Lessons in the sand: Redrawing the poverty line

The Economist reports on the most recent work by Martin Ravallion and two colleagues, World Bank researchers who first drew the global poverty line at “a dollar a day” over a decade ago. Starting again from scratch and based on new data, the team has erased the old and announced the new international poverty line at $1.25 a day.

Here’s snippet,

They gather 75 national poverty lines, ranging from Senegal’s severe $0.63 a day to Uruguay’s more generous measure of just over $9. From this collection, they pick the 15 lowest (Nepal, Tajikistan and 13 sub-Saharan countries) and split the difference between them. The result is a new international poverty line of $1.25 a day.

Why those 15? The answer is philosophical, as well as practical. In setting their poverty lines, most developing countries aim to count people who are poor in an absolute sense. The line is supposed to mark the minimum a person needs to feed, clothe and shelter himself. In Zambia, say, a poor person is defined as someone who cannot afford to buy at least two to three plates of nshima (a kind of porridge), a sweet potato, a few spoonfuls of oil, a handful of groundnuts and a couple of teaspoons of sugar each day, plus a banana and a chicken twice a week.

But even in quite poor countries, a different concept of poverty also seems to creep in, the authors argue. It begins to matter whether a person is poor relative to his countrymen; whether he can appear in public without shame, as Adam Smith put it.

Can you hold your head up among your neighbours? That might be a more dignified way of assessing the concepts of “poor”, “low income” and purchasing power parity. I’ve mentioned before that its far more difficult to live on a low income in the US than it is in India. Simple things like being able to buy a single cigarette or half a cabbage all the way to paying nominal rents for a couple of sheets of corrugated iron held by salvaged bricks and door still allow many who work in the metro’s of India to live close to their work.

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