# Nusefile

The higher cost of poverty

It costs the poorest people $1.90 to buy the same as $1.25 in 2005, according to the latest estimates of the World Bank.

That's why the Bank, using estimates from 2011, has upped its extreme-poverty line measure by 42%, just after the United Nations set itself the goal of eliminating the worst poverty by 2030.

The falling dollar against the currencies of poor countries accounts for part of the increase, the fourth since the international poverty line was introduced in 1990 using 1985 prices.

The $1 per day earning standard for judging extreme poverty was raised to $1.08 in 1993, then to $1.25 in 2008 using 2005 figures.

Tomorrow, by the way, is End Poverty Day, and the Bank is promoting Twitter and Facebook action.

Down 2.8% in three years: 200 million fewer

The World Bank estimates extreme poverty will fall below 10% of the world's population, according to its measures, for the first time in 2015. This is down from 12.8% three years ago.

The 2015 total would be 702 million, compared with 902 million in 2012.

World Bank President Jim Yong Kim described it as "the best story in the world today" on 4 October, Reuters reported.

PPP misleading: try MPI

The University of Oxford's Department of International Development has criticised the PPP (purchasing power parity) measure of poverty used by the World Bank.

In contrast it has promoted a multidimensional poverty index (MPI) that takes into account 10 indictors such as malnutrition and lack of education.

On this count, extreme poverty affects 87% of the people in Ethiopia and Chad, compared with 37% as judged by the $1.25 a day standard.

30% of world are poor, 15% destitute

According to Oxford, 30% of people (1.6 billion) count as multidimensionally poor. Most, 70%, live in middle-income countries.

Nearly half live in such extreme deprivation -- 736 million -- "they should be considered destitute," observe the Oxford campaigners.

Others have pointed out that the figures don't go far enough in telling governments how to go about tackling the poverty. Claire Melamed of the Overseas Development Institute wrote in The Guardian on 7 October: "What is needed is not just headlines at the level of countries but much more detailed information on who is poor within countries."

Ethnicity and geography count

"Not everyone is poor in poor countries, and the people who live below the new $1.90 poverty line tend to share certain characteristics," she points out. "In Nigeria, for example, ethnicity and geography are key drivers of the inequalities that sustain extreme poverty. People from ethnic minorities living in rural areas have always been the majority of the extreme poor in that country."

So less than 1% of the Yoruba are classified as poor, while more than half the Fulani fall within this category.

Invisible elderly

Global AgeWatch says millions of the elderly are "invisible" because governments do not keep track of their wellbeing and poverty. Its world ranking in September had to drop 98 countries for lack of info.

"Ultimately, picking a poverty line is pretty arbitrary," argue Charles Kenny and Justin Sandefur, of the Center for Global Development, on Vox on 7 October 2015.

Tom Murray at Humanosphere noted in an article on 13 October 2015: "Income does not measure things like access to clean water, quality education and child mortality. There are strong connections with wealth, but getting a family across the $1.90-a-day line is not too helpful if the local health clinic is unable to treat their child with pneumonia."

A political choice?

Kenny and Sandefur observe: "The main virtue of the line the World Bank has picked is political: It keeps the total number of global poor roughly where it was last month when world leaders at the U.N. signed up to eradicate poverty by 2030. But it did so by moving the line quite a bit. In the future, it’d be nice to have a measure of poverty that doesn’t swing wildly – or necessitate a change in methodology – every time exchange rates move."

"Most of the very poorest worldwide are able to buy more of what they need than they could 10 or 20 years ago," Kenny and Sandefur nevertheless admit. "Perhaps the extreme poverty line is fuzzier than we thought, but the progress against extreme poverty remains clear."

Angus Deaton, the Princeton economist, is among those who suspect the World Bank of pushing its own line, since the bank's main task is fighting poverty. So its very existence depends on poverty measures: "I think they have some institutional bias toward finding more poverty rather than less," he told Reuters.

Other source

The World Bank report in PDF (October 2015) »