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Global poverty estimates based on 2011 purchasing power parity: Where should the new poverty line be drawn?

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  • Nanak Kakwani
  • Hyun H. Son

Abstract

This paper calculates a new global poverty line based on 2011 PPP. It moves away from the World Bank’s method of anchoring a single global poverty line on the national poverty lines of the poorest countries. To calculate a new global poverty line based on 2011 PPP, the paper proposes the use of equivalent poverty lines. Each country has a different equivalent poverty line. The paper demonstrates that there is no single poverty line in 2011 PPP that is equivalent to \$1.25 in 2005 PPP. Single poverty lines vary for each region since countries have experienced different inflation rates and have different PPP conversion rates between 2005 and 2011. To calculate a single poverty line in 2011 PPP, the paper measures the weighted average of equivalent poverty lines of 66 countries in Asia and Sub-Saharan Africa with weights proportional to their populations. The corresponding poverty line is calculated at \$1.78 in 2011 PPP. Using the proposed global poverty line of \$1.78 in 2011 PPP, the number of poor is reduced by 58.06 million with the reduction largely occurring in Asia.

Suggested Citation

  • Nanak Kakwani & Hyun H. Son, 2015. "Global poverty estimates based on 2011 purchasing power parity: Where should the new poverty line be drawn?," Working Papers 371, ECINEQ, Society for the Study of Economic Inequality.
    • Handle: RePEc:inq:inqwps:ecineq2015-371
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    File URL: http://www.ecineq.org/milano/WP/ECINEQ2015-371.pdf
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    References listed on IDEAS

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    1. Crombrugghe, D.P.I. de & Szirmai, A. & Bluhm, R., 2014. "Poor trends: The pace of poverty reduction after the Millennium Development Agenda," MERIT Working Papers 2014-006, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. repec:pri:rpdevs:deaton_price_indexes_inequality_and_the_measurement_of_world_poverty_aer. is not listed on IDEAS
    3. Jolliffe, Dean & Prydz, Espen Beer, 2015. "Global Poverty Goals and Prices: How Purchasing Power Parity Matters," IZA Discussion Papers 9064, Institute of Labor Economics (IZA).
    4. repec:pri:rpdevs:presidential%20address%2017january%202010%20all.pdf is not listed on IDEAS
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    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. Florent Bresson, 2022. "Comparing Poverty Variations: A Robustness Assessment of the MDGs’ Achievements with Respect to Poverty Alleviation," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(4), pages 1007-1031, December.
    3. Amita Majumder & Ranjan Ray & Sattwik Santra, 2016. "Global and Country Poverty Rates, Welfare Rankings of the Regions and Purchasing Power Parities: How Robust Are the Results?," Monash Economics Working Papers 11-16, Monash University, Department of Economics.

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