A global count of the extreme poor in 2012: data issues,methodology and initial results

The 2014 release of a new set of purchasing power parity (PPP) conversion factors (PPPs) for 2011 has prompted a revision of the World Bank’s international poverty line. In revising the line, we have sought to minimize changes to the real purchasing power of the earlier $1.25 line (in 2005 PPPs), so as to preserve the integrity of the goalposts for international targets such as the Sustainable Development Goals (SDGs) and the World Bank’s twin goals – which were set with respect to that line. In particular, the new line was obtained by inflating the same fifteen national poverty lines – originally used by Ravallion et al. (World Bank Econ. Rev. 23(2): 163–184 2009) to construct the $1.25 line – to 2011 prices in local currency units, and then converting them to US dollars using 2011 PPP conversion factors. With a small approximation, this procedure yields a new international poverty line of $1.90 per person per day. In combination with other changes described in the paper, this revision leads to relatively small changes in global poverty incidence for 2011: from 14.5 % using the old method to 14.1 % using the new method. In 2012, the new reference year for the global count, we find 12.7 % of the world’s population, or 897 million people, are living in extreme poverty. There are changes in the regional composition of poverty, but they are also relatively small. This paper documents methodological decisions taken in the process of updating both the poverty line and the consumption and income distributions at the country level, including issues of inter-temporal and spatial price adjustments. It also describes various caveats and limitations of the approach taken.     

How much does reducing inequality matter for global poverty?

The Journal of Economic Inequality - The goals of ending extreme poverty by 2030 and working towards a more equal distribution of incomes are part of the United Nations’ Sustainable...     

Estimating international poverty lines from comparable national thresholds

The World Bank’s international poverty line (IPL) of $1.90/day at 2011 PPPs is based on a collection of national poverty lines provided in Ravallion et al. (World Bank Econ. Rev. 23(2), 163–184, 2009), originally used to set the IPL of $1.25/day at 2005 PPPs. This paper proposes an approach for estimating a more recent, complete and comparable collection of national poverty thresholds from reported national poverty rates, and then presents a set of IPLs based on this new database of national poverty lines. In contrast to the lines used to estimate the $1.90 IPL, this approach produces national poverty lines that are (1) consistent with national poverty rates, (2) expressed in common units, and (3) provide greater support to the estimated IPL. These national poverty lines are used to estimate an extreme IPL, and three higher IPLs that are more relevant to higher-income countries. We provide evidence of the robustness and relevance of the $1.90 IPL as a measure of extreme poverty for low-income countries.