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Added: Javonna Giglio - Date: 05.02.2022 15:53 - Views: 49526 - Clicks: 5213

Most people in the world live in poverty. In each of these statistics price differences between countries are taken into to adjust for the purchasing power in each country. The poverty line was revised in —since then, a person is considered to be in extreme poverty if they live on less than 1. Income measures, on the other hand, are only used for countries in which reliable consumption measures are not available. A key difficulty in measuring global poverty is that price levels are very different in different countries. For this reason, it is not sufficient to simply convert the consumption levels of people in different countries by the market exchange rate; it is additionally necessary to adjust for cross-country differences in purchasing power.

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This is done through Purchasing Power Parity adjustments explained below. It is important to emphasize that the International Poverty Line is extremely low. Focusing on extreme poverty is important precisely because it captures those most in need.

However, it is also important to point out that living conditions well above the International Poverty Line can still be characterized by poverty and hardship. 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. 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. Poverty is a concept intrinsically linked to welfare — and there are many ways in which one can try to measure welfare.

But before we present the evidence, the introductory sub-section here provides a brief overview of the relevance of this approach. Global poverty is one of the very worst problems that the world faces today. The poorest in the world are often hungryhave much less access to educationregularly have no light at night, and suffer from much poorer health. To make progress against poverty is therefore one of the most urgent global goals. But with the onset of industrialization and rising productivity, the share of people living in extreme poverty started to decrease.

Accordingly, the share of people in extreme poverty has decreased continuously over the course of the last two centuries. This is surely one of the most remarkable achievements of humankind. 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.

We also discuss the link between education, health, and poverty in this entry. During the first half of the last century, the growth of the world population caused the absolute of extremely poor people in the world to increase, even though the share of people in extreme poverty was going down. After aroundthe decrease in poverty rates became so steep that the absolute of people living in extreme poverty started falling as well. This trend of decreasing poverty—both in absolute s and as a share of the world population—has been a constant during the last three decades.

But as we highlight in the first section of this entry it is unfortunately not what we can expect for the coming decade. It is the fact that still almost every tenth person lives in extreme poverty and the slowing progress against extreme poverty that motivate this entry. How do we know the history of extreme poverty? Economic growth — How do economies become more productive? Understanding how and when countries achieved economic growth is crucial to understand how some countries left the worst poverty behind and how other countries can follow.

Income inequality — It is not just the average income that matters for whether or not people live in poverty but how incomes are distributed. Global economic inequality — Our entry on the global distribution of incomes. Over the course of the last generation more than a billion people left the most destitute living conditions behind.

Can we expect this progress to continue over the coming decade? The world economy is growing. In less than a generation the value of the yearly global economic production has doubled. Increasing productivity around the world meant that many left the worst poverty behind. More than a third of the world population now live on more than 10 dollars per day. Just a decade decade ago it was only a quarter. In absolute s this meant the of people who live on more than 10 dollars per day increased by million in just the last 10 years.

This expansion of the global middle class went together with progress in reducing global poverty — no matter what poverty line you want to compare it with, the share of the world population below this poverty line declined. That is a very low poverty line and focusses on what is happening to the very poorest people on the planet. The same international organizations that set the poverty line made it a global goal to end extreme poverty.

The deadline for achieving this goal is Can we expect to achieve this? All expect some positive development — the of people in extreme poverty is expected to continue to decline — but all also agree on the bad headline: the world is not on track to end extreme poverty by The chart shows the projection made by the development research team at the World Bank.

This projection answers the question of what would happen to extreme poverty trends if the economic growth of the past decade —15 continued until 5 The of people in extreme poverty will stagnate at almost million. This is not because it is not possible to end extreme poverty.

In more than half of the countries of the world the share of the population in extreme poverty is now less than 3 percent. In fact, the big success over the last generation was that the world made rapid progress against the very worst poverty. The of people in extreme poverty has fallen from nearly 1.

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This was possible as economic growth reached more and more parts of the world. But after two decades of growth the share in extreme poverty more than halved in all these countries. Poverty was not concentrated in Africa until recently.

In more than a billion of the extremely poor lived in China and India alone. Since then those economies have grown faster than many of the richest countries in the world and did much to a reduction of global inequality. Now it has shifted to Sub-Saharan Africa.

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The projections suggest the geographic concentration of extreme poverty is likely to continue. Poverty declined during the last generation because the majority of the poorest people on the planet lived in countries with strong economic growth. This is now different. Development economists have emphasized this for some time: The very poorest people in the world did not see their material living conditions improve.

This is an important reminder that one poverty line is not enough and we need to rely on several poverty lines — higher and lower than the international poverty line — to understand what is happening. We miss this if we only follow what is happening to the rapidly emerging global middle class or if we rely on global poverty lines that are not capturing what is happening to the poorest. The projections suggest that over the coming decade the stagnation at the bottom will become very clear.

These projections describe what we have to expect on current trends. The second big lesson from the history of extreme poverty is that it is the growth of an entire economy that lifts individuals out of poverty. Key for ending extreme poverty globally will be that the poorest countries achieve the difficult task of economic growth.

Social policy and direct household-level support, too, make an important difference. Even in very poor economies there is scope for targeted policies to support the very poorest. We know that it is possible; we have done it many times in the past. The big success of the last generation was that global extreme poverty declined rapidly.

But many are still very poor and progress against extreme poverty is urgently needed. There are many ways in which researchers and policymakers try to measure welfare. However, as we emphasize throughout, this is only one of many aspects that we need to consider when discussing poverty. In other entries in Our World In Data we discuss evidence that allows tracking progress in other aspects of welfare that are not captured by standard economic indicators. This broad perspective on global development is at the heart of our publication. The practice of measuring welfare via consumption and income has a long tradition in economics.

Many classic textbooks and papers provide details regarding the conceptual framework behind this for a basic technical overview see Deaton and Zaidi ; 12 and by now there is also an extensive literature discussing various important points of contention see Ch 2. Alternative starting points for measuring welfare include subjective views e. These alternative notions of welfare play an important role in academia and policy, and it is necessary to bear in mind that they are interrelated.

Indeed, as we explain belowmany of these concepts indirectly enter the methodology used by the World Bank to measure poverty; for example, by helping set the poverty lines against which monetized consumption is assessed. 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. But why should we care? 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?

One way to find out is to simply ask. Subjective views are an important way of measuring welfare. This is what the Gallup Organization did. The Gallup World Poll asked people around the world what they thought about their standard of living—not only about their income. The following chart compares the answers of people in different countries with the average income in those countries.

It shows that, broadly speaking, people living in poorer countries tend to be less satisfied with their living standards. This suggests that economic prosperity is not a vain, unimportant goal but rather a means for a better life. The correlation between rising incomes and higher self-reported life satisfaction is shown in our entry on happiness.

This is more than a technical point about how to measure welfare. It is an assertion that matters for how we understand and interpret development. First, the smooth relationship between income and subjective well-being highlights the difficulties that arise from using a fixed threshold above which people are abruptly considered to be non-poor.

In reality, subjective well-being does not suddenly improve above any given poverty line. Therefore, while the International Poverty Line is useful for understanding the changes in living conditions of the very poorest of the world, we must also take into higher poverty lines reflecting the fact that living conditions at higher thresholds can still be destitute. As the data shows, there is just no empirical evidence that would suggest that living with very low consumption levels is romantic.

A disregard for or disinterest in poverty estimates that are calculated on the basis of low consumption and income levels is partly explained by the fact that it can be very difficult for people to imagine what it is like to live with very little. Even economists who think a lot about income and poverty find it difficult to understand what it means to live on a given income level. The most straightforward way to measure poverty is to set a poverty line and to count the of people living with incomes or consumption levels below that poverty line.

This is the so-called poverty headcount ratio. Measuring poverty by the headcount ratio provides information that is straightforward to interpret; by definition, it tells us the share of the population living with consumption or incomes below some minimum level. The World Bank defines extreme poverty as living on less than 1. In the map we show available estimates of the extreme poverty headcount ratio, country by country.

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The map shows the latest available estimates by default, but with the slider immediately below the map you can explore changes over time. Estimates are again expressed in international dollars int. This means that figures for different price levels in different countries, as well as for inflation.

Hence, it is both interesting and important to measure poverty with higher poverty lines. The World Bank also reports poverty headcount ratios using a higher line at 3. Measuring poverty through headcount ratios does not capture the intensity of poverty—individuals with consumption levels marginally below the poverty line are counted as being poor just as individuals with consumption levels much further below the poverty line.

The most common way to deal with this is to measure the shortfall from the poverty line, the amount of money required by a poor household to reach the poverty line. It tells us the fraction of the poverty line that people are missing, on average, in order to escape poverty. 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.

Interestingly, the correlation is very strong, but is far from perfect. As discussed above, the poverty gap index is often used in policy discussions because it has an intuitive unit percent mean shortfall that allows for meaningful comparisons regarding the relative intensity of poverty.

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