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International income poverty measurement: which way now?

Author

Listed:
  • Stephan Klasen

    () (University of Göttingen)

  • Tatyana Krivobokova

    (University of Göttingen)

  • Friederike Greb

    (Food and Agricultural Organization)

  • Rahul Lahoti

    (University of Göttingen)

  • Syamsul Hidayat Pasaribu

    (Bogor Agricultural University)

  • Manuel Wiesenfarth

    (German Cancer Research Center)

Abstract

Abstract We critically review conceptual and empirical issues surrounding the derivation of the international poverty line, expressed in PPP-adjusted dollars and linked to various rounds of the International Comparison Program (ICP). We find that there are some limitations in the current estimation of these lines, but show that statistically superior methods lead to lines that are relatively robust and confirm the $1.25 using 2005 PPPs and suggest $1.67–1.71 using 2011 PPPs (or close to the $1.90 proposed by the World Bank if we follow the World Bank’s approach of adjusting inflation rates in some countries); they also roughly confirm the current shape of the proposed ‘weakly relative’ poverty line. Using the new absolute line based on 2011 PPPs would lead to substantially lower poverty in our estimation. The extent of the decline depends on whether and how one treats China, India, and Indonesia differently from other countries in the 2005 and 2011 PPPs. More seriously, we note that the dependence on successive ICP rounds creates conceptual and empirical problems that have become worse over time so that we suggest that it would be best to consider alternatives to the current reliance on ICP rounds and the resulting PPPs. As a short-term solution we propose to fix the international poverty line in national currencies using either the 2005 or 2011 level; in the medium term, we argue for global poverty measurement based on internationally coordinated national poverty measurement.

Suggested Citation

  • Stephan Klasen & Tatyana Krivobokova & Friederike Greb & Rahul Lahoti & Syamsul Hidayat Pasaribu & Manuel Wiesenfarth, 2016. "International income poverty measurement: which way now?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(2), pages 199-225, June.
  • Handle: RePEc:spr:joecin:v:14:y:2016:i:2:d:10.1007_s10888-016-9324-8
    DOI: 10.1007/s10888-016-9324-8
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Ravallion, Martin & Chen, Shaohua, 2019. "Global poverty measurement when relative income matters," Journal of Public Economics, Elsevier, vol. 177(C), pages 1-1.
    3. Martin Ravallion, 2016. "Toward better global poverty measures," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(2), pages 227-248, June.
    4. Stephan Klasen, 2016. "An Asian poverty line? Issues and options," Chapters, in: Jacques Silber & Guanghua Wan (ed.), The Asian ‘Poverty Miracle’, chapter 1, pages 13-29, Edward Elgar Publishing.
    5. Dean Jolliffe & Espen Beer Prydz, 2016. "Estimating international poverty lines from comparable national thresholds," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(2), pages 185-198, June.
    6. Sanjay G. Reddy & Ingrid Harvold Kvangraven, 2015. "Global Development Goals: If At All, Why, When and How?," Working Papers 1523, New School for Social Research, Department of Economics.
    7. Caroline Dotter, 2017. "Can the World Bank's International Poverty Line reflect extreme poverty?," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 232, Courant Research Centre PEG.

    More about this item

    Keywords

    Poverty; World Bank; Dollar-a-day; Weakly relative poverty;

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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