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Can the World Bank's International Poverty Line reflect extreme poverty?

Caroline Dotter

No 232, Courant Research Centre: Poverty, Equity and Growth - Discussion Papers from Courant Research Centre PEG

Abstract: The World Bank's international poverty line has been a success in drawing the attention of policymakers and media to the issue of poverty. This paper summarises the main critique in the literature and adds some additional insights, pointing out the weak database for the estimation of the international poverty line. The author also shows how poverty outcomes at the country level diverge when the international and respective national poverty lines are applied. For poorer countries, we observe a significant over- as well as underestimation of poverty at similar levels of mean consumption. The international poverty line can therefore not fulfil its own claim of being representative of the poverty lines of poor countries. One also needs to question whether this poverty line can be considered as a measure of ``extreme poverty" in the sense of the SDGs. Summarising all the issues in the estimation process of this measure, the author argues that the simple average of fifteen poverty lines of varying quality chosen through a statistically inaccurate estimation cannot represent a global standard of extreme poverty. These issues gain momentum as the World Bank recently published new (but not improved) global poverty counts exhibiting the identical issues as earlier poverty estimations.

Keywords: poverty; international poverty line; poverty estimation (search for similar items in EconPapers)
Date: 2017-07-19
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