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More relatively-poor people in a less absolutely-poor world

  • Chen, Shaohua
  • Ravallion, Martin

Relative deprivation, shame and social exclusion can matter to the welfare of people everywhere. The authors argue that such social effects on welfare call for a reconsideration of how we assess global poverty, but they do not support standard measures of relative poverty. The paper argues instead for using a weakly-relative measure as the upper-bound complement to the lower-bound provided by a standard absolute measure. New estimates of global poverty are presented, drawing on 850 household surveys spanning 125 countries over 1981-2008. The absolute line is $1.25 a day at 2005 prices, while the relative line rises with the mean, at a gradient of 1:2 above $1.25 a day. The authors show that these parameter choices are consistent with cross-country data on national poverty lines. The results indicate that the incidence of both absolute and weakly-relative poverty in the developing world has been falling since the 1990s, but more slowly for the relative measure. While the number of absolutely poor has fallen, the number of relatively poor has changed little since the 1990s, and is higher in 2008 than 1981.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6114.

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Date of creation: 01 Jul 2012
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Handle: RePEc:wbk:wbrwps:6114
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  1. Ravallion, Martin & Lokshin, Michael, 2005. "Who cares about relative deprivation ?," Policy Research Working Paper Series 3782, The World Bank.
  2. Martin Ravallion & Shaohua Chen & Prem Sangraula, 2007. "New Evidence on the Urbanization of Global Poverty," Population and Development Review, The Population Council, Inc., vol. 33(4), pages 667-701.
  3. Ravallion, Martin & Datt, Gaurav & van de Walle, Dominique, 1991. "Quantifying Absolute Poverty in the Developing World," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 37(4), pages 345-61, December.
  4. Angus Deaton & Salman Zaidi, 2002. "Guidelines for Constructing Consumption Aggregates for Welfare Analysis," World Bank Publications, The World Bank, number 14101.
  5. Ravallion, Martin & Chen, Shaohua & Sangraula, Prem, 2008. "Dollar a day revisited," Policy Research Working Paper Series 4620, The World Bank.
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