A Global Count of the Extreme Poor in 2012: Data Issues, Methodology and Initial Results

68 Pages Posted: 2 Nov 2015

See all articles by Francisco H. G. Ferreira

Francisco H. G. Ferreira

World Bank - Development Research Group (DECRG)

Shaohua Chen

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

Andrew Dabalen

World Bank - Africa

Yuri Dikhanov

World Bank

Nada Hamadeh

World Bank

Dean Jolliffe

World Bank; IZA Institute of Labor Economics

Ambar Narayan

World Bank, Poverty Global Practice

Espen Beer Prydz

World Bank - Development Research Group (DECRG)

Ana Revenga

The World Bank

Prem Sangraula

World Bank - Development Research Group (DECRG)

Umar Serajuddin

World Bank

Nobuo Yoshida

World Bank

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Abstract

The 2014 release of a new set of purchasing power parity conversion factors (PPPs) for 2011 has prompted a revision of the international poverty line. In order to preserve the integrity of the goalposts for international targets such as the Sustainable Development Goals and the World Bank's twin goals, the new poverty line was chosen so as to preserve the definition and real purchasing power of the earlier $1.25 line (in 2005 PPPs) in poor countries. Using the new 2011 PPPs, the new line equals $1.90 per person per day. The higher value of the line in US dollars reflects the fact that the new PPPs yield a relatively lower purchasing power of that currency vis-à-vis those of most poor countries. Because the line was designed to preserve real purchasing power in poor countries, the revisions lead to relatively small changes in global poverty incidence: from 14.5 percent in the old method to 14.1 percent in the new method for 2011.In 2012, the new reference year for the global count, we find 12.7 percent of the world's population, or 897 million people, are living in extreme poverty. There are changes in the regional composition of poverty, but they are also relatively small. This paper documents the detailed methodological decisions taken in the process of updating both the poverty line and the consumption and income distributions at the country level, including issues of inter-temporal and spatial price adjustments. It also describes various caveats, limitations, perils and pitfalls of the approach taken.

Keywords: global poverty, poverty measurement, purchasing power parity

JEL Classification: I3, I32, E31, F01

Suggested Citation

Ferreira, Francisco H. G. and Chen, Shaohua and Dabalen, Andrew and Dikhanov, Yuri and Hamadeh, Nada and Jolliffe, Dean Mitchell and Narayan, Ambar and Prydz, Espen Beer and Revenga, Ana and Sangraula, Prem and Serajuddin, Umar and Yoshida, Nobuo, A Global Count of the Extreme Poor in 2012: Data Issues, Methodology and Initial Results. IZA Discussion Paper No. 9442, Available at SSRN: https://ssrn.com/abstract=2684272

Francisco H. G. Ferreira (Contact Author)

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

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Shaohua Chen

World Bank ( email )

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World Bank - Development Research Group (DECRG)

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Andrew Dabalen

World Bank - Africa ( email )

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Yuri Dikhanov

World Bank ( email )

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Nada Hamadeh

World Bank

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Dean Mitchell Jolliffe

World Bank ( email )

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IZA Institute of Labor Economics ( email )

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HOME PAGE: http://www.iza.org/en/webcontent/index_html

Ambar Narayan

World Bank, Poverty Global Practice ( email )

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United States

Espen Beer Prydz

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

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

HOME PAGE: http://www.worldbank.org/en/about/people/espen-beer-prydz

Ana Revenga

The World Bank ( email )

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Washington, DC 20433
United States

Prem Sangraula

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

1818 H Street NW
MSN3-311
Washington, DC 20433
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Umar Serajuddin

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Nobuo Yoshida

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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