World Bank Poverty Numbers Explained

June 4, 2015

"What is considered the threshold for poverty ¬ the "poverty line" ¬ is normally calculated by each nation for itself, and is supposed to reflect what an average human adult needs to subsist. In 1990, Martin Ravallion, an Australian economist at the World Bank, noticed that the poverty lines of a group of the world's poorest countries clustered around $1 per day. On Ravallion's recommendation, the World Bank adopted this as the first¬ever International Poverty Line (IPL)."

 

"Using this threshold, the World Bank announced in its 2000 annual report that 'the absolute number of those living on $1 per day or less continues to increase. The worldwide total rose from 1.2 billion in 1987 to 1.5 billion today and, if recent trends persist, will reach 1.9 billion by 2015.'"

 

"This was alarming news.... This amounted to a PR nightmare for the World Bank. Not long after the report was released, however, their story changed dramatically and they announced the exact opposite news.""This new story was possible because the Bank shifted the IPL from the original $1.02 (at 1985 PPP) to $1.08 (at 1993 PPP), which, given inflation, was lower in real terms. With this tiny change ¬ a flick of an economist's wrist ¬ the world was magically getting better, and the Bank's PR problem was instantly averted."

 

"A 1990 survey in Sri Lanka found that 35 percent of the population fell under the national poverty line. But the World Bank, using the IPL, reported only 4 percent in the same year. In other words, the IPL makes poverty seem much less serious than it actually is.""[P]eople who live in the US know it is impossible to survive on this amount ($1.25). The prospect is laughable.... The same story can be told in many other countries, where a dollar a day is inadequate for human existence. In India, for example, children living just above the IPL still have a 60 percent chance of being malnourished."

 

"According to Peter Edwards of Newcastle University, if people are to achieve normal life expectancy, they need roughly double the current IPL, or a minimum of $2.50 per day."

 

"An IPL of $2.50 shows a poverty headcount of around 3.1 billion, almost triple what the World Bank and the Millennium Campaign would have us believe. It also shows that poverty is getting worse, not better, with nearly 353 million more people impoverished today than in 1981. With China taken out of the equation, that number shoots up to 852 million."

 

"Some economists go further and advocate for an IPL of $5 or even $10 ¬ the upper boundary suggested by the World Bank. At this standard, we see that some 5.1 billion people ¬ nearly 80 percent of the world's population ¬ are living in poverty today."

 

"[E]ven the $1.25 line shows that, without factoring China, the poverty headcount is worsening, with 108 million people added to the ranks of the poor since 1981."

 

"If the Sustainable Development Goals are to have any real value, they need to begin with a more honest poverty line ¬ at least $2.50 per day ¬ and instate rules to preclude the kind of deceit that the World Bank and the Millennium Campaign have practiced to date."

 

Dr Jason Hickel, "Exposing the great 'poverty reduction' lie," Al Jazeera, Aug. 14, 2015, Accessed Oct. 14, 2015, http://www.aljazeera.com/indepth/opinion/2014/08/exposing-great-poverty-...

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