Raising the Standard: The War on Global Poverty
There are two standard approaches to the measurement of poverty: an exclusive survey-based method, and the alternative method of using distribution from the surveys and means from the national accounts data. Over the last two decades, household surveys have shown a disturbing trend in terms of the decreasing amount of survey ‘capture’ of national accounts data. This chapter suggests a third method for measuring poverty; this method imputes the growth rate in national accounts consumption to the mean in the benchmark year 1987. The results using this method show world poverty decline to be considerably larger than that revealed by the ‘official’ World Bank exclusive survey method. This finding forms the basis of the suggestion that the world poverty line needs to be raised in order to reflect the drift from absolute to relative poverty in the developing world. The chapter also emphasizes the lack of any relationship, theoretical or empirical, between initial inequality and future trends in poverty. What matters is the inequality around the poverty line, not overall inequality.
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