Has World Poverty Really Fallen?
Sanjay G. Reddy
The New School - Department of Economics; Initiative for Policy Dialogue (IPD)
International Monetary Fund (IMF)
April 2, 2007
We evaluate the claim that world consumption poverty has fallen since 1990 in light of alternative assumptions about the extent of initial poverty and the rate of subsequent poverty reduction in China, India, and the rest of the developing world. We use two poverty indicators: the aggregate headcount and the headcount ratio, and consider two widely-used international poverty lines ($1/day and $2/day). We conclude that, because of uncertainties in relation to the extent and trend of poverty in China, India, and the rest of the developing world, global poverty may or may not have increased. The extent of the estimated increase or decrease in world poverty is critically dependent on the assumptions made. Our conclusions highlight the importance of improving the quality of global poverty statistics.
Number of Pages in PDF File: 23
Keywords: world poverty, sensitivity analysis, China, India, Millennium Development Goals
JEL Classification: I32, I30, O53
Date posted: August 3, 2006