More Relatively‐Poor People in a Less Absolutely‐Poor World

28 Pages Posted: 5 Feb 2013

See all articles by Shaohua Chen

Shaohua Chen

World Bank; World Bank - Development Research Group (DECRG)

Multiple version iconThere are 2 versions of this paper

Date Written: March 2013

Abstract

Relative deprivation, shame, and social exclusion can matter to the welfare of people everywhere. The paper argues that such social effects on welfare call for a reconsideration of how we assess global poverty. We argue for using a weakly‐relative measure as the upper‐bound complement to the lower‐bound provided by a standard absolute measure. New estimates of poverty are presented. 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, consistently with national poverty lines. We find 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.

Keywords: absolute poverty, global poverty, inequality, relative poverty

JEL Classification: E31, I32, O10

Suggested Citation

Chen, Shaohua, More Relatively‐Poor People in a Less Absolutely‐Poor World (March 2013). Review of Income and Wealth, Vol. 59, Issue 1, pp. 1-28, 2013, Available at SSRN: https://ssrn.com/abstract=2211999 or http://dx.doi.org/10.1111/j.1475-4991.2012.00520.x

Shaohua Chen (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

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