Extreme Poverty: Bad, but better

The World Bank has used an international poverty line, originally the “dollar a day” line, since at least 1990 to monitor global poverty. In recent years, the line has come under criticism for being too low in value.

When the World Bank convened the Commission on Global Poverty in 2015, 10 percent of the world was living in extreme poverty. We might be entering the hardest stretch in the march toward the end of extreme poverty, which is increasingly concentrated in sub-Saharan Africa.

A recent World Bank report breaks new ground. To construct a more complete picture of poverty, it presents two new sets of poverty lines. The first are poverty lines at higher thresholds—$3.20 and $5.50 per day (in 2011 Purchasing Power Parity dollars)—reflecting typical national poverty thresholds in lower- and upper-middle-income countries. By these criteria, more than a quarter (at the $3.20 line) and almost half of the world’s population (at the $5.50 line) were poor in 2015.

The report also introduces a societal poverty line that increases in value as a country gets richer—a global poverty line that reflects the variation in national poverty lines observed across the world. It is a recognition that poverty is a deeply social and relative experience, so it cannot be detached from the social context of the individual. A refrigerator may be a luxury in a poor country, but it is essential to basic functioning in rich countries. When judged by the relative standard of the society in which they live, almost 3 in 10 individuals were living in poverty in 2015.

The new measures are not without flaws, and lack of timely, high-quality data to monitor poverty in all its forms everywhere remains a challenge. Despite these limitations, close observers of the World Bank would agree that the latest report breaks the mold. It stays centered on its core mandate of monitoring global extreme poverty, while offering a rich menu of complementary indicators that are relevant to a growing world and that encompass poverty in its multiple forms.

When asked about the state of the world, Hans Rosling, the data guru, was fond of quipping: “Bad, but better.” Similarly, this year’s Poverty and Shared Prosperity Report shows that while remarkable progress has been made in reducing extreme poverty, much remains to be done to eliminate poverty in all countries, in all aspects of life, and for all individuals.

[Brookings]

This entry was posted in Humanitarian Aid, International Cooperation, Philanthropy by Grant Montgomery.