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

Author

Listed:
  • Francisco H. G. Ferreira

    (The World Bank)

  • Shaohua Chen

    (The World Bank)

  • Andrew Dabalen

    (The World Bank)

  • Yuri Dikhanov

    (The World Bank)

  • Nada Hamadeh

    (The World Bank)

  • Dean Jolliffe

    (The World Bank)

  • Ambar Narayan

    (The World Bank)

  • Espen Beer Prydz

    (The World Bank)

  • Ana Revenga

    (The World Bank)

  • Prem Sangraula

    (The World Bank)

  • Umar Serajuddin

    (The World Bank)

  • Nobuo Yoshida

    (The World Bank)

Abstract

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.

Suggested Citation

  • Francisco H. G. Ferreira & Shaohua Chen & Andrew Dabalen & Yuri Dikhanov & Nada Hamadeh & Dean Jolliffe & Ambar Narayan & Espen Beer Prydz & Ana Revenga & Prem Sangraula & Umar Serajuddin & Nobuo Yosh, 2016. "A global count of the extreme poor in 2012: data issues, methodology and initial results," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(2), pages 141-172, June.
  • Handle: RePEc:kap:jecinq:v:14:y:2016:i:2:d:10.1007_s10888-016-9326-6
    DOI: 10.1007/s10888-016-9326-6
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    More about this item

    Keywords

    Global poverty; Poverty measurement; Purchasing power parity;
    All these keywords.

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F01 - International Economics - - General - - - Global Outlook

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