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Is Global Poverty Falling? Not in Absolute Terms

9 points by mgunes 12y ago

cperciva 12y ago
What a strange article. It seems to be saying that the dramatic reduction in the number of poor people over the past two decades doesn't matter because the poorest person in the world now is just as poor as the poorest person in the world was in 1990. I'm pretty sure that the people who were poor in 1990 and aren't poor any more would differ.
rgbrenner 12y ago
The actual paper is a little clearer than the blog: http://papers.nber.org/tmp/80245-w20791.pdf http://papers.nber.org/tmp/80245-w20791.pdf Basically, it says that although the income of the poorest has risen, their consumption has risen at a much lower rate (and significantly lower than the median) -- see figure 2 on pg 28. Table 1.. says consumption (by those under 1.25/day) has increased from 0.73 to 0.88 over the past 30 years. So a 20% increase. The main point seems to be that the poorest have increased their consumption at a lower rate than the median.. so therefore they're being 'left behind'. But it seems to me that consumption would just be a lagging indicator of income...
- jordanb 12y ago
  Why would it be a lagging indicator? These are people who can't get enough calories in a day. If they get an increase in income they're not going to start saving up for a new car, they're going to spend it on more food. I think a more plausible explanation is simple inflation: Suppose you're a slum dweller earning money collecting scrap. And suppose the country around you sees an improvement in its economy. The value and/or quantity of the scrap you can collect goes up, but so does the price of the food you need.
  - rgbrenner 12y ago
    You're right about it not being a lagging indicator. I fell asleep after writing that, and realized something when I woke up... the paper takes those living below $1.25/day and then estimates the consumption floor at 1/2 of that: Both methods of quantifying the floor suggest a consumption floor today that is about half of the international poverty line of $1.25 a day. This is probably close to the consumption of essential foods for those living around $1.25 a day. Then says, even though progress has been made in reducing the number of people living below that level, it has not increased the consumption floor -- which is from the table I mentioned before. But why would you expect to see an increase in consumption if their income is still below $1.25/day? It capped the income, and then somehow expected increased consumption? If I had to guess, the increase in the consumption floor is simply from those increasing their income but still below the $1.25/day (moving from say, $0.80/day to $1/day). The paper acknowledges a decrease in the number of people living below $1.25.. so I think it would be wrong to say no progress has been made in reducing poverty. As far as the paper's point about the consumption floor not increasing at the same rate as average consumption.. I think you could make that argument using income as well.. So I think the paper simply confuses the issue.
gojomo 12y ago
This headline and story frame relies on a strained redefinition of what people usually mean by an "absolute" measure of poverty. The source paper doesn't have this problem: neither its title nor abstract refer to "absolute" poverty or even "global poverty" (which would tend make people think of rates-of-poverty). The paper clearly considers just the "floor" experienced by the "poorest" (of which there are fewer). In discussing its own data sources, the paper also says outright: "The latest results from these data confirm past findings that the developing world has seen impressive progress against absolute poverty over the last 30 years, with signs of acceleration since 2000." The WSJ story's author/editor/headline-writer should be embarrassed by the confusion-creating spin they've added.

9 points by mgunes 12y ago

What a strange article. It seems to be saying that the dramatic reduction in the number of poor people over the past two decades doesn't matter because the poorest person in the world now is just as poor as the poorest person in the world was in 1990. I'm pretty sure that the people who were poor in 1990 and aren't poor any more would differ.

rgbrenner 12y ago

The actual paper is a little clearer than the blog: http://papers.nber.org/tmp/80245-w20791.pdf http://papers.nber.org/tmp/80245-w20791.pdf Basically, it says that although the income of the poorest has risen, their consumption has risen at a much lower rate (and significantly lower than the median) -- see figure 2 on pg 28. Table 1.. says consumption (by those under 1.25/day) has increased from 0.73 to 0.88 over the past 30 years. So a 20% increase. The main point seems to be that the poorest have increased their consumption at a lower rate than the median.. so therefore they're being 'left behind'. But it seems to me that consumption would just be a lagging indicator of income...

jordanb 12y ago
Why would it be a lagging indicator? These are people who can't get enough calories in a day. If they get an increase in income they're not going to start saving up for a new car, they're going to spend it on more food. I think a more plausible explanation is simple inflation: Suppose you're a slum dweller earning money collecting scrap. And suppose the country around you sees an improvement in its economy. The value and/or quantity of the scrap you can collect goes up, but so does the price of the food you need.
- rgbrenner 12y ago
  You're right about it not being a lagging indicator. I fell asleep after writing that, and realized something when I woke up... the paper takes those living below $1.25/day and then estimates the consumption floor at 1/2 of that: Both methods of quantifying the floor suggest a consumption floor today that is about half of the international poverty line of $1.25 a day. This is probably close to the consumption of essential foods for those living around $1.25 a day. Then says, even though progress has been made in reducing the number of people living below that level, it has not increased the consumption floor -- which is from the table I mentioned before. But why would you expect to see an increase in consumption if their income is still below $1.25/day? It capped the income, and then somehow expected increased consumption? If I had to guess, the increase in the consumption floor is simply from those increasing their income but still below the $1.25/day (moving from say, $0.80/day to $1/day). The paper acknowledges a decrease in the number of people living below $1.25.. so I think it would be wrong to say no progress has been made in reducing poverty. As far as the paper's point about the consumption floor not increasing at the same rate as average consumption.. I think you could make that argument using income as well.. So I think the paper simply confuses the issue.

gojomo 12y ago

This headline and story frame relies on a strained redefinition of what people usually mean by an "absolute" measure of poverty. The source paper doesn't have this problem: neither its title nor abstract refer to "absolute" poverty or even "global poverty" (which would tend make people think of rates-of-poverty). The paper clearly considers just the "floor" experienced by the "poorest" (of which there are fewer). In discussing its own data sources, the paper also says outright: "The latest results from these data confirm past findings that the developing world has seen impressive progress against absolute poverty over the last 30 years, with signs of acceleration since 2000." The WSJ story's author/editor/headline-writer should be embarrassed by the confusion-creating spin they've added.