A Global Count of the Extreme Poor in 2012: Data Issues, Methodology and Initial Results

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents inIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. The higher value of the line in US dollars reflects the fact that the new PPPs yield a relatively lower purchasing power of that currency vis-à-vis those of most poor countries. Because the line was designed to preserve real purchasing power in poor countries, the revisions lead to relatively small changes in global poverty incidence: from 14.5 percent in the old method to 14.1 percent in the new method for 2011. In 2012, the new reference year for the global count, we find 12.7 percent 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 the detailed 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, limitations, perils and pitfalls of the approach taken.

Global Absolute Poverty: Behind the Veil of Dollars

“…BBBs do not necessarily observe that principle. 10 The latest value of the iPL is set to $1.90 in 2011 PPP by Ferreira et al (2015) following the "dollar-a-day" methodology. 11 For example, Ravallion (2015) argues about the existence of "clearly political resistance" in updating NPLs, and Kakwani (2003) offers as an example the NPL of Pakistan for not allowing a "meaningful comparison of poverty incidence in different periods" due to explicit methodological choices.…”

“…According to Chen and Ravallion (2010), 80% of the national poverty lines (NPLs) used in Ravallion, Chen, and Sangraula (2009) to derive the iPL of 1.25$-a-day in 2005 prices, are constructed also using some variation of a cost of basic needs approach. In all its versions, the dollar-a-day iPL is estimated by averaging a set of NPLs from a group countries (Chen and Ravallion 2001;Ferreira et al 2015;Ravallion, Chen, and Sangraula 2009;Ravallion, Datt, and van de Walle 1991), without any explicit analysis of what the underlying NPLs actually represent in terms of welfare. 10 The methodological variation among the NPLs underlying the iPL, especially with respect to the encapsulated normative choices, 11 does not allow for any use of the NPLs, as they stand, to consistently measure global poverty.…”

A Bayesian Measure of Poverty in the Developing World

“…As explained in Ferreira et al . (), for a quantity expressed in 2005 PPP dollars and denoted by , the conversion to 2011 PPP dollars, denoted by , means that where and are two PPP conversion series and and are the corresponding two series of consumer price indices. We have collected these series from the World Bank website.…”

“…The procedure used by the World Bank to compute the new IPL using 2011 PPP is well detailed and is discussed in Ferreira et al . (); namely, take the same database (the one we are using) and the same reference group of 15 countries as in Ravallion et al . (), convert the corresponding national poverty lines from 2005 PPP to 2011 PPP using equation , and take their mean over that group.…”

“…The last 2011 revision of PPP led to even larger changes, so large that Ferreira et al . () suggest keeping the 2005 PPP for some countries where the changes are too important and rather counterintuitive. So there is doubt about whether the 2005 PPP (and even more its 2011 revision) equalizes price levels across less developed countries.…”