressed as a percentage of the line. The number reads intuitively.
A poverty gap of 10 percent means the average person in the country falls short of the poverty line by a tenth of the line's value, spread across everyone, poor and non-poor. Policy uses the measure differently from the headcount.
A programme that lifts the poorest slightly helps the headcount only if it crosses the line, but it always helps the gap, so the gap rewards progress among the very poorest. That sensitivity cuts both ways.
Cash transfers that barely miss moving families over the line look like failures on the headcount and successes on the gap. The squared poverty gap goes further, weighting the worst-off more heavily, and economists reach for it when distribution among the poor itself is the question.
For a non-finance reader, the poverty gap answers the question the poverty rate cannot: not how many people are drowning, but how deep the water is. The measure also guides targeting.
Two regions with the same poverty rate need different programmes if one shows a shallow gap and the other a deep one; the deep region needs heavier transfers per person. Donors and finance ministries track the gap over time as a budget yardstick.
Roughly, eliminating poverty by perfect transfers would cost the gap multiplied by the line and the population, a floor on the arithmetic of ambition.
In practice
Real-world examples.
Example
A government reports a poverty rate of 18% and a poverty gap of 5%, showing most of its poor live close to the line. Dividing 5 by 18 shows the poor are, on average, a little over a quarter below the line. The same headcount with a gap of 12% would describe a much harsher country.
Example
After a cash transfer programme, a country's poverty gap falls from 12% to 9% even though the headline poverty rate barely moves. The headcount missed it, but the families did not. Evaluators who relied on the rate alone would have recorded no progress.
Example
Researchers compare regions using the poverty gap and find one region's poor are, on average, twice as far below the line as another's. The finding directs larger transfers per household to the deeper region. A flat national programme would have spread the same money too thinly there.
Formula
Calculation
Poverty gap = headcount rate x income gap ratio, where the income gap ratio = average shortfall of the poor / poverty line. Put another way, it is the sum of every person's shortfall below the line, with the non-poor counted as zero, divided by the population multiplied by the poverty line.
Worked example: the poverty line is $1,000 a month and 20% of a population of 1,000 people are poor, so 200 people. Their average shortfall is $150, so the income gap ratio is $150 / $1,000 = 15% and the poverty gap is 20% x 15% = 3%. The same answer comes from the totals: 200 x $150 = $30,000 of shortfall, divided by 1,000 x $1,000 = $1,000,000, which is 3%. That $30,000 a month is also the minimum cost of lifting everyone to the line with perfectly targeted transfers.Case study
Seen in the real world.
This case study is fictional and illustrative. A made-up development agency runs two pilot districts with identical 30% poverty rates. District A's poverty gap is 22%, meaning its poor are far below the line; District B's gap is 6%, with most of its poor clustered just underneath. The agency designs different programmes. In B, small top-up transfers push thousands over the line, and the poverty rate falls fast.
In A, the same money barely dents the headcount, but the gap falls from 22% to 17%, signalling real relief for the worst-off. Evaluators who watched only the headcount would have called A a failure; the gap measure showed the money worked hardest exactly where poverty was deepest, and the agency scales both designs with different success metrics attached. Suppose each district has 100,000 residents and a poverty line of $100 a month. Perfectly targeted transfers would cost 22% x $100 x 100,000 = $2,200,000 a month in District A but only 6% x $100 x 100,000 = $600,000 in District B, which shows why the agency budgets the two programmes so differently.
Watch out
Common mistakes.
- Confusing the poverty rate with the poverty gap; the first counts people below the line, the second measures how far below they sit.
- Judging programmes only on the headcount, which ignores genuine improvements among the poorest that stop short of the line.
- Comparing gaps across countries without checking the poverty lines used; a gap measured against a higher national line is not comparable to one against the international line.
Questions
People also ask.
What is the poverty gap?
The average income shortfall of the poor from the poverty line, expressed as a percentage of the line and averaged across the whole population.
How does it differ from the poverty rate?
The rate counts how many people are poor; the gap measures the depth of their poverty, so it can improve even when the rate does not move.
What is the squared poverty gap?
A variant that weights larger shortfalls more heavily, highlighting the condition of the very poorest rather than treating all shortfalls equally.
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