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Price Indexes, Inequality, and the Measurement of World Poverty

Angus Deaton

American Economic Review, 2010, vol. 100, issue 1, 5-34

Abstract: I discuss the measurement of world poverty and inequality, with particular attention to the role of purchasing power parity (PPP) price indexes from the International Comparison Project. Global inequality increased with the latest revision of the ICP, and this reduced the global poverty line relative to the US dollar. The recent large increase of nearly half a billion poor people came from an inappropriate updating of the global poverty line, not from the ICP revisions. Even so, PPP comparisons between widely different countries rest on weak theoretical and empirical foundations. I argue for wider use of self-reports from international monitoring surveys, and for a global poverty line that is truly denominated in US dollars. (JEL C43, D31, I31, I32, F31)

JEL-codes: C43 C83 D12 D31 D82 D83 F31 F32 G15 H41 I18 I31 I32 J31 J63 J65 L11 L65 M54 O12 P36 R23 Z13 (search for similar items in EconPapers)
Date: 2010
Note: DOI: 10.1257/aer.100.1.5
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