Poverty Measurement

What’s the big idea?  For a variety of reasons, mostly about OECD country politics, the World Bank adopted a “dollar a day” standard of poverty, which by the name of “extreme poverty” became a key feature of development discussions. I argue that everything is fundamentally wrong with low-bar poverty and that the only legitimate poverty target is a “high bar” line, more like 10 or 15 dollars a day than a dollar day.

Who is not poor?  Dreaming of a World Truly Free of Poverty.” World Bank Research Observer, Spring 2006. I argue the World Bank should adopt not a penurious poverty line of a “dollar a day” but the poverty lines of its shareholders.

Video of a speech I gave at the HKS Center for International Development‘s Global Empowerment meetings in 2013 arguing against eradicating “dollar a day” poverty as a global goal.

In this blog I argue that the “dollar a day” standard has been adopted because it is analytically wrong–in politically convenient ways. By drawing a low-bar poverty line it makes it seem as if “the rich” of poor countries are as well off as “the poor” from rich countries–which is just false, but conveniently false for OECD countries trying to reduce their commitment to development.

There is no line.  The measures of poverty that report numbers of poor in the world depend on a poverty line. But there is no line. With water there is a line. Below 0 degree Celsius water is a solid. Above water is a liquid. At a line (which of course can be labeled 0 C or 32 F or anything) there is a phase transition. But with human well-being and income there is no phase transition–people get better off materially (and in subjective assessment of life satisfaction) as their incomes get higher–but there is no line.

Developing country democracies cannot adopt “eradication of extreme poverty” as their primary objective as, along with many other reasons, in almost none of the top 20 largest developing countries is the median voter below the penurious poverty line the global elites want to push on poor countries. The “eradication of extreme poverty” is a development agenda without any developing countries.