How Not to Count the Poor

71 Pages Posted: 28 Mar 2006  

Thomas Pogge

Yale University, Global Justice Program

Sanjay G. Reddy

The New School - Department of Economics; Initiative for Policy Dialogue (IPD)

Date Written: October 29, 2005

Abstract

The World Bank's approach to estimating the extent, distribution and trend of global income poverty is neither meaningful nor reliable. The Bank uses an arbitrary international poverty line that is not adequately anchored in any specification of the real requirements of human beings. Moreover, it employs a concept of purchasing power equivalence that is neither well defined nor appropriate for poverty assessment. These difficulties are inherent in the Bank's "money-metric" approach and cannot be credibly overcome without dispensing with this approach altogether. In addition, the Bank extrapolates incorrectly from limited data and thereby creates an appearance of precision that masks the high probable error of its estimates. It is difficult to judge the nature and extent of the errors in global poverty estimates that these three flaws produce. However, there is reason to believe that the Bank's approach may have led it to understate the extent of global income poverty and to infer without adequate justification that global income poverty has steeply declined in the recent period. A new methodology of global poverty assessment, focused directly on what is needed to achieve elementary human requirements, is feasible and necessary. A practical approach to implementing an alternative is described.

Keywords: Poverty, Global Poverty, World Bank, Elementary Human Requirements, $1 per day, $2 per day

JEL Classification: B41, C80, C81, O10

Suggested Citation

Pogge, Thomas and Reddy, Sanjay G., How Not to Count the Poor (October 29, 2005). Available at SSRN: https://ssrn.com/abstract=893159 or http://dx.doi.org/10.2139/ssrn.893159

Thomas Pogge

Yale University, Global Justice Program ( email )

New Haven, CT 06520
United States
2034322272 (Phone)

HOME PAGE: http://pantheon.yale.edu/~tp4

Sanjay G. Reddy (Contact Author)

The New School - Department of Economics ( email )

Room 1116
6 East 16th Street
New York, NY 10003
United States

Initiative for Policy Dialogue (IPD) ( email )

New York, NY
United States

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