New data on global poverty

Researchers have developed new and more robust ways to measure global extreme poverty, based on people’s access to essential goods. Jason Hickel, Michail Moatsos and Dylan Sullivan show that this data presents a more complex – and more troubling – story of poverty than existing narratives would suggest.

In international development circles, most people are familiar with the World Bank’s data showing that extreme poverty has declined dramatically over the past several decades, from 43 per cent of the world’s population in 1981 to less than 10 per cent today. This narrative is based on the World Bank’s method of calculating the share of people who live on less than $1.90 per day (in 2011 “PPP” terms).

But a growing body of literature argues that the World Bank’s PPP-based method suffers from a major empirical limitation, in that it does not account for the cost of meeting basic needs in any given context (see here, here and here). Having more than $1.90 PPP does not guarantee that a person can afford the specific goods and services that are necessary for survival.

In recent years, scholars have developed a more accurate method for measuring extreme poverty, by comparing people’s incomes to the prices of essential goods in each country (specifically food, shelter, clothing and fuel). This approach is known as the “basic needs poverty line” (BNPL), and it more closely approximates what the original concept of “extreme poverty” was intended to measure. The OECD has published BNPL poverty figures for most countries. Robust data exists for the years during which both household surveys and direct price data are available, which generally covers the period 1980-2008 (more on this below).

A new time series of global extreme poverty

While the OECD publication is the most reliable source for BNPL time series data, the published global series does not include the original price data for one of the world’s largest economies, China. With Michail Moatsos, the author of the OECD work, we incorporated the original price data for China in a recent paper in New Political Economy, presenting a complete picture of global poverty using the BNPL approach. Here, we connect this with additional BNPL data for the year 2011, drawing on research by Robert Allen. Allen relies on different sources of price data than the OECD paper, which may affect the trend from 2008 to