This evaluation technique consists in administering the policy intervention to a random group of individuals (the ‘treatment group’) and evaluating the effect by comparing outcomes against another group of individuals who were not affected by the policy (the ‘control group’). American Economic Review, 100(1): 5-34. As we can see, there is once again a clear negative relationship: poverty tends to be more frequent in countries where education is less developed. Many of the world’s poorest today live in countries that had very low economic growth in the past.9 Consider the case of Madagascar: In the last 20 years GDP per capita has not grown; and the number in extreme poverty increased almost one-for-one with total population. As we can see, the effect of migration for the poor is remarkably high. Is it not the case that poor people might have less consumption but enjoy their lives just as much—or even more—than people with much higher consumption levels? Fiszbein and Schady (2009)44 provide a comprehensive analysis of the evidence. One in five children in rich countries lives in relative poverty. Journal of development Economics, 98(1), 3-18. Online here. Available online here. Figures correspond to the International Poverty Line, at 1.90 int.$ in 2011 PPP prices. In this paper, the two authors reconstruct measures of poverty as far back as 1820. Fouquet and Broadberry (2015)49 provide a detailed account of how economic historians construct these estimates. The World Bank breaks down the population living below $1 and $2 a day into graphs for six regions of the world. Adam Taylor. When citing this entry, please also cite the underlying data sources. However, with rapid economic growth in Asia over the past two decades, poverty in Asia fell more rapidly than in Africa. This table specifies how the different indicators are defined and aggregated. According to the World Health Organization (WHO), poverty accounts for 30% of human deaths (i.e. But today it is not just the poverty line of India that is taken into account rather, as we can see in the following table, it is based on the national poverty lines of 15 different low-income countries. And one in eight risks going hungry or not getting the right food. On the one hand, low skilled industrial jobs do provide a formal, steady source of income, so it is possible that they raise incomes and reduce poverty. Some of these may be obvious, but in other situations, i… The World Bank defines extreme poverty as living on less than 1.90 int.-$. The concept of poverty traps is important in the context of policy, since it implies that one-off policy efforts that make it possible to ‘escape the trap’ have permanent positive effects. We license all charts under Creative Commons BY. As we can also see from this map, there are some countries with very few observations. The share of correct answers differs substantially across countries. (2016). Deaton, A. and Kozel, V. 2005a. 2002. An important recent paper on absolute poverty is Chen and Ravallion (2010) – The Developing World is Poorer than We Thought, But No Less Successful in the Fight Against Poverty. Bourguignon and Morrison’s starting point is to estimate the global distribution of incomes over time. Below are the most up-to-date, quantifiable poverty statistics from the world’s top data gathering and humanitarian organizations. This is a point we discuss below in more detail. 2016. Who Are the Poor in the Developing World?. The MPI is constructed from ten indicators across three core dimensions: health, education and living standards. Accordingly, in this entry we will also discuss the global distribution of people below poverty lines that are higher than the International Poverty Line of 1.90 int.-$. Economic growth over the last 200 years completely transformed our world, with the share of the world population living in extreme poverty falling continuously over the last two centuries. 1. The poverty gap index is an alternative way of measuring poverty that considers the intensity of deprivation. Kenya and Chad have similar monetary poverty rates (about 40% of the population live below the International Poverty Line), but they have extremely different multidimensional poverty rates (around 40% in Kenya, compared to 87% in Chad are living in ‘multidimensional poverty’). Newhouse, D. L., Suarez-Becerra, P., & Evans, M. (2016). 15-7. The World Bank estimates that the number of extremely poor people globally – those who live on 1.90 U.S. dollars a day or less – has fallen from 1.85 billion in 1990 to about 736 million in 2015. But how well does this simplifying omission capture the reality of people living there? National prosperity is a strong predictor of extreme poverty at the individual level. Productivity levels were low and food was scarce—material living standards were generally very low. And you can find a more technical discussion of the MPI and its properties in Alkire and Foster (2011).32. In the recent past we saw the fastest reduction of the number of people in extreme poverty ever. The Gallup World Poll asked people around the world what they thought about their standard of living—not only about their income. Science, 348(6236), 1260799. First, we can see that extreme poverty was very common in today’s rich countries until fairly recently; in fact, in most of these countries the majority of the population lived in extreme deprivation only a few generations ago. This evidence is partial, since it does not account for ‘general equilibrium effects’—that is, the potentially positive long-term effects that new manufacturing jobs have via more competition and higher salaries in other sectors of the economy. The number of people who live on more than 10 dollars per day increased by 900 million in the last 10 years. The most important task in our time is to ensure that the living conditions of the world’s poorest improve and to end extreme poverty. This is the case for many African countries, where there is only one survey available in the last decade. World Bank Group. Following this logic, we can read the poverty rates at any poverty line. U.S. $2 a Day Poverty in a Global Context.” Policy Paper 2014-03, Brookings Institution, Washington, DC. The Journal of Economic Inequality, 14(2), 185-198. Available online from http://documents.worldbank.org/, PovcalNet explains the process of interpolation for missing reference years as follows: “When the reference year falls between two survey years, an estimate of mean consumption at the reference year is constructed by extrapolating the means obtained from the surveys forward and backward to the reference year. Explanation of how poverty for the world without China was calculated:In 1981 there were 4.5 billion people in the world. The idea is simple: poverty today causes poverty in the future, so households that start poor, remain poor. Online at the World Bank website here. Rethinking the effect of immigration on wages. What are the main limitations of World Bank poverty estimates? The MPI is typically used to assess deprivation at the individual level: if someone is deprived in a third or more of the ten (weighted) indicators, the index identifies them as ‘MPI poor’. “Inequality” is an easy, but sometimes misleading term used to describe the systemic barriers leaving groups of people without a voice or representation within their communities. For all countries shown in grey in this map, there is not a single survey available to the World Bank in the last three decades. See the Gapminder Ignorance Project for more evidence. The World Bank also reports poverty headcount ratios using a higher line at 3.10 int.-$, and the map shows these estimates. On every day in the last 25 years there could have been a newspaper headline reading, “The number of people in extreme poverty fell by 128,000 since yesterday”. It is important to emphasize that the International Poverty Line is extremely low. An online library of reports (including statistical data) on poverty and income inequality. But relying only on higher poverty lines would mean that we are not keeping track of the very poorest people in the world and this is the focus of this entry. What Poverty Looks Like Poverty is a horrifying thing and here are some pictures to show you how sad it really is 4. As before, the button at the bottom allows you to change the reference years, so that you can see how these two variables covary across time. The source defines the universe of low and middle income countries as all countries except: Australia, Belgium, Cyprus, Finland, France, Germany, Greece, Iceland, Ireland, Israel, Italy, Luxembourg, Japan, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom and United States. Economists Xavier Sala-i-Martin and Maxim Pinkovskiy estimated the share of the world population living in absolute poverty.80. Closely linked to this improvement in material living conditions is the improvement of global health and the expansion of global education that we have seen over these last two centuries. People living on less than $1.25 a day (1990-2005) Poverty's death toll. Income and consumption measures available from national household surveys are denominated in local currency units. (1979),77 and as we point out above, historical estimates of poverty, such as those from Bourguignon and Morrison (2002), also follow this approach. Available online here. The World Bank says 10 percent of the world's population lived on less than $1.90 a day in 2015, down from 11.2 percent in … There is a strong correlation between the incidence of poverty and the intensity of poverty: sub-Saharan Africa, where the share of people below the poverty line is higher, is also the region where people tend to be furthest below the poverty line. The evidence suggests that multi-pronged interventions aimed at relieving multiple joint constraints at the household-level, are more likely to reduce poverty than ‘big push’ policies on the macro-level. This is what the Gallup Organization did. It includes low incomes and the inability to acquire the basic goods and services necessary for survival with dignity. In Dollar Street you can find portraits of families and see how they cook, what they eat, how they sleep, what toilets they have available, what their children’s toys look like, and much more. Research teams from the World Bank, ODI, the IHME, and Brookings jointly with the World Data Lab made independent projections for what we can expect for global poverty during the SDG era. The second chart provides regional estimates of poverty rates – the share of population in each region living below the International Poverty Line. In the background paper accompanying the data, Castaneda et al. Bounding the price equivalent of migration barriers. The Multidimensional Poverty Index (MPI)—shown in the world map above and published by the Oxford Poverty & Human Development Initiative (OPHI)—is the most common international instrument used in this context. Blattman, C., & Dercon, S. (2016). To make progress against poverty is therefore one of the most urgent global goals. The answer to that question is no. When richer individuals or households are less likely to answer surveys than poor people, survey-based estimates of consumption and income will understate the mean level of prosperity and overstate the share of people in poverty. These figures suggest that the total lifetime value of the most successful anti-poverty program is less than a quarter of the gain every year from letting a worker work in a high productivity environment, in this case the United States. Yet, the exact opposite happened. For example, low-income countries might lack the good growth fundamentals (e.g. If you are interested in understanding poverty through these other lenses, you are welcome to explore our website—the content menu at the top of the page links to all of our entries on these topics. An accurate estimate of the cost of ending extreme poverty requires not only having good data on poverty rates from across the world (including in countries where there are still important gaps), but also understanding the inefficiencies that redistributive transfers typically entail. use a consistent ‘unit of measure’. A multifaceted program causes lasting progress for the very poor: Evidence from six countries. Here, we provide evidence of another important correlate: education. But it is important to note that we don’t have enough data to really understand how strong this assumption is. For the years prior to 1980, we use the mid-point of the estimates from Bourguignon and Morrison (2002) as shown in the previous chart; from 1981, we use the World Bank estimates. It is also available by broad age group: child poverty (0-17 years old), working-age poverty and elderly poverty (66 year-olds or more). This is the result of exceptionally high income inequality. The United Nations and the World Bank are major advocates in reducing world poverty. Tables and Charts on Poverty and Development. The poverty rate estimates come from the World Bank (2016 PovCal release, using 2013 household survey data);26 and total population estimates come from the World Development Indicators. In the top panel, the authors graph the employment rate for all eligible adults in both the control and treatment arms for each evaluation. In the same countries the huge majority – even in today’s richest countries – lived in extreme poverty just a few generations ago. The extent of ignorance in the UK is particularly bad if we take into account that the shown result corresponds to a population with a university degree. This suggests, under their assumptions, that the optimal ‘weights’ to calculate aggregate income should be very large for national accounts and very modest for survey means. The other lines exclude different countries, depending on whether they have comparable and good-quality data. The pioneering work that set out to count the number of people in poverty using a common global standard was published by Montek Ahluwalia, Nicholas Carter, and Hollis Chenery in 1979.53 The three authors based their estimates of global poverty figures on the Indian poverty line at the time. The most important conclusion from the evidence presented in this entry is that extreme poverty, as measured by consumption, has been going down around the world in the last two centuries. New estimates of extreme poverty for children. But there is also missing data for some poorer countries, in which surely a considerable share of the population is living in extreme poverty. However, as we emphasize throughout, this is only one of many aspects that we need to consider when discussing poverty. Finally, when the output of all sectors is reconstructed, these various series are brought together and—using a set of sectoral weights that capture the changing structure of the economy—an estimate of the total historic output of the productive work of the population is reached. The map here plots estimates for the poverty gap index, country by country. Based on World Bank data ranging from 1998 to 2018. So despite limitations, the available poverty estimates are still very informative about how the world has changed. As mentioned above, a ‘poverty trap’ is a situation where incomes are stagnant over long periods, because ‘poverty today causes poverty in the future’. The process of lining up estimates relies on interpolation for countries in which survey data are not available in particular years, but are available either before or after (or both). As the authors point out, while not every country is covered, this new set of estimates is the most updated and comprehensive source currently available to researchers and policymakers trying to understand the demographics of poverty. Jolliffe, D. (2001) – “Measuring Absolute and Relative Poverty: The Sensitivity of Estimated Household Consumption to Survey Design” Journal of Economic and Social Measurement. Beegle, K., Christiaensen, L., Dabalen, A., & Gaddis, I. Recent estimates for global poverty are that 9.2% of the world, or 689 million people, live in extreme poverty on $1.90 or less a day, according to the World Bank. One common approach is to ask survey-respondents about the amount of such resources consumed over a given reference period. Alternative starting points for measuring welfare include subjective views (e.g. An online library of reports (including statistical data) on poverty and income inequality. 2020 Federal Poverty Guidelines Chart . Economists use the term ‘poverty trap’ to denote a situation in which individuals are stuck in deprivation over long periods of time, and there is nothing they can do by themselves to escape their situation. When data from only one survey year are available, the reference year mean is based on the survey mean by applying the growth rate in private consumption per capita from the national accounts. Fouquet, R., & Broadberry, S. (2015). A seminal paper following this approach and estimating global poverty figures from 1820 onward is Bourguignon and Morrison (2002).48 Their work is the source of the poverty estimates for the time 1820 to 1970 shown above. As we can see, there is a clear negative relationship: people tend to live longer in countries where poverty is less common. The world is making progress against all poverty lines and with rapid growth in many middle income countries we can hope that this progress against poverty relative to high poverty lines will continue. The concentration of the world’s poorest shifted from East Asia in the 1990s to South Asia in the following decade. Available online here. For example, the poverty level for a household of four in 2020 is an annual income of $26,200. At Our World In Data we are particularly interested in how living conditions change over the long run. In the Middle East and North Africa region, the exclusion of Egypt, Iraq, Jordan, and the Republic of Yemen and the lack of recent data on Algeria and Syria imply that the remaining countries account for only a third of the region’s population, below the 40 percent threshold of regional population coverage needed to report region representative estimates. A. ... is a hub of information, data and reports about climate change around the world. This yields two estimates of the headcount poverty rates in the reference year. The reference year poverty estimate is then based on this mean and on the distribution observed in the one survey year. Journal of development Economics, 98(1), 3-18. A second approach asks households directly about their own valuation of the amount of money they would expect to pay if they had bought such items themselves, or, the amount of money they would expect to receive if they had sold these items.