Unknown: The Extent, Distribution and Trend of Global Income Poverty
25 Pages Posted: 12 Oct 2006
Date Written: 2006
The estimates of the extent, distribution and trend of global income poverty provided in the World Bank's World Development Reports for 1990 and 2000/01 are neither meaningful nor reliable. The Bank uses an arbitrary international poverty line unrelated to any clear conception of what poverty is. It employs a misleading and inaccurate measure of purchasing power equivalence that vitiates international and inter-temporal comparisons of income poverty. It extrapolates incorrectly from limited data and thereby creates an appearance of precision that masks the high probable error of its estimates. The systematic distortion introduced by these three flaws likely leads to a large understatement of the extent of global income poverty and to an incorrect inference that it has declined. A new methodology of global poverty assessment is feasible and necessary.
Keywords: World Poverty, $1 per day, $2 per day, World Bank, PPPs, elementary human requirements
JEL Classification: I32, O10, O19
Suggested Citation: Suggested Citation