updated April 2016
As each national poverty line in poorer countries reflects varying definitions of essential food and goods, an alternative method is needed to aggregate global poverty on a consistent basis. The task of condensing such a mix of currencies, staple foods and data collection standards into a single international poverty line is immensely challenging and controversial.
The World Bank calculates the international poverty line as the average of national poverty lines in a “reference group” of 15 of the world’s poorest countries. The differing values of local currencies are neutralised by conversion into US dollars, not by standard currency exchange rates, but by a set of purchasing power parity (PPP) rates that were last evaluated with 2011 data.
The international poverty line is reviewed periodically, most recently in 2015 when the World Bank revised the figure to $1.90 per person per day. The spending power of $1.90 in the United States at 2011 prices therefore provides an indication of the daily human experience that lies behind official global poverty statistics.
For 2015, the World Bank has estimated that 702 million people lived below this international poverty line. This figure is in part an estimate; global poverty is assessed by comparing the $1.90 benchmark with the income and consumption data from hundreds of household surveys conducted in developing countries. The timelag in publishing these surveys is such that 2012 is the most recent year for which data is considered adequate. The figure of 902 million for that year is updated to 2015 by a broad assumption about the beneficial impact of economic growth.
This process inevitably leads to confusion in countries whose choice of national poverty line differs significantly from the international benchmark. A prolonged and controversial review of the national poverty line in India was provoked in part because it had fallen in value so far behind the international figure.
A second tier international poverty line of $3.10 per day is derived from the average of national poverty lines in all lower and middle income countries. The World Bank reports that 2.1 billion people lived below this benchmark in 2012, a figure which has changed little since 1981, when it was 2.6 billion.
A criticism of income-based global poverty assessment is its exclusion of important human development criteria such as education, health, water and housing. A new Multidimensional Poverty Index, launched in 2010 and subsequently updated by the UN Development Programme, is the most recent attempt to supplement our understanding of poverty through statistics.
Helping governments reduce poverty – an explanation of the Multidimensional Poverty Index which is likely to be an indicator for the Sustainable Development Goals
from OPHI Oxford
Understanding how people move in and out of poverty is important
a World Bank production.
more Global Poverty briefings
Perceptions of Global Poverty
Global Poverty Statistics
National Poverty Line
Causes of Global Poverty
Should We Care About Poverty?
Sustainable Development Goal for Poverty
Global Poverty Solutions