STORY Oct 07, 2018

Tracking poverty in its many forms

Lifting people out of poverty is central to both national and international development agendas. Since 1990, the World Bank has tracked global poverty using an international poverty line, a level of income or consumption below which a person is considered to be living in "extreme poverty". To ensure that the poverty line represents the same material standard of living in every country, its value is adjusted for price differences using purchasing power parity exchange rates (PPPs).

International poverty lines help to measure progress across the world.

The current international poverty line of $1.90 per person per day at 2011 PPPs is used to track the goal of ending poverty by 2030, shared by the World Bank and UN's Agenda for Sustainable Development. This $1.90 line reflects the value of national poverty lines in some of the poorest countries in the world, and is sometimes referred to as the "extreme poverty line".

As complementary measures, the World Bank also tracks poverty at two higher international poverty lines: those living below $3.20 a day, and those below $5.50 a day. These two lines reflect the typical national poverty lines seen in lower- and upper-middle-income countries, respectively.

The chart below shows the share of people living below each of these thresholds across all regions. We can see, for example, that extreme poverty, as measured by the $1.90 line, affects a small minority in East Asia and the Pacific, but that more than 3 in 10 live under the higher threshold of $5.50 a day. A similar pattern is seen in the Middle east and North Africa. 

Poverty rates generally higher by national definitions than international ones.

At the country level, governments and others monitor progress based on national poverty lines, which reflect minimum nutritional, clothing and other needs required for being considered non-poor locally. Such needs vary with the level of development of the country, with countries typically revising its poverty lines upwards as they get richer.

In many rich countries, the national poverty line is set as a constant proportion of median income, and thus increases as overall incomes rise. It follows that richer countries have higher poverty lines – for example, Germany's is equivalent to $26 (PPP) per person per day, while poorer countries have considerably lower ones – for example Angola at just around $2 a day.

World Development Indicators reports poverty at national poverty lines, as well as at the international thresholds. Indeed, the Sustainable Development Goals set targets for both national and international poverty.

In most countries, the share of those living in poverty at the national line is higher than the international one based on $1.90. However, in Sub-Saharan Africa we still find many countries with poverty rates below this value. For example, in Malawi in 2010, around 71 percent of the population lived below $1.90, but just 51 percent lived below the national poverty line, leaving at least 20 percent of the population considered "extremely poor" under international standards, but "not poor" domestically.

Poverty is a concept that goes beyond the monetary aspects captured by the measures above, and is also increasingly measured using non-monetary indicators, and multidimensional measures. The WDI tracks several indicators that are frequently used in multidimensional poverty measures, such as child malnutrition and educational attainment, but does not track any composite measures.