What is the new poverty line, and based on this new measure, how many people are living in extreme poverty in the world?
The new international poverty line is set at $2.15 using 2017 prices. This means that anyone living on less than $2.15 a day is considered to be living in extreme poverty. About 648 million people globally were in this situation in 2019.
How is the international poverty line derived?
We start with the poverty line defined by each country, which usually reflects the amount below which a person’s minimum nutritional, clothing, and shelter needs cannot be met in that country. Not surprisingly, richer countries tend to have higher poverty lines, while poorer countries have lower poverty lines.
However, when we want to identify how many people in the world live in extreme poverty across countries, we cannot simply add up the national poverty rates of each country. This would be the equivalent of using a different yardstick in each country to identify who is poor. That’s why we need a poverty line that measures poverty in all countries by the same standard.
In 1990, a group of independent researchers and the World Bank examined national poverty lines from some of the poorest countries in the world and converted those lines into a common currency by using purchasing power parity (PPP) exchange rates. The PPP exchange rates are constructed to ensure that the same quantity of goods and services are priced equivalently across countries. Once converted into a common currency, they found that in six of these very poor countries around the 1980s the value of the national poverty line was about $1 per day per person (in 1985 prices). This formed the basis for the first dollar-a-day international poverty line.
The IPL of $1.90, which was used until fall 2022, was derived as the mean of the national poverty lines of 15 poor countries in the 1990s, expressed in 2011 PPPs. The selection of these 15 poor countries was based on limited data at the time. With the gathering and analysis of new data from other low-income countries, we have expanded the reference group. The IPL is now derived as the median of the national poverty lines of 28 of the world’s poorest countries, expressed in 2017 PPPs. For more details about the methodology used in deriving and updating the IPL, see this blog and working paper. For how the IPL has been updated in the past, see Ferreira et al. (2016) and Ravallion et al. (2009).
How do the 2017 PPPs change global, regional, country-level estimates of extreme poverty?
The 2017 PPPs do not change global poverty in a substantial way. Yet there are meaningful changes at the regional level. For example, extreme poverty is reduced in Sub-Saharan Africa and increased slightly in each of the other regions, which nets out to almost zero at the global level. Sub-Saharan Africa still has the highest levels of people living in extreme poverty.
With the 2017 PPPs, poverty estimates for a few countries change considerably, changing their relative rankings with other countries. Most of these country-level changes reflect improvements in the quality of price data. For more details about the changes in global, regional, and country-level poverty profiles, see this working paper, this blog and this blog.
Why has the international poverty line increased from $1.90 to $2.15, yet global poverty has remained virtually unchanged?
The nominal value of the international poverty line has increased from $1.90 in 2011 prices to $2.15 in 2017 prices. However, the real value of the international poverty line remains virtually unchanged. In other words, a basket of goods and services that would cost $1.90 in 2011 in a typical low-income country would cost $2.15 in 2017 on average.
FAQs
As differences in price levels across the world evolve, the global poverty line has to be periodically updated to reflect these changes. That's why in September 2022 the international poverty line is being updated from $1.90 to $2.15 per person per day.
What is the poverty line adjusted for? ›
The current poverty line calculation is tied a household's food budget in the 1960s and adjusted for inflation. While significant, for most modern American households the cost of food has decreased as a share of expenses relative to other costs like housing, utilities, and more.
What are some key points about global poverty? ›
Top 20 Global Poverty Facts
- Nearly 22,000 children die each day due to living in poverty.
- There are 2.2 billion children in the world, and 1 billion of them live in poverty.
- A third of all poor in developing countries are children aged zero to 12.
The poverty line is the minimum amount of money a person needs to fulfill the basic necessities of life, like shelter and food. When families are below the poverty line, they qualify for help from the government.
How would you describe global poverty lines? ›
The international poverty line, which is currently $2.15 per person per day, is the threshold that determines whether someone is living in poverty. The line is based on the value of goods needed to sustain one adult.
What is the #1 cause of poverty? ›
The United Nations Social Policy and Development Division identifies “inequalities in income distribution and access to productive resources, basic social services, opportunities” and more as a cause for poverty. Groups like women, religious minorities, and racial minorities are the most vulnerable.
What are the 3 main problems of poverty? ›
What is the social problem of poverty? Poverty is a socio-economic issue with various negative impacts such as lack of education, cultural and religious discrimination, unemployment, overpopulation, and corruption.
What is the global issue of poverty? ›
Global poverty is one of the most pressing problems that the world faces today. The poorest in the world are often undernourished, without access to basic services such as electricity and safe drinking water; they have less access to education, and suffer from much poorer health.
Why is the poverty line so high? ›
Much of California's poverty occurs in Northern counties which are home to farming, mining, and manufacturing communities. High costs across the state have also led to higher poverty rates as often seen in San Francisco and Los Angeles, with 4.5 million living in poverty.
What does the poverty line tell us? ›
The poverty threshold, poverty limit, poverty line, or breadline is the minimum level of income deemed adequate in a particular country. The poverty line is usually calculated by estimating the total cost of one year's worth of necessities for the average adult.
According to the most recent report issued in January 2023, the poverty threshold for a family of four is $29,960. For an individual, the poverty threshold is $14,891. The US Department of Health and Human Services (HHS) issues its poverty guidelines based on the Census Bureau's poverty thresholds.
How does global poverty affect people's lives? ›
More than 700 million people live in extreme poverty
But it's not only about not having enough money to live on. Poverty affects many aspects of life, including not being able to afford access to education, food, health care and job security.
Who is most affected by poverty? ›
Children are disproportionately affected. Despite comprising one third of the global population, they represent half of those struggling to survive on less than $2.15 a day. An estimated 333 million children live in extreme poverty.
How is global poverty ratio changing? ›
There are more than a billion fewer people living below the International Poverty Line of $2.15 per day today than in 1990. On average, the number declined by 47 million every year, or 130,000 people each day. The scale of global poverty today, however, remains vast.
Has global poverty increased or decreased? ›
Low-income countries were most impacted and have yet to recover. In 2022, a total of 712 million people globally were living in extreme poverty, an increase of 23 million people compared to 2019.
What is the current global poverty trend? ›
The World Bank reports that 719 million people, 9.2% of the world's population, live on less than $2.15 a day. In 2022, 11.5% of the United States' population, 37.9 million people, lived in poverty. Sub-Saharan Africa has the highest rate of children living in extreme poverty, reaching 40% in 2022.
Has the poverty level changed? ›
The poverty rate rose from 11.7% in fall 2021 to 13.2% in the first quarter of 2023, according to the California Poverty Measure (CPM), a research effort by PPIC and the Stanford Center on Poverty and Inequality that accounts for housing costs and safety net benefits.
