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Debates on the Measurement of Global Poverty$
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Sudhir Anand, Paul Segal, and Joseph E. Stiglitz

Print publication date: 2010

Print ISBN-13: 9780199558032

Published to Oxford Scholarship Online: May 2010

DOI: 10.1093/acprof:oso/9780199558032.001.0001

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How Not to Count the Poor

How Not to Count the Poor

Chapter:
(p.42) 3 How Not to Count the Poor
Source:
Debates on the Measurement of Global Poverty
Author(s):

Sanjay G. Reddy

Thomas Pogge

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199558032.003.0003

This chapter argues that the World Bank's approach to estimating the extent, distribution, and trend of global income poverty is neither meaningful nor reliable. The Bank uses an arbitrary international poverty line that is not adequately anchored in any specification of the real requirements of human beings. Moreover, it employs a concept of purchasing power ‘equivalence’ that is neither well defined nor appropriate for poverty assessment. These difficulties are inherent in the Bank's ‘money-metric’ approach and cannot be credibly overcome without dispensing with this approach altogether. In addition, the Bank extrapolates incorrectly from limited data and thereby creates an appearance of precision that masks the high probable error of its estimates. It is difficult to judge the nature and extent of the errors in global poverty estimates that these three flaws produce. However, there is reason to believe that the Bank's approach may have led it to understate the extent of global income poverty and to infer without adequate justification that global income poverty has steeply declined in the recent period. A new methodology of global poverty assessment, focused directly on what is needed to achieve elementary human requirements, is feasible and necessary. A practical approach to implementing an alternative is described.

Keywords:   World Bank, global poverty line, purchasing power, money-metric poverty measures

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