Defining the indicator as growth in average income of a poorer group, like the bottom 10, 20 or 30 percent, would on the one hand reduce the extent of this problem. This advantage however has to be weighed against such an indicator being at the risk of high measurement errors (that are typically greater near the tails of the income distribution) and less appealing to the general population due to its focus on a smaller segment of the population. The choice of the bottom 40 percent as the “least well off” group to focus on is thus a compromise between these competing considerations. While the 40<sup>th</sup> percentile is admittedly an arbitrary threshold, the criticism of arbitrariness would apply to any such threshold.

_Finally_ , as mentioned earlier, G40 is an anonymous measure, expressed as the growth in mean income of the bottom 40 percent of the income distribution between two periods irrespective of who the individuals belonging to this group are at either point of time. The distinction between anonymous and nonanonymous measures does not matter when repeated cross-section data is used for the calculation (such as the datasets we use in this paper), as there is no way of tracking households from one period to another. The distinction however matters if panel data were used to monitor shared prosperity, as it well might be in some countries for certain sub-populations. Even with panel data, the WBG indicator of shared prosperity would be growth in mean income of the _anonymously_ defined bottom 40 percent between two periods. A non-anonymous measure – like income growth of those in the bottom 40 percent of the _initial_ period’s income distribution – would instead reflect income mobility (or lack thereof) of a fixed group of individuals over time, which can be quite different from what the anonymous measure would convey.<sup>7</sup>

# _Comparable estimates across countries_

Creating a cross-country dataset over time poses several comparability challenges. Since household surveys are infrequent in most countries and misaligned in terms of timing, perfect comparability is impossible without drastically reducing the number of countries for which the indicator can be reported. Moreover, while the indicator refers to “income growth”, in many cases household consumption must be used as a proxy for household income, particularly when income data are unavailable or of poor quality. The first and still provisional database used for the results reported in this paper, which is the result of an ongoing WBG initiative to create shared prosperity numbers, ensures some degree of comparability without making the criteria too restrictive. A clear and transparent set of criteria are adopted for selecting years/surveys, which goes some way toward ensuring consistency of estimates.<sup>8</sup> Growth rates are computed as _annualized average growth rate in per capita real income (or consumption) over a roughly 5-year period during circa 2005-2010_ , where only those countries with surveys that meet certain criteria for available survey data availability are included.<sup>9</sup> For a global exercise, using annualized average growth rates over a (roughly) five-year is merited for a number of reasons. _Firstly,_ annual household surveys are not available for most countries, which would imply that any degree of comparability between countries would only be possible using an annualized growth rate over a comparable length of time covering multiple years. _Secondly,_ the choice of the length of the period reflects a balance between the competing considerations of “smoothening” and “stickiness”. Pursuit of shared prosperity is a medium-run proposition, where year-to-year fluctuations are less important for monitoring progress, since these can occur due to short-lived economic shocks (positive or negative) or one-time redistribution “events” that boost incomes of the less well off in unsustainable ways. An annual average rate over multiple years would tend to smooth out year-on-year volatility and thus preferable, even for countries where annual household data might be available. At the same time, averaging over too long a period (say, 10 years) would make the indicator resistant to change and likely to downplay (or reflect with a long lag) important movements.

# **III. Recent performance in Shared Prosperity**

We use a database of 79 developing countries that have at least two household surveys that meet the criteria mentioned above, roughly five years apart during the period _circa_ 2005-2010 (Figure 1). A number of interesting facts emerge. _First_ , the median G40 in the sample is 4.2 percent, which is quite 4