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How World Poverty is Measured and Tracked

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Our grasp of world poverty and its evolution over time is heavily focused on counting the number of people living below an International Poverty Line (IPL) widely known as "a dollar a day." This line had initially been defined in terms of the purchasing power that $1.02 had in the US in 1985, but it has since been redefined three times. The latest definition is in terms of the purchasing power that $1.25 had in the US in 2005. Once the IPL is on hand, poverty is simply defined as the size of the group of those living below it, and a reduction of poverty as a reduction in the size of this group. Invoking this tracking method, the world's governments have repeatedly promised to "halve world poverty by 2015." One such promise was made very prominently at the 1996 World Food Summit in Rome, where 186 governments pledged "to achieving food security for all and to an ongoing effort to eradicate hunger in all countries, with an immediate view to reducing the number of undernourished people to half their present level no later than 2015" (www.fao.org/docrep/003/w3613e/w3613e00.htm). Taking 19 years to solve just half of the world poverty problem is not exactly ambitious, to be sure - just imagine Franklin Roosevelt pledging in 1942 to cut the suffering caused by the Nazis down to half by 1961! But at least the pledge seemed manageable, implying an annual reduction of 3.58% in the number of poor people. Yet the world's governments soon decided that they had promised more than they were willing to keep. In the year 2000, they declared it the first Millennium Development Goal (MDG-1) "to halve, by the year 2015, the proportion of the world's people whose income is less than one dollar a day and the proportion of people who suffer from hunger." This formulation retains the idea of halving the problem by 2015, and yet smartly dilutes the goal by focusing not on the number but on the proportion of poor. This proportion is a fraction consisting of the number of poor in the numerator and world population in the denominator. With world population expected to increase by 2015 to over 120% of what it was in 2000, a reduction of the number of poor to 60% of what it was in 2000 suffices to cut the proportion in half. By redefining what is to be halved, the world's governments substantially raised the acceptable number of poor people in 2015 - from 836 million (1996 benchmark minus 50%) to 1004 million (2000 benchmark minus 40%), according to the current World Bank statistics (Chen & Ravallion 2008: 34). They also lowered the needed annual reduction in the number of poor people from 3.58% to 3.35%. Since its celebrated adoption by the UN General Assembly, MDG-1 has undergone further dramatic dilution. The current UN interpretation and tracking of MDG-1 expresses the number of poor as a proportion not of world population ("the world's people"), but of the faster-growing population of the developing countries. It also backdates the baseline to 1990. Because the population of the developing countries in 2015 is expected to be 145% of what it was in 1990, a reduction in the number of poor to 72.5% of what it was in 1990 is now deemed sufficient to "halve poverty by 2015." Shrinking the
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Chapter 3
How World Poverty is
Measured and Tracked
Thomas Pogge
Our current understanding of world poverty and its evolution over time is heavily
focused on counting the number of poor people. This counting is based on a narrow
conception of ‘absolute’ or ‘extreme’ poverty, closely tied to hunger: people are
counted as poor only if they fall short of ‘the income or expenditure level below
which a minimum, nutritionally adequate diet plus essential non-food requirements
are not affordable’ (UNDP 1995, 223).
For the last 20 years or so, the World Bank has taken charge of this counting
exercise. The Bank employs for this purpose an international poverty line (IPL)
widely known as ‘a dollar a day’. The Bank had initially dened this line in terms
of the purchasing power that $1.02 had in the US in 1985, but has since redened
it three times. Its latest denition is in terms of the purchasing power that $1.25
had in the US in 2005. Once the IPL is xed, poverty is quantied simply by the
number of those living below the IPL, and a reduction of poverty as a reduction
in this number.
Invoking the Bank’s tracking method and gures, the world’s governments
have repeatedly promised to halve world poverty by 2015. One such promise was
grandly made at the 1996 World Food Summit in Rome, where 186 governments
pledged themselves ‘to achieving food security for all and to an ongoing effort to
eradicate hunger in all countries, with an immediate view to reducing the number
of undernourished people to half their present level no later than 2015’ (World
Food Summit 1996). An ‘immediate’ view that takes 19 years to solve just half
of the world poverty problem is not exactly ambitious, to be sure – just imagine
Franklin Roosevelt pledging in 1942 to cut the ongoing harm caused by the Nazis
down to half by 1961! But at least the pledge seemed manageable, implying an
annual reduction of 3.58 per cent in the number of poor people.
Yet the world’s governments soon decided that they had promised more than
they were willing to deliver. In the year 2000, they declared the rst Millennium
Development Goal (MDG-1) was ‘to halve, by the year 2015, the proportion of
the world’s people whose income is less than one dollar a day and the proportion
of people who suffer from hunger’ (UN General Assembly 2000, article 19). This
formulation retains the idea of halving the problem by 2015, and yet smartly
diminishes the ambition by focusing not on the number but on the proportion of
poor and hungry people. This proportion is a fraction consisting of the number of
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Absolute Poverty and Global Justice
52
poor people in the numerator and world population (‘the world’s people’) in the
denominator. With world population expected to increase by 2015 to about 120
per cent of what it was in 2000 (UN Population Division 2007), a reduction in the
number of poor people to 60 per cent of what it was in 2000 sufces to cut the
proportion in half. By redening what is to be halved, the world’s governments
raised the acceptable number of poor people in 2015 from 836 million (1996
benchmark minus 50 per cent) to 1,004 million (2000 benchmark minus 40 per
cent), according to the current World Bank statistics (Chen and Ravallion 2008,
34). They also lowered the promised annual reduction in the number of poor
people from 3.58 per cent to 3.35 per cent.
It is not important whether governments focus on the number or the proportion
of poor people. What’s more important is the dilution of the 2015 goal and the effort
to obscure this dilution. The dilution can be expressed in either idiom: The number
of poor is to be reduced by 50 per cent according to the Rome Declaration and by
only 40 per cent according to the Millennium Declaration. Or: The proportion of
poor is to be reduced by 58.33 per cent according to the Rome Declaration and
by only 50 per cent according to the Millennium Declaration. Either formulation
makes apparent that the goal-posts were moved to add 168 million to the number
of those whose extreme poverty in 2015 will be deemed morally acceptable – an
extra 168 million human beings for whom ‘a minimum, nutritionally adequate
diet plus essential non-food requirements’ will be out of reach. This dilution was
successfully obscured from the public, and kept out of the media, by opaquely
switching from ‘number to ‘proportion’ while retaining the language of ‘halving
poverty by 2015’.
Since its celebrated adoption by the UN General Assembly, the poverty
promise has undergone further dramatic dilution through two important revisions.
The current UN interpretation and tracking of MDG-1 expresses the poor no
longer as ‘a proportion of the world’s people’, but as a ‘proportion of people in the
developing world’ (e.g. United Nations 2008, 6), thus taking advantage of a faster-
growing denominator. It also back-dates the baseline envisioning that the halving
should take place ‘between 1990 and 2015’ (ibid.) rather than between 2000 and
2015. Because the population of the developing world in 2015 is expected to be
146 per cent of what it was in 1990 (UN Population Division 2007), a reduction in
the number of poor to 73 per cent of what it was in 1990 is now deemed sufcient
to halve poverty by 2015. Shrinking the reduction to be achieved and also
lengthening to 25 years the period in which to achieve it, this revision of MDG-1
lowers the promised annual reduction in the number of poor people down to 1.25
per cent. This revision also raises the acceptable number of poor people in 2015 to
1,327 million (1990 benchmark minus 27 per cent), according to the current World
Bank statistics (Chen and Ravallion 2008, 34).
One remarkable consequence of the UN’s back-dating of the baseline is that
China’s reported massive poverty reduction in the 1990s – the number of Chinese
living in extreme poverty supposedly declined by 265 million during that decade
(ibid.) – can be counted as progress toward MDG-1. The revision of MDG-1 thus
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How World Poverty is Measured and Tracked 53
led UN Secretary-General Ko Annan tragicomically to report to the General
Assembly (United Nations 2002, 8 and 22) that for the world’s most populous
region – East Asia and the Pacic – the 2015 poverty target had been fully met
already in 1999, a full year before this goal had even been adopted!
There is little doubt that the UN will announce, in 2015, that the goal of
halving world poverty has been achieved. But this success will depend decisively
on having replaced the initial understanding of this goal as requiring a 50 per cent
reduction in the number of poor people from the 1996 level (promised at the 1996
World Food Summit in Rome) with a new understanding of this goal as requiring
merely a 27 per cent reduction from the substantially higher 1990 level.
The nearby table summarises what this dilution means in human terms: The
number of extremely poor people that the world’s governments deem acceptable
in the year 2015 has been revised upward by 491 million. The reduction in the
number of extremely poor people that the world’s governments had promised in
Rome has correspondingly been cut back by 491 million: Once 836 million, the
reduction promised for 1996–2015 is now 345 million.
The story of the sly revision of the grandiose commitment of Rome and, more
generally, of how the world’s governments are managing the ‘halving of world
poverty by 2015’ illustrates one main reason for the persistence of massive
poverty: The poor have no allies among the global elite. Hundreds of ofcials in
many governments and international agencies were involved in shifting the goal-
posts to the detriment of the poor. Thousands of economists and other academics
Table 3.1 A promise diluted
Baseline year
Baseline number of poor (millions)
Promised reduction by 2015
Target for 2015 (millions)
Required annual rate of reduction
Target for 2005 (millions)
World Food Summit 1996 1672 50% 836 3.58% 1204
MDG-1 as adopted 2000 1673 40% 1004 3.35% 1411
MDG-1 as revised 1990 1817.5 27% 1327 1.25% 1505
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Absolute Poverty and Global Justice
54
understood what was happening. So did thousands of people in the media, who
had been reporting on the Rome Summit and the MDGs – with some of them
expressly denying that the revisions were worth reporting (Pogge 2008, note 18).
Most of these privileged harbour no ill will toward poor people. They merely have
other priorities. And they don’t care how their pursuit of these priorities may affect
the global poor.
Problems with Tracking Poverty as the Number
or Proportion of People Living Below Some IPL
The rst and most obvious problem with tracking poverty by means of a headcount
gure is that it indefensibly prioritises people living just below the IPL: Moving
such people above the IPL is the cheapest and easiest way of reducing the poverty
headcount. But there is no good reason for ignoring changes in people’s economic
situation when these occur below or slightly above the IPL while counting as
progress any move from a penny below to a penny above this line.
A second, related problem is that, when poverty is tracked as a headcount, our
picture of the evolution of poverty may be excessively sensitive to the level at
which the IPL is set. The problem is easily illustrated because the World Bank
researchers leading the poverty count, Martin Ravallion and Shaohua Chen,
provide headcounts not only for their own chosen IPL of $1.25 PPP 2005 (daily
consumption),1 but also for three other poverty lines denominated in 2005
international dollars. The following table displays, for each of these four poverty
lines (listed in the leftmost column) the headcount change between various base
years (listed in the top row) and the year 2005. (A minus sign in a cell indicates that
the poverty headcount has fallen in the column period relative to the row’s poverty
line.) Column 6 shows how the actual change in the number of poor people during
1990–2005 compares to the 17.2 per cent reduction in this number that would put
the world on track for achieving the 27 per cent reduction that the diluted MDG-1
envisions for 1990–2015.
1 See Chen and Ravallion (2008, 34–35). ‘PPP’ stands for ‘purchasing power parity’,
and ‘$1.25 PPP 2005’ stands for the purchasing power that $1.25 had in the US in 2005.
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How World Poverty is Measured and Tracked 55
The table shows that the reportable headcount progress depends very strongly on
the level chosen for the IPL. No matter what time period one may examine, the
change in the poverty count during this period looks better the lower the IPL is
set. Relative to the UN’s newly favoured 1990 benchmark, for instance, poverty
has in the 1990–2005 period fallen by nearly 33 per cent relative to the $1 PPP
2005 poverty line – way ahead of the 17.2 per cent reduction needed to put us ‘on
track’ for meeting MDG-1. And in the very same period poverty has increased by
2 per cent relative to the $2.50 PPP 2005 poverty line – moving us away from the
MDG-1 target number. If one of the two lower lines is chosen, the world is well on
schedule for realising the 27 per cent headcount reduction required to achieve the
diluted MDG-1. If one of the two higher lines were chosen, we would probably get
nowhere near this 27 per cent reduction by 2015.
How then does the World Bank decide upon the level of its IPL? It is widely
accepted that the IPL should express a narrow conception of absolute poverty that
is closely tied to hunger (see opening sentence). How does the World Bank convert
this shared minimalist understanding of poverty into a specic level for its IPL?
We have a rich historical record for answering this question because the Bank
has in fact successively employed and defended four distinct IPLs denominated
in international dollars of three different base years: 1985, 1993, and 2005. The
Bank has done so while contending that it is desirable to change the poverty line
from time to time to keep it up to date. It is indeed true that an IPL denominated in
dollars of a recent base year leads to a more accurate picture of poverty around that
year – but it is also true that such an updated poverty line gives us a less accurate
picture of poverty in earlier years. So periodic switching of IPLs is not needed for
the sake of attaining a more accurate picture of the long term poverty trend.2
The Bank has defended all four of its successive IPLs as ‘anchored to what
“poverty” means in the poorest countries’ (Chen and Ravallion 2008, 9). How
2 It is possible, though, that the PPPs available for one base year are more reliable
than those of another – perhaps on account of participation by more countries or more
comprehensive price data. If the 2005 PPPs are better in this sense than the 1993 PPPs, say,
then they may indeed support a more accurate picture of the 1981–2005 poverty trend.
Table 3.2 How success against poverty depends on the level of the IPL
Period/
Poverty Line
1981–
2005
1984–
2005
1987–
2005
1990–
2005
Relative to path
of diluted MDG-1
1993–
2005
1996–
2005
1999–
2005
$1.00 PPP 2005 -43% -35% -28% -33% 89% ahead -29% -22% -23%
$1.25 PPP 2005 -27% -23% -19% -23% 34% ahead -22% -16% -17%
$2.00 PPP 2005 2% -1% -2% -6% 67% behind -8% -7% -10%
$2.50 PPP 2005 15% 9% 6% 2% 112% behind -1% -3% -5%
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Absolute Poverty and Global Justice
56
do they know what ‘poverty’ means in the poorest countries? The Bank infers its
answer from one single set of information: The ofcial domestic poverty lines
used in poor countries. The details of this ‘anchoring’ have varied, however. In its
rst exercise, the Bank chose $1.02 PPP 1985 per day as the IPL on the ground that
the domestic poverty lines of eight poor countries – converted at 1985 PPPs – were
close to this amount (Ravallion, Datt and Van De Walle 1991, 348–49). This IPL
was quickly rounded off to a more memorable $1.00 PPP 1985 per day (Chen and
Ravallion 2001, 285, note 7). Later, the Bank chose $1.08 PPP 1993 per day as
the IPL because this was then the median of the ten lowest domestic poverty lines
as converted at 1993 PPPs (ibid., 285). And for its most recent exercise unveiled
in the summer of 2008, the Bank has chosen $1.25 PPP 2005 per day as the IPL
because it is the mean of the domestic poverty lines – converted at 2005 PPPs into
2005 US dollars – of the 15 poorest countries (Chen and Ravallion 2008, 10).
It is unclear why political decisions made by rulers or bureaucrats in a few poor
countries3 should be thought a reliable indicator of what ‘poverty’ means to poor
people all over the world. And the fact that the Bank has been involved in setting
domestic poverty lines for many poor countries cannot increase condence in the
exercise: The Bank’s setting of the IPL at a certain level cannot be justied by its
proximity to the levels at which the Bank itself has set national poverty lines.
The Bank’s successive substitutions have resulted in a tightening of the poverty
criterion in most countries and a broadening in a few (Reddy and Pogge 2009, Table
1). The case of the US is not atypical. If we use the US consumer price index (<www.
bls.gov/cpi>) to convert the Bank’s four successive IPLs into 2005 dollars, we get:
$1.02 PPP 1985 = $1.85 (2005)
$1.00 PPP 1985 = $1.81 (2005)
$1.08 PPP 1993 = $1.45 (2005)
$1.25 PPP 2005 = $1.25 (2005)
The last and now exclusively used IPL comes to roughly $9.50 per person per
week in 2009 – or $41 per month or $500 per year (ibid.). A US resident would
count as poor by the World Bank’s new standard only if she could purchase, in the
US, all of her 2009 consumption of goods and services – including food, water,
clothing, shelter, utilities, and medical care – for under $500.
Perhaps it is obvious that the Bank’s latest IPL is absurdly low. But we should
conrm this judgment. To do so, we should look for guidance not to ofcial African
poverty lines converted at PPPs, but to straightforward domestic evidence. The US
Department of Agriculture has for many decades published data about what it
costs to adhere to an elaborately designed low-cost food plan that has variously
3 The 15 poorest countries are given as Malawi, Mali, Ethiopia, Sierra Leone, Niger,
Uganda, Gambia, Rwanda, Guinea-Bissau, Tanzania, Tajikistan, Mozambique, Chad, Nepal,
and Ghana (Chen and Ravallion 2008, 10). Nine of these have very small populations and
13 are located in sub-Saharan Africa.
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How World Poverty is Measured and Tracked 57
been called ‘the Restricted Food Plan for Emergency Use’, the ‘Economy Food
Plan, developed as a nutritionally adequate diet for short-term or emergency use’,
and the ‘Thrifty Food Plan’ (USDA 1999, 2). In 2005, the cost of purchasing this
minimal diet for a family of four was (depending on family size and children’s
ages) between $3.59 and $4.97 per person per day.4 If this was the cost of a minimal
diet in the US, then we can safely conclude that the Bank’s IPL of $1.25 PPP 2005
is absurdly low in its base country and base year in the US in 20055 – especially if
we remember that the $1.25 per day would need to cover not merely nutrition, but
also minimal requirements of water, clothing, shelter, utilities, and medical care.
What can be said to justify the Bank’s chosen IPL level? It is obvious that the
Bank cannot justify its decision by saying that the IPL must be set so low in order
to show the world to be on track toward achieving MDG-1. As we have seen, a low
IPL entails much prettier trend gures than would be derived from higher IPLs.
But this cannot be a justication for choosing a low IPL.
Another defence of the Bank’s chosen IPL level would point out that the blatant
insufciency of $1.25 per day in the US of 2005 proves nothing because, in the
locations where in 2005 very poor people actually lived, dollars bought much more
than in the United States. This defence involves a common misunderstanding of
the Bank’s procedure. Dollars converted at market exchange rates did indeed buy
more in poor countries than in the US. But the Bank is using for its conversions not
market exchange rates, but PPPs which supposedly preserve purchasing power.
Thus the Bank counts someone who lived in India or Vietnam on the exchange-
rate equivalent of $0.40 or $0.45 per day in 2005 as non-poor because this amount,
converted at 2005 PPPs, equals or exceeds $1.25.6
This raises the question whether the general-consumption PPPs employed
by the Bank are an adequate guide to what poor people must actually pay for
necessities. Can we conclude from the fact that $1.25 per day was not enough to
meet the basic needs of a human being in the US in 2005 that the PPP equivalent
of $1.25 per day in any other currency was similarly insufcient? In the author’s
view, PPP conversions indeed fail to preserve command over basic necessities
(cf. page 60 and more fully Reddy and Pogge 2009). But the Bank cannot invoke
the inadequacy of its PPPs in defence of the level of its IPL because, by doing so,
it would fatally undermine the very methodology it is using, which assumes that
PPPs provide suitable conversion rates for comparing incomes and consumption
expenditures of poor people worldwide and for xing the level of the IPL.
Let’s restate this point a little more elaborately. It has been shown that
consumption expenditure of $1.25 per person per day is much too low to access
even the most basic subsistence minimum in the US in 2005. It follows that the
4 See <www.cnpp.usda.gov/USDAFoodCost-Home.htm>, prices for June of 2005.
5 See also Zimmerman (2008) for some anecdotal evidence.
6 The PPPs the Bank uses are available on the web at <http://siteresources.worldbank.
org/ICPINT/Resources/icp-nal.pdf>, drawn from Table 1, column ‘individual consumption
expenditure by households’.
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use of 2005 PPPs to convert this amount into another currency cannot be relied
upon to yield an amount sufcient to purchase in 2005 the most basic subsistence
minimum in the territory of that other currency. This follows from considering two
jointly exhaustive possibilities. Suppose PPPs reliably preserve purchasing power
with respect to basic necessities. Then any 2005 foreign currency equivalent of
$1.25 per person per day was as inadequate abroad as $1.25 per person per day
was in the US. Alternatively, suppose PPPs do not reliably preserve purchasing
power with respect to basic necessities. Then a person’s position relative to the
dollar-denominated IPL – calculated by means of PPPs – does not tell us whether
this person has access to a minimally adequate set of basic necessities.
There is one more possible justication of the very low IPL chosen by the
Bank and employed by the UN for tracking MDG-1. This justication invokes
the normative signicance of the IPL. We are monitoring the evolution of extreme
poverty not merely out of curiosity but also with the aim of its eventual eradication.7
Given this commitment to eradicate extreme poverty, one might say, we ought to
dene the IPL in such a way that the magnitude of the world poverty problem
implied by this denition is reasonably related to the world’s resources: We should
not dene poverty so broadly that its eradication becomes wholly impractical.
Doing so might even be counterproductive by discouraging efforts to reduce
poverty to the extent that we can.
This table (gures based on Chen and Ravallion 2008, 23; 32–36), provides the
data we need to assess this worry. Using the IPL favoured by the Bank and the
UN, we nd that the aggregate shortfall of the 1.4 billion people living below this
IPL amounts to merely 0.15 per cent of the global product – or about $70 billion
per annum or one-ninth of US military spending (<http://www.cdi.org/PDFs/W
hat%20is%20the%20Defense%20Budget.pdf>). It is this poverty problem that
the world’s privileged see themselves as reducing at the stately pace of 1.25 per
7 Talk of the eventual eradication of extreme poverty survived from the World Food
Summit (1996) all the way to current MDG-1 monitoring (United Nations 2008, 6).
Table 3.3 How the size of the global poverty gap varies with the level of the IPL
Poverty line
expressed in
US-dollars PPP
2005 per person
per day
Poor people in 2005 Aggregate shortfall from the poverty
line in percent of the global product
Number in
billions
Average
shortfall from
the poverty line
at PPPs at market
exchange rates
$1.25 1.40 28% 0.33% 0.15%
$2.00 2.58 40% 1.3% 0.6%
$2.50 3.14 45% 2.2% 1.1%
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How World Poverty is Measured and Tracked 59
cent per annum, with the afuent states contributing about $12 billion annually in
ofcial development assistance for basic social services.8
Were we to double the Bank’s IPL, both the number of poor and their average
shortfall from the poverty line would greatly increase. A seven times larger 1.1
per cent change in the distribution of the global product would then be required to
eradicate poverty so dened. Yet, even this shift would hardly be discouragingly
large – not when one considers that poverty causes some 18 million premature
deaths annually (WHO 2004, 120–25), thus killing at over twice the rate of World
War II during its worst years. Winning that war cost the lives of 23 million allied
soldiers as well as half or more of the gross domestic products of the US, UK, and
USSR during the war years (Harrison 1988, 184; cf. Harrison 2000). Ending world
poverty would require no young people to be sent into battle. And it would – even
on as broad a denition as $2.50 PPP 2005 – not noticeably affect the economies
of the afuent countries. It would lower the growth path of these countries a bit
so that they would reach any future standard of living a little later than would
otherwise be the case – perhaps half a year or a year later on as broad a denition
of poverty as $2.50 PPP 2005. It is for the sake of relatively trivial gains, then, that
we let poverty destroy billions of human lives.
A third problem with the World Bank’s counting of the poor arises from the fact
that the exclusive focus on monitoring income and consumption expenditure
leaves out factors that are relevant to poverty as intuitively understood. Someone
who survives by working in a cold climate, which requires additional expenses for
staying warm, is poorer than another who can earn the same income without having
to bear such extra costs. Similarly, someone who reaches the IPL by working 70
hours a week is poorer than another who can maintain the same consumption
expenditure by working only 20 hours per week. Any plausible measure of poverty
must take account of necessary labour time – including here not merely paid work,
but also the work on family food production, housekeeping, and child rearing,
which is typically unpaid and very predominantly performed by women and
girls.
A fourth problem arises from the Bank’s reliance on household surveys that seek to
value, in local currency, the totality of a household’s consumption or income. This
amount is then simply divided by the number of household members to determine
their economic position. This simple division ignores variations in course-of-
life needs: As persons’ needs vary with age, so do the requirements of poverty
avoidance.9 The Bank should not then ignore a household’s age composition when
assessing the adequacy of its consumption expenditure. The simple division also
ignores how consumption and labour are distributed within each household, and
8 See <http://millenniumindicators.un.org/unsd/mdg/SeriesDetail.aspx?srid=592&crid=;>
the latest gures currently available are for 2006.
9 Recall how the Thrifty Food Plan maintained by the USDA is taking age into account.
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thereby systematically overlooks, in particular, gender biases in the distribution
of work, food, education, and health care. A closer look would often reveal what
the Bank’s method renders a priori impossible: That some typically female
household members are poorer than others.
A fth problem arises from how the results of household consumption surveys,
expressed in the currencies of many countries and years, are compared against
the IPL. How does the Bank determine whether the consumption of an Indian
household in 1987, say, valued at some amount of 1987 Rupees per person per day,
is above or below $1.25 PPP 2005?
The Bank makes such determinations through two transformations. It uses
PPPs of the base year to convert its chosen IPL into base-year amounts of all other
currencies (e.g., into 2005 Rupees). It then uses national consumer price indices
(CPIs) to convert the results further into national currency amounts of other years
(e.g., into 1987 Rupees).
This conversion method is unreliable on account of the CPI and PPP conversions
it involves. Price comparisons across years (within the same country) and across
countries (within the same year) yield different results for diverse commodities:
The price of computers may be falling even while the price of rice is rising, and
dollars may buy more bread but less maid services in the US than yuans do in
China. CPIs and PPPs aggregate such diverse price data, weighting the prices of
the various commodities according to their role in national (CPI) and international
(PPP) consumption expenditure. This fact renders CPIs and PPPs unreliable
within a poverty measurement exercise, because national and international
consumption patterns do not come close to reecting the consumption needs of
the very poor. The prices of basic foodstuffs, for instance, have a signicance in
the lives of poor people that is vastly greater than their inuence on CPI and PPP
calculations reects. The doubling of these prices during 2006–08 made much less
of a difference to national CPIs, and hence to the ofcial poverty statistics, than to
the poor who typically must spend well over half their income on basic foodstuffs.
Conversely, prices of cars or services play a much larger role in CPI and PPP
calculations than in the lives of poor people. There is no assurance, then, that
plausible poverty comparisons across space and time can be generated by using
national CPIs and PPPs in order to map any amount, denominated in any currency
of any year, onto the common currency of the IPL.
To illustrate, imagine a simple world with three commodities: necessities,
discretionaries, and services (always in this order). If their prices do not move in
lockstep, the CPI will reect a weighted average of their price movements, based
on the national spending pattern. By relying on the CPI, the World Bank thus loses
track of the price of necessities. Falling prices of discretionaries (e.g., consumer
electronics) may lead to a falling CPI even while rising bio-fuel demand is driving
up food prices. Poor people on constant incomes become poorer relative to what
they need to buy (necessities), yet by the Bank’s calculations richer (relative to
what their country’s population is consuming).
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How World Poverty is Measured and Tracked 61
Similar errors are introduced through the use of PPPs, as can be shown with a
numerical example. Suppose the prices of our three commodities, in pesos, are 5,
6 and 1 in some poor country and $3, $4 and $9 in the US. What is the PPP? The
answer depends on the spending patterns in both countries. Suppose this pattern
is 30 per cent/50 per cent/20 per cent in the poor country and 10 per cent/50 per
cent/40 per cent in the US. This yields a bilateral PPP of 1.55 each peso is
deemed to be equivalent to $1.55. (Here the hypothetical peso is valued so highly
in dollars because it buys nine times more services and because services constitute
so large a portion – 40 per cent – of US consumption expenditure.) But this bilateral
PPP is inadequate for assessing the incomes of the very poor: They do and must
concentrate their consumption expenditure on necessities – relative to which each
peso is worth only $0.60 (ve pesos buy as much necessities in the foreign country
as $3 buy in the US). Again, many who are extremely poor, relative to what they
really need to buy, may not show up in the Bank’s poverty statistics.
This distortion is compounded once third countries enter the picture. Bilateral
PPPs calculated without regard to other countries would not satisfy transitivity,
that is, the condition:
for all countries A, B, C: PPP(A, B) x PPP(B, C) = PPP(A, C)
Transitivity fails to hold because the left side of the equation is substantially
inuenced by the spending pattern in country B, while the right side is not so
inuenced at all. It is highly desirable, however, that PPPs be transitive because
the Bank’s poverty measurement exercise would otherwise not be robust with
respect to the choice of base country (the relation between the domestic poverty
lines of any two countries would change depending on which currency they are
converted into and compared in). To ensure transitivity, the calculation of PPPs
conventionally involves a nal step that adjusts all preliminary bilateral PPPs to
one another in a way that guarantees transitivity. As a result, the PPP assigned
to any local currency is affected by the prices and spending patterns not only of
its home country and the United States (base country), but also by the spending
patterns of every other country. In the Bank’s method, then, the classication of
any person as poor or non-poor is inuenced not merely by the money she has and
the prices she faces, but also by the prices and spending patterns of all countries
included in the PPP exercise.
The dependence of PPP calculations on the spending patterns of all other
countries and on the prices of commodities that are irrelevant to poverty avoidance
distorts the World Bank’s poverty assessment exercise. This distortion could be
reduced by leaving afuent countries out of account entirely. When counting the
poor the Bank is looking only at the less developed countries – on the plausible
assumption that virtually no one in the afuent countries lives below $1.25 PPP
2005. But then the Bank includes the afuent countries in its calculation of PPPs,
thereby allowing the prices of necessities to be drowned out by the prices of
discretionaries and services (which play a much larger role in the consumption
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Absolute Poverty and Global Justice
62
of afuent countries than in that of poor countries). The Bank would do better if
it excluded afuent countries also from its PPP calculations, using the currency
of some developing country rather than the US dollar as the common measure –
though this revision would only reduce, not eliminate the error.
The fth problem with the Bank’s method is then that it is hugely over-inclusive
in its informational base. Intuitively, to determine whether a person is poor, we
need to examine her necessary workload and consumption possibilities in regard
to what she needs by way of nutrition, shelter, water, clothing, utilities, and basic
medical care. The local prices of other commodities, the prices of commodities in
other countries, and national spending patterns are all irrelevant. By making all
this information relevant through its CPI and PPP conversions, the Bank distorts
our picture of world poverty in unknown ways.
Perhaps the best evidence one can have against any method is that its applications
can deliver massively divergent results. The two notions of equivalence invoked
in CPI and PPP calculations invoke very different (national and global) spending
patterns. As a consequence, the comparison of two amounts in different years
and countries varies with the base year chosen for PPP conversion. For example,
one can use the CPIs of the two countries to convert into 1993 amounts and then
compare via 1993 PPPs – or one can use these national CPIs to convert into any
other year and then do the comparison in PPPs of that year. One can get as many
different results as there are available PPP base years.
An intuitive way of displaying the problem involves taking a national currency
amount – denominated in 1993 Chinese yuan, say – on a ‘round trip’: Using 1993
PPPs to convert it into Bangladeshi taka, then the Bangladeshi CPI to convert
into 1985 taka, then 1985 PPPs to convert into 1985 yuan, and then nally the
Chinese CPI to convert it back into 1993 yuan. The nal amount resulting from
such a round trip is typically quite different from the initial amount, in this case 31
per cent higher (Reddy and Pogge 2009, Table 1). This is so because the CPI and
PPP conversions performed involve very different notions of purchasing power
equivalence, based on different consumption patterns. And the comparison of a
1993 yuan amount and a 1985 taka amount will then vary depending on whether
this comparison is made via 1993 PPPs and the Bangladeshi CPI or via 1985 PPPs
and the Chinese CPI (or in some other way). Using 1993 rather than 1985 as the
base year raises all Chinese amounts prices, incomes, consumption expenditures
in all years by 31 per cent relative to all Bangladeshi amounts in all years. And
conversely, using 1985 rather than 1993 as the base year raises all Bangladeshi
amounts in all years by 31 per cent relative to all Chinese amounts in all years.
The choice of base year thus has a large impact on the relative position of
national poverty lines – often much greater than 31 per cent (ibid.). The Bank’s
arbitrary choice of PPP base year affects the classication – as poor or non-poor –
of hundreds of millions of people, though some of these effects do cancel out, of
course, as poverty is shifted from one country or continent to another.
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How World Poverty is Measured and Tracked 63
Conclusion
Intuitively, whether people are poor and how poor they are depends on whether and
to what extent they can, at reasonable cost in necessary labour, gain access to the
goods and services they need to meet their basic human needs within their actual
natural and social environment. To make this assessment, we need to know their
age-specic human needs, the relevant environmental factors (such as climate and
disease vectors) that co-determine what nutrients and other necessities persons
require to satisfy their needs, the cost of the locally cheapest way of meeting these
requirements in a culturally acceptable way, and the amount of labour necessary
to gain access to these required goods and services.
The World Bank’s poverty monitoring method bases its binary output (poor/
non-poor) on the per capita cost of household consumption. It completely ignores
household composition (age and gender), intra-household distribution, necessary
labour, culture and other environmental factors. And it marginalises the local
prices of necessities by swamping them with an enormous wealth of irrelevant
data: About prices of commodities that are irrelevant to poverty avoidance, about
the cost of all commodities in all other countries and other years, and about the
proportions in which all national populations all over the world allocate their
spending over commodities.
There are strong reasons to doubt that this method can reliably identify the
poor, assess how poor they are, or reveal whether world poverty is in decline
and, if so, at what rate. If you are still tempted to join the United Nations and the
World Bank in celebrating ‘success in the ght against poverty’, you may want
to take a look at the FAO-reported number of chronically undernourished people.
This number – stated as ‘more than 800 million’ in the Rome Declaration (World
Food Summit 1996) reportedly exceeds 1 billion for the rst time in human
history (FAO 2009). The number of those who experience hunger intermittently
is substantially higher.
Given the great political importance that tracking the evolution of poverty, and
the possible feminisation of poverty, have assumed in the wake of MDG-1 and in
the heated debates about WTO globalisation, it is high time to specify and try out
an alternative approach that would draw on the right information base and would
combine this information in a plausible way. The rich data produced by such an
approach would not merely give us a more comprehensive picture of world poverty
and its evolution, but would also enrich our empirical understanding of poverty,
thus enabling more effective poverty avoidance.
References
Anand, S. et al. (eds) (2009), Debates in the Measurement of Global Poverty
(Oxford: Oxford University Press).
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Absolute Poverty and Global Justice
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Chen, S. and Ravallion, M. (2001), ‘How Did the World’s Poorest Fare in the
1990s?’, Review of Income and Wealth 47, 283–300.
Chen, S. and Ravallion, M. (2008), ‘The Developing World is Poorer than We
Thought, but No Less Successful in the Fight Against Poverty’, World
Bank Policy Research Working Paper WPS 4703. Available at <http://econ.
worldbank.org/docsearch>.
FAO (Food and Agriculture Organization of the United Nations) (2009), ‘1.02
Billion People Hungry’, news release, 19 June 2009, available at <www.fao.
org/news/story/en/item/20568/icode/>.
Harrison, M. (1988), ‘Resource Mobilization for World War II: The U.S.A., U.K.,
U.S.S.R., and Germany, 1938–1945’, Economic History Review 41, 171–192.
Harrison, M. (ed.) (2000), The Economics of World War II: Six Great Powers in
International Comparison (Cambridge: Cambridge University Press).
Pogge, T. (2004), ‘The First UN Millennium Development Goal: A Cause for
Celebration?’, Journal of Human Development 5/3, 377–397.
Pogge, T. (2008), World Poverty and Human Rights, 2nd Edition. (Cambridge:
Polity Press).
Ravallion, M., Datt, G. and Van De Walle, D. (1991), ‘Quantifying Absolute
Poverty in the Developing World’, Review of Income and Wealth 37, 345–61.
Reddy, S. and Pogge, T. (2009), ‘How Not to Count the Poor’, in Anand, S. et al.
(eds), also available at <http://www.socialanalysis.org>.
UN General Assembly (2000), United Nations Millennium Declaration (A/
res/55/2, 8 September 2000), also available at <www.un.org/millennium/
declaration/ares552e.htm>.
UN Population Division (2007), World Population Prospects: The 2006 Revision.
Available at <http://esa.un.org/unpp>.
UNDP (United Nations Development Programme) (1995), Human Development
Report 1995 (New York: Oxford University Press).
United Nations (2002), Implementation of the United Nations Millennium
Declaration: Report of the Secretary-General (A/57/270, 31 July 2002), also
available at <http://www.undemocracy.com/A-57-270.pdf>.
United Nations (2008), The Millennium Development Goals Report 2008 (New
York: UNO), also available at <http://www.un.org/millenniumgoals>.
USDA (United States Department of Agriculture) (1999), Thrifty Food Plan,
1999: Administrative Report (Washington: USDA Center for Nutrition Policy
and Promotion), also available at <http://www.cnpp.usda.gov/Publications/
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WHO Publications), also available at <http://www.who.int/whr/2004>.
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World Bank).
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in Rome in November 1996, also available at <http://www.fao.org/docrep/003/
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How World Poverty is Measured and Tracked 65
Zimmerman, E. (2008), ‘Dining on a Dollar a Day’, Christian Science Monitor,
29 December 2008, also available at <http://features.csmonitor.com/
backstory/2008/12/29/dining-on-a-dollar-a-day/>.
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... However, the level in which the narrative corresponded with reality is open to discussion, as since the financial crisis of 2008, political momentum towards stronger international development cooperation has shrunk. While the final report on the project asserts that it should be considered "the most successful anti-poverty movement in history" (UN, 2015: 3), there are doubts about the statistical manipulation that influenced the final outlook and the too narrow conceptualisation of poverty (Pogge, 2009). ...
... This makes it a very politically sensitive topic. For example, the work of Thomas Pogge reveals a lot on the manipulation behind the extreme poverty index (Pogge, 2009). Figure 1, when any indicator for global en- Figure 1. ...
Technical Report
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This report is the result of a two-year exploration of the post-growth movement, merging planetary health thinking, feminist economics and fieldwork from Dutch healthcare and caring commoning practices. In our new publication, we show that the ideology of ‘growth as good’ – and the growth-focused system it upholds – is the lead cause of rising inequalities and ecological destruction. We explore what it means to move beyond growth, towards a vision for a society that is centered around care, autonomy and sufficiency. Throughout the report, we ask the question: If a growth-centered economic system is making us and the planet sick, what can we do to transform it? We introduce the reader to the key features of the degrowth narrative and explore what we can learn from the growing movement of self-organizing caring citizen collectives – or commons – that display various facets of degrowth. We show that degrowth envisions a world that is already in the making in places where these commoning practices are flourishing. Commons Network. https://www.commonsnetwork.org/news/new-report-out-now-building-a-caring-world-beyond-growth/ Living Well on a Finite Planet: Building a Caring World Beyond Growth was written by Winne van Woerden, who works as Lead Researcher Degrowth and Caring Economy at Commons Network in Amsterdam and Thomas de Groot, co-director at Commons Network. Contributing authors: Dr. Remco van der Pas, Senior Research Fellow Global Health at the Institute of Tropical Medicine in Antwerp and Sophie Bloemen, co-director at Commons Network.
... 25 As Pogge notes, "It is unclear why political decisions Problematic Global Metrics made by rulers or bureaucrats in a few poor countries should be thought a reliable indicator of what 'poverty' means to poor people all over the world." 26 Naturally, this leads to significant discrepancies between the poverty counts reported by other national governments. To be fair, the World Bank includes the alternative poverty baselines of $3.20 and $5.50 a day PPP (as well as national government levels) in its famous World Development Indicators database. ...
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An added benefit of doing library instruction is you learn things from students and faculty. This knowledge informs both collection development and research consultations. It is especially interesting when a new faculty member arrives and issues a revised syllabus for a popular course. One such class at UC Berkeley is in the Global Poverty and Practice (GPP) minor, founded by Professor Ananya Roy ten years ago. Her book, Poverty Capital: Microfinance and the Making of Development, makes the uncomfortable point that people and institutions profit from poverty: it is a lucrative business. But there are also those who attempt to create and influence “poverty knowledge.” The 1998 subtitle of the World Bank’s flagship publication, the World Development Report, was “Knowledge for Development.” In 2017 the World Bank wrote a feature news article (about itself) as a “knowledge institution.” There are articles that trace the history of the World Bank’s vision of itself as a “knowledge bank,” a term I find both amusing (do they charge “interest”?) and problematic. Yet a library is also a knowledge institution, and what we purchase or recommend influences the thinking and research of students and scholars.
... As Thomas Pogge (2004Pogge ( , 2009Pogge ( , 2010 has argued, the UN's narrative about poverty reduction rests on a history of shifting goalposts. To understand what has happened with the poverty goal we have to go back to 1996, when the world's governments first pledged to tackle hunger during the World Food Summit in Rome. ...
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The final report on the Millennium Development Goals (MDGs) concludes that the project has been ‘the most successful anti-poverty movement in history’. Two key claims underpin this narrative: that global poverty has been cut in half, and global hunger nearly in half, since 1990. This good-news narrative has been touted by the United Nations and has been widely repeated by the media. But closer inspection reveals that the UN’s claims about poverty and hunger are misleading, and even intentionally inaccurate. The MDGs have used targeted statistical manipulation to make it seem as though the poverty and hunger trends have been improving when in fact they have worsened. In addition, the MDGs use definitions of poverty and hunger that dramatically underestimate the scale likely of these problems. In reality, around four billion people remain in poverty today, and around two billion remain hungry – more than ever before in history, and between two and four times what the UN would have us believe. The implications of this reality are profound. Worsening poverty and hunger trends indicate that our present model of development is not working and needs to be fundamentally rethought.
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Is human suffering increasing or decreasing, in aggregate? One way to answer this question is to look at trends in global poverty and hunger. The World Bank and the United Nations tell us that poverty and hunger have been decreasing over the past few decades. But this narrative relies on misleading statistics. In reality, the problem is much greater than we have been led to believe, with around four billion people in poverty today, and around two billion people in hunger – and the numbers have been rising over time, not falling. In other words, our current model of international development has failed at its most basic goal. We need to formulate new approaches to alleviating human suffering by addressing the root structural causes of global poverty and hunger: the international debt system, structural adjustment, lack of democracy in global governance institutions, unfair trade regimes, poor wages, tax evasion, land grabs, and climate change. This essay makes suggestions toward this end. But creating a fairer global economy is not sufficient in and of itself. In an era of climate change and resource limits, we also need to rethink the growth imperatives at the core of our system.
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In this chapter we introduce the topics of this volume. We start by distinguishing and discussing three issues that are of importance for an ethical reflection on poverty alleviation: the definitions of poverty and poverty alleviation, the normative background theories of poverty alleviation and the identification of the agents and institutions of poverty alleviation. After discussing these we will go on to present a brief overview of the chapters in this volume.
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Face aux mutations sociales et environnementales engendrées par le développement économique actuel, la communauté internationale a fait du développement durable une panacée. L’objectif de ce travail est de questionner ce concept. Après avoir rappelé l’existence de deux paradigmes opposés, nous montrons que seul le paradigme de durabilité forte peut appréhender de façon satisfaisante les relations entre l’économie, le social et l’environnement, grâce aux apports de la systémique et de la thermodynamique. Mots clefs : Développement durable, environnement et développement, économie écologique, rapport entre l’économie et les valeurs sociales, méthodologie économique. Classification JEL : Q01, Q56, Q57, A13, B41.
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The international community's commitment to halve global poverty by 2015 has been enshrined in the first Millennium Development Goal. How global poverty is measured is a critical element in assessing progress towards this goal, and different researchers have presented widely-varying estimates. The chapters in this volume address a range of problems in the measurement and estimation of global poverty, from a variety of viewpoints. Topics covered include the controversies surrounding the definition of a global poverty line; the use of purchasing power parity exchange rates to map the poverty line across countries; and the quality, and appropriate use, of data from national accounts and household surveys. Both official and independent estimates of global poverty have proved to be controversial, and this volume presents and analyses the lively debate that has ensued.
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The first and most prominent UN Millennium Development Goal has been widely celebrated. Yet, four reflections should give us pause. Though retaining the idea of "halving extreme poverty by 2015," MDG-1 in fact sets a much less ambitious target than had been agreed to at the 1996 World Food Summit in Rome: that the number of poor should be reduced by 19 (rather than 50) percent, from 1094 to 883.5 million. Tracking the $1/day poverty headcount, the World Bank usesa method that is internally unreliable and may paint far too rosy a picture of the evolution of extreme poverty. Shrinking the problem of extreme poverty, which now causes some 18 million deaths annually, by 19 percent over 15 years is grotesquely underambitious in view of resources available and the magnitude of the catastrophe. Finally, this go-slow approach is rendered even more appalling by the contributions made to the persistence of severe poverty by the affluent countries and the global economic order they impose. An apparently generous gesture toward the global poor helps conceal these contributions. Key Words International Poverty Line (IPL), Millennium Development Goals (MDGs), Official ,,,,,,, ,,,,
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Thomas Pogge has been teaching moral and political philosophy at Columbia University since receiving his Ph.D. in philosophy from Harvard University. His recent publications include the edited volume, Freedom from Poverty as a Human Right (2005); Real WorldJustice (co-edited with Andreas Follesdal, 2005); World Poverty and Human Rights (2002); “Can the Capability Approach be Justified?” (Philosophical Topics, 2002); and, with Sanjay Reddy, “How Not to Count the Poor” (www.socialanalysis.org). He is editor for social and political philosophy for the Stanford Encyclopedia of Philosophy and a member of the Norwegian Academy of Science. His work was supported, most recently, by the John D. and Catherine T. MacArthur Foundation, the Princeton Institute for Advanced Study, All Souls College, Oxford, and the National Institutes of Health, Bethesda. He is currently Professorial Research Fellow at the Centre for Applied Philosophy and Public Ethics, Australian National University (an Australian Research Council-funded Special Research Centre).
Book
The international community's commitment to halve global poverty by 2015 has been enshrined in the first Millennium Development Goal. How global poverty is measured is a critical element in assessing progress towards this goal, and different researchers have presented widely-varying estimates. The chapters in this volume address a range of problems in the measurement and estimation of global poverty, from a variety of viewpoints. Topics covered include the controversies surrounding the definition of a global poverty line; the use of purchasing power parity exchange rates to map the poverty line across countries; and the quality, and appropriate use, of data from national accounts and household surveys. Both official and independent estimates of global poverty have proved to be controversial, and this volume presents and analyses the lively debate that has ensued.
Article
This is the twenty-first in the annual series assessing major development issues. This report acknowledges that knowledge, not capital, is the key to sustained economic growth and improvements in human well-being. It distinguishes between two sorts of knowledge: knowledge about technology, called technical knowledge or simply know-how, and knowledge about attributes, that is, knowledge about products, processes, or institutions. The report focuses on the relationship between the unequal distribution in know-how (knowledge gaps) across and within countries and the difficulties posed by having incomplete knowledge of attributes (information problems). In the first of three parts, the report discusses the importance of knowledge to development, and the risks and opportunities that the information revolution poses for developing countries. It then examines three critical steps that developing countries must take to narrow knowledge gaps: acquiring knowledge, absorbing knowledge, and communicating knowledge. Part 2 discusses the nature and extent of information problems, specific information problems, and three areas where information problems are most severe, namely in financial information, in environmental research, and in listening to the poor. Part 3 summarizes what knowledge and information requirements mean for developing government and international institution policies.
Article
A new data set on national poverty lines is combined with new price data and almost 700 household surveys to estimate absolute poverty measures for the developing world. We find that 25% of the population lived in poverty in 2005, as judged by what “poverty” typically means in the world's poorest countries. This is higher than past estimates. Substantial overall progress is still indicated—the corresponding poverty rate was 52% in 1981—but progress was very uneven across regions. The trends over time and regional profile are robust to various changes in methodology, though precise counts are more sensitive.
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Drawing on 297 national sample surveys spanning 88 countries, we find that there was a net decrease in the overall incidence of both absolute and relative consumption poverty between 1987 and 1998. But it was not enough to reduce the total number of poor by various definitions. The incidence of absolute poverty fell in Asia, Latin America, and the Middle East-North Africa, while it rose in Sub-Saharan Africa and Eastern Europe-Central Asia. Over the whole data set, interpersonal distribution improved slightly from the point of view of the poor, due mainly to growth in China. Copyright 2001 by The International Association for Research in Income and Wealth.
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The authors estimate that in 1985 about one in five persons in the developing world lived in poverty, judged by the standards of the poorest countries. This rises to one in three at a common, more generous, poverty line. The aggregate consumption short-fall of the poorest fifth is about one half of one percent of world consumption, while that of the poorest third is a further one percent. The shape of the distribution of consumption suggests that aggregate poverty would fall fairly rapidly if moderate growth in average consumption levels can be sustained, and the poor share at least proportionally in that growth. However, it would take only small adverse shifts in the world distribution of consumption to eliminate the gains to the poor from growth. Copyright 1991 by The International Association for Research in Income and Wealth.
1.02 Billion People Hungry', news release
FAO (Food and Agriculture Organization of the United Nations) (2009), '1.02 Billion People Hungry', news release, 19 June 2009, available at <www.fao. org/news/story/en/item/20568/icode/>.