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id	title	slug	type	status	content	archieml	archieml_update_statistics	published_at	updated_at	gdocSuccessorId	authors	excerpt	created_at_in_wordpress	updated_at_in_wordpress	featured_image	formattingOptions	markdown	wpApiSnapshot
41450	Global poverty in an unequal world: Who is considered poor in a rich country? And what does this mean for our understanding of global poverty?	higher-poverty-global-line	post	publish	<!-- wp:html --> <div class="blog-info"> <p>Our World in Data presents the data and research to make progress against the world’s largest problems.<br>This post draws on data and research discussed in our entries on <strong><a href="https://ourworldindata.org/income-inequality" target="_blank" rel="noopener">Income Inequality</a></strong>, <strong><a href="https://ourworldindata.org/poverty" target="_blank" rel="noopener">Poverty</a></strong> and <strong><a href="https://ourworldindata.org/economic-growth" target="_blank" rel="noopener">Economic Growth</a></strong>.</p> </div> <!-- /wp:html --> <!-- wp:paragraph --> <p><strong><em>Abstract:</em></strong><em> The extremely low poverty line that the UN relies on has the advantage that it draws the attention to the very poorest people in the world. It has the disadvantage that it ignores what is happening to the incomes of the 90% of the world population who live above the extreme poverty threshold.<br>The global poverty line that the UN relies on is based on the national poverty lines in the world’s poorest countries. In this article I ask what global poverty looks like if we rely on the notions of poverty that are common in the world’s rich countries – like Denmark, the US, or Germany. Based on the evidence I ask what our aspirations for the future of global poverty reduction might be.</em></p> <!-- /wp:paragraph --> <!-- wp:separator --> <hr class="wp-block-separator"/> <!-- /wp:separator --> <!-- wp-block-tombstone 53780 --> <!-- wp:owid/help --> <!-- wp:heading {"level":4} --> <h4>The World Bank has updated its poverty and inequality data</h4> <!-- /wp:heading --> <!-- wp:paragraph --> <p>The data in this article uses a previous release of the World Bank's poverty and inequality data in which incomes are expressed in 2011 international-$.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The World Bank has since updated its methods, and now measures incomes in 2017 international-$. As part of this change, the International Poverty Line used to measure extreme poverty has also been updated: from $1.90 (in 2011 prices) to $2.15 (in 2017 prices).</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>This has had little effect on our overall understanding of poverty and inequality around the world. But because of the change of units, many of the figures mentioned in this article will differ from the latest World Bank figures.</p> <!-- /wp:paragraph --> <!-- wp:owid/prominent-link {"title":"","linkUrl":"https://ourworldindata.org/from-1-90-to-2-15-a-day-the-updated-international-poverty-line","className":"is-style-thin"} --> <!-- wp:paragraph --> <p>Read more about the World Bank's updated methodology</p> <!-- /wp:paragraph --> <!-- /wp:owid/prominent-link --> <!-- wp:owid/prominent-link {"title":"Explore the latest World Bank data on poverty and inequality","linkUrl":"https://ourworldindata.org/explorers/poverty-explorer","className":"is-style-thin"} --> <!-- wp:paragraph --> <p></p> <!-- /wp:paragraph --> <!-- /wp:owid/prominent-link --> <!-- /wp:owid/help --> <!-- wp:paragraph --> <p>In every country of the world there are people living in poverty. Even in the world’s richest countries the poorest people often live in poor housing and struggle to afford basic goods and services like heating, transport, and healthy food for themselves and their family.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Those who are in monetary poverty also have much poorer living conditions more broadly. Even in a rich and relatively equal country like Denmark middle-aged men who are among the poorest 20% of the population die on average <em>9 years</em> earlier than those among the richest 20%.{ref}Brønnum-Hansen H, Foverskov E, Andersen I. Income inequality in life expectancy and disability-free life expectancy in Denmark. J Epidemiol Community Health 2021;75:145-150. <a href="https://jech.bmj.com/content/75/2/145">https://jech.bmj.com/content/75/2/145</a> {/ref} In Denmark a person who lives on less than $30 per day is considered poor, and it is the declared goal of the country to reduce poverty relative to this threshold.{ref} For the moment it is important to note that this $30 per day poverty line is defined in international-$ and therefore comparable with the ‘International Poverty Line’ discussed in the following section. Much more details about how to compare incomes across countries, the income concept here, and the definition of this poverty line follows further below in this text.{/ref} </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Countries that are much poorer than Denmark also have the goal to reduce poverty. The United Nations declared the objective of <a href="https://sdg-tracker.org/">ending ‘extreme poverty’</a> to be the number 1 goal of the global <em>Sustainable Development Goals</em>. <a href="https://www.un.org/en/global-issues/ending-poverty">According</a> to the UN a person is considered to live in extreme poverty when he or she is living on less than $1.90 per day, this is called the <em>International Poverty Line</em>. According to the latest global statistics almost <em><a href="https://ourworldindata.org/poverty?insight=the-pandemic-pushed-millions-into-extreme-poverty#key-insights-on-poverty">one in ten</a></em> people live in extreme poverty globally.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>If we know that poverty is a large problem even in high income countries like Denmark where the poverty line is set at around $30 a day, why should we use an International Poverty Line that is so extremely low to measure poverty globally?</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>It is the reality of our extremely unequal world – in which every tenth person lives in extreme poverty – that makes such an extremely low poverty line necessary. Without having an <em>extremely</em> low poverty line we would not be aware of the fact that a large share of the world lives in such extreme poverty. The UN’s global poverty line is valuable because it draws attention to the reality of extreme poverty in our world.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>In a world where the majority still lives on very low incomes it would be wrong if the UN decided to measure global poverty solely by a poverty line as high as the poverty line of Denmark. It would mean that the global statistics gloss over the extremely large and important income differences among the poorest billions in the world. It would mean that the difference between those who live on only $1 per day and those who have an income that is more than 20-times higher would be entirely disregarded. They would all be considered poor, and the reality that some of them are much poorer than others would be hidden.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Slightly higher global poverty lines – such as the poverty line of $3.10 per day that Kate Raworth relies on in her ‘Doughnut’ framework, or the poverty line of $7.40 per day that anthropologist Jason Hickel uses in his work, or Bob Allen’s absolute poverty line based on minimal nutritional requirements – all have the same value.{ref}Kate Raworth (2017) – A Doughnut for the Anthropocene: humanity's compass in the 21st century. In The Lancet Planetary Health. Volume 1, Issue 2, E48-E49, May 01, 2017. Open Access DOI: <a href="https://doi.org/10.1016/S2542-5196(17)30028-1">https://doi.org/10.1016/S2542-5196(17)30028-1</a> You find the metrics that the Doughnut relies on <a href="https://www.thelancet.com/cms/10.1016/S2542-5196(17)30028-1/attachment/2d58fdae-741c-4016-84cd-2fc0b1e94f49/mmc1.pdf">in the Appendix here</a>.<br>Jason Hickel – <a href="https://www.theguardian.com/global-development-professionals-network/2015/nov/01/global-poverty-is-worse-than-you-think-could-you-live-on-190-a-day">Could you live on $1.90 a day? That's the international poverty line</a> and <a href="https://twitter.com/jasonhickel/status/1012339440113594368">here</a>.<br>Allen, Robert C.(201). – <em>Absolute Poverty: When Necessity Displaces Desire</em>. American Economic Review, 107 (12): 3690-3721.DOI: 10.1257/aer.20161080{/ref} These low poverty lines allow us to understand the material living conditions of the poorest people in the world and have been successful in drawing attention to the terrible depths of poverty experienced by a large share of the world's population. The only way to achieve these goals is to rely on extremely low poverty lines.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Indeed, there is an argument for using an even lower poverty line. To understand what is happening to the <em>very</em> poorest in the world, we need to look even lower than $1.90. This is because one of the biggest failures of development is that over the last decades the incomes of <a href="https://ourworldindata.org/poverty?insight=hundreds-of-millions-will-remain-in-extreme-poverty-on-current-trends#key-insights-on-poverty">the very poorest</a> people have not risen. A big part of the reason for why this issue doesn’t get discussed enough is that the International Poverty Line we rely on is too high to see this fact.</p> <!-- /wp:paragraph --> <!-- wp:heading {"level":4} --> <h4>Why not both?</h4> <!-- /wp:heading --> <!-- wp:paragraph --> <p>Yet, <em>only </em>measuring global poverty relative to such extremely low poverty lines has its own large downside. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>By focusing on an income threshold that is lower than the incomes of 90% of the global population we are ignoring what is happening to the majority of the world’s population. This matters. The majority of the world do not live in extreme poverty <a href="https://ourworldindata.org/extreme-history-methods">anymore</a>, but billions are nevertheless living in great poverty still.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The obvious solution to the problem that the majority of the world is not considered by the International Poverty Line is to use an <em>additional</em> poverty line. This is not a new idea. One poverty researcher who has made the argument for an additional higher global poverty line based on the notions of poverty in rich countries is Lant Pritchett – you find it in his short, yet widely-cited essay <em>‘The case for a high global poverty line’ </em>from eight years ago.{ref}Lant Pritchett (2013) – Monitoring progress on poverty: the case for a high global poverty line. Online here <a href="https://web.archive.org/web/20150608125138/http://www.odi.org:80/sites/odi.org.uk/files/odi-assets/publications-opinion-files/8440.pdf">https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/8440.pdf</a>{/ref}</p> <!-- /wp:paragraph --> <!-- wp:heading {"level":4} --> <h4>Defining global poverty lines</h4> <!-- /wp:heading --> <!-- wp:paragraph --> <p>The definition of poverty differs between countries. Poorer countries set much lower poverty lines than richer countries.{ref}Jolliffe and Prydz (2016){/ref} This means that if we were to simply rely on national poverty definitions for a global measure of poverty we would end up with a measurement framework in which <em>where</em> a person happens to live would determine whether they are poor or not: If we would count as poor those who are defined nationally as poor we would end up counting a person who lives on $20 per day as poor in a rich country, while at the same time counting a person who lives on $2 as not-poor when they happen to live in a very poor country.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>One way out of this problem is to set global poverty lines based on the national definitions, but to apply them globally. This is how the UN decided to define the International Poverty Line. In order to ground this global poverty line on something more than the views of global poverty researchers, it is based on the existing definitions of poverty adopted in countries around the world at the national level, but to avoid the problem outlined above they apply the national poverty lines globally. As we explain <a href="https://ourworldindata.org/extreme-poverty#setting-the-international-poverty-line">here</a> in some detail, the $1.90 per day poverty line is set to reflect the national poverty lines adopted in the world’s <em>poorest</em> countries.{ref}Specifically, the line is set at the average national poverty line amongst 15 particular low-income countries. As Jolliffe and Prydz (2016) demonstrate however, this is also the average poverty line found among the poorest quarter of countries with available data, and also among countries falling into the World Bank’s low-income category.{/ref} Applying this poverty line globally means that a person who lives on less than $1.90 per day is considered extremely poor no matter where they live.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>In recent years the World Bank has applied this same methodology to countries in the middle-income bracket, those countries with a GNI per capita between $1000 and $12,500. Based on the poverty lines in these countries they have set additional global poverty lines at $3.20 and $5.50 per day, which are now <a href="https://data.worldbank.org/indicator/SI.POV.LMIC">directly</a> <a href="https://data.worldbank.org/indicator/SI.POV.UMIC">available</a> via the World Bank statistics.{ref}The study on which these thresholds rely is Jolliffe, D., Prydz, E.B. Estimating international poverty lines from comparable national thresholds. J Econ Inequal 14, 185–198 (2016). <a href="https://doi.org/10.1007/s10888-016-9327-5">https://doi.org/10.1007/s10888-016-9327-5</a> The researchers also report an average high-income country poverty line of $21.70 per day.<br>High income countries in the World Bank framework are however relatively poor compared to the countries that I’m focusing on here – the cutoff for a high-income country according to the World Bank is $12,536, about a quarter of the GNI of Germany and only a fifth of the US. Accordingly, the poverty cutoff is much lower than in those countries. <a href="https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups">Here you find the World Bank income classification cutoffs</a>.{/ref}</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>What I want to do here is to see what a global poverty line would be if we rely on the notion of poverty in rich countries — countries like Denmark, the US, or Germany.{ref}The range of incomes considered ‘middle’ and ‘high’ income countries according to the World Bank are very low relative to rich countries. High-income economies are those with a GNI per capita of $12,536 or more. The range of middle-income economies begins at a GNI per capita of $1,036. In this post I want to rely on countries like Denmark; higher income countries by any standard.{/ref} That is what Pritchett suggested eight years ago: “Since the origin of the [International Poverty Line] was just to adopt as a global lower bound the poverty lines used by the poorest countries, it symmetrically makes sense to say that the global upper bound poverty line is based on the poverty line used in rich countries.” </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The definition of poverty is certainly not an easy ethical question and thoughtful people disagree about it in ways that have meaningful consequences for our understanding of the world. There are also interesting proposals for hybrid poverty lines that combine absolute and weakly-relative measures; see Ravallion (2019) for a recent proposal.{ref}Martin Ravallion (2019) – <a href="https://www.nber.org/papers/w26211">On Measuring Global Poverty</a>. NBER Working Paper 26211. DOI 10.3386/w26211{/ref} And I would also recommend Tony Atkinson’s last book ‘<a href="https://www.tony-atkinson.com/book-measuring-poverty-around-the-world/">Measuring Poverty around the World</a>’ for an excellent recent overview of the topic.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>→ To understand how it is possible to compare poverty levels and living standards across countries you need to know the basics of global poverty measurement. You find a summary of the basics in the following fold-out box.</p> <!-- /wp:paragraph --> <!-- wp:owid/additional-information --> <!-- wp:heading {"level":3} --> <h3>The basics of global poverty measurement</h3> <!-- /wp:heading --> <!-- wp:columns {"className":"is-style-sticky-right"} --> <div class="wp-block-columns is-style-sticky-right"><!-- wp:column --> <div class="wp-block-column"><!-- wp:paragraph --> <p>Throughout this article – and in global income and expenditure data generally – the statisticians who produce these figures are careful to make these numbers as comparable as possible. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>First, many poorer people rely on subsistence farming and do not have a monetary income. To take this into account and make a fair comparison of their living standards, the statisticians that produce these figures estimate the monetary value of their home production and add it to their income/expenditure.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Second, price changes over time (inflation) and price differences across countries are both taken into account: all measures are adjusted for differences in purchasing power.{ref}This is possible by relying on the work of the <a href="https://www.worldbank.org/en/programs/icp">International Comparison Project</a>, which monitors the prices of goods and services around the world.{/ref} To this end incomes and expenditures are expressed in so-called <em>international dollars</em>. This is a hypothetical currency that results from the price adjustments across time and place. An international dollar is defined as having the same purchasing power as one US-$ <em>in the US</em>. This means no matter where in the world a person is living on int.-$30, they can buy the goods and services that cost $30 in the US. None of these adjustments are ever going to be perfect, but in a world where price differences are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do.{ref}Angus Deaton and Alan Heston (2010) discuss the methods behind such price adjustments and many of the difficulties and limitations involved.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Deaton, A., and Heston, A. 2010. “Understanding PPPs and PPP-Based National Accounts.” <em>American Economic Journal: Macroeconomics</em> 2 (4): 1–35. A working paper version is available online <a href="https://www.nber.org/papers/w14499">here</a>.{/ref}</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Throughout this text I’m always adjusting incomes for price changes over time and price differences between countries in this way. All dollar values discussed here are presented in int.-$; the UN does the same for the $1.90 poverty line. Sometimes I leave out ‘international’ as it is awkward to repeat it all the time; but every time I mention any $ amount in this text I’m referring to international-$ and not US-$.{ref}Keep in mind that in the special case of the US the US-$ equals the international-$.{/ref}</p> <!-- /wp:paragraph --></div> <!-- /wp:column --> <!-- wp:column --> <div class="wp-block-column"><!-- wp:html /--></div> <!-- /wp:column --></div> <!-- /wp:columns --> <!-- /wp:owid/additional-information --> <!-- wp:heading {"level":3} --> <h3>An additional higher poverty line of $30 per day</h3> <!-- /wp:heading --> <!-- wp:paragraph --> <p>Pritchett made his proposal based on data and prices a decade ago and so it is necessary to update his calculations. But I want to go beyond Pritchett’s approach and additionally provide a number of other relevant comparisons to inform our understanding of who is considered poor in a rich country.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>By following this idea I find that a poverty of 30 international-$ per day corresponds to the notion of poverty in a rich country. In the following section I consider a long number of benchmarks that made me arrive at this poverty line. Here is the short summary of these comparisons:</p> <!-- /wp:paragraph --> <!-- wp:list --> <ul><li><strong>European countries: </strong>The span of poverty lines in high-income countries in Europe ranges from <strong>int.-$25 to int.-$38 per day</strong>.</li></ul> <!-- /wp:list --> <!-- wp:list --> <ul><li><strong>The US: </strong>A comparison with the poverty line in the US is not straightforward, as explained in some detail below; two different approaches arrive at poverty lines of <strong>int.-$23 and int.-$35 per day</strong> respectively.</li></ul> <!-- /wp:list --> <!-- wp:list --> <ul><li><strong>Survey result: </strong>A study surveyed people in a high-income country to ask at what income a person is considered poor. The study found that the mean income threshold suggested by the surveyed population corresponds to an income of <strong>int.-$37.58 per day</strong></li></ul> <!-- /wp:list --> <!-- wp:list --> <ul><li><strong>Proposal to replace the categorization into developing and developed countries: </strong>In the book ‘Factfulness’ the authors recommend replacing the simplistic categorization of countries into developing and developed countries with a finer grained structure. The high-income cutoff the authors suggest is <strong>int.-$32 per day</strong>.</li></ul> <!-- /wp:list --> <!-- wp:list --> <ul><li><strong>UBI: </strong>The daily income paid as ‘Universal Basic Income’ in a pilot study in Germany corresponds to an income of <strong>int.-$48.19 per day</strong>.</li></ul> <!-- /wp:list --> <!-- wp:list --> <ul><li><strong>Social care: </strong>The average basic social care payout in Germany (‘Hartz-IV’) corresponds to <strong>int.-$30.78 per day</strong></li></ul> <!-- /wp:list --> <!-- wp:paragraph --> <p>The range of possible higher poverty lines based on richer countries is wide, as the list of benchmarks suggests. At the lower end I believe that it might be as low as $25 per day, and on the higher end it might be as high as $40 or $50 per day. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Just as someone who lives on less than $1.90 per day is defined as <em>extremely </em>poor, a person who lives on less than $30 a day could be considered <em>moderately </em>poor.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>A reality check for any poverty line you might want to consider is to ask yourself what you think about living on less than that poverty line yourself. I lived on less than $30 per day before and would consider myself poor if I’d fall back on that income level again.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>In the following box you find the sources and calculations of the benchmarks that led me to my $30 per poverty line proposal.</p> <!-- /wp:paragraph --> <!-- wp:owid/additional-information {"defaultOpen":false} --> <!-- wp:heading {"level":3} --> <h3>Who is considered poor in rich countries? Poverty lines and other relevant benchmarks</h3> <!-- /wp:heading --> <!-- wp:columns {"className":"is-style-sticky-right"} --> <div class="wp-block-columns is-style-sticky-right"><!-- wp:column --> <div class="wp-block-column"><!-- wp:heading {"level":4} --> <h4>Poverty lines in European countries</h4> <!-- /wp:heading --> <!-- wp:paragraph --> <p>As mentioned before most European countries set their poverty line at 60% of the median income in the country. In his original proposal Pritchett was relying on this 60% of median cut-off.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Calculating the poverty line for European countries therefore means that we look up their median income and then multiply it by 0.6. This is less straightforward than it might first appear. The reason for that is that there are many different income concepts. You quickly realize that it is not easy to define a person’s income if you ask yourself what your own income is. Do you take government transfers into account or not? Do you take your partner’s income into account and divide it by two? How do you take into account that you have a child for which you need to pay? It is possible to take these and many other aspects into account and arrive at useful statistics, but various sensible ways of addressing such questions lead to many different income metrics. As such, in comparing different poverty thresholds across countries we have to take care to avoid mixing different income concepts as much as possible. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>One important difference is how incomes are adjusted for the size of the household: whether the total household income is simply divided by the number of people (including children) – ‘per capita’ income – or whether some adjustment is made to account for the fact that larger households, and particularly households with children, face lower costs per person – known as ‘equivalised’ income. Whereas EU countries, like other rich countries, use equivalised income to measure poverty, the UN’s measurement of global poverty is based on a global dataset of per capita incomes. This dataset is called <a href="http://iresearch.worldbank.org/PovcalNet/povDuplicateWB.aspx">PovcalNet</a>, and it is this that we must use in order to make comparisons of poverty measures in different countries according to the same income concept.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>In this dataset we find the median income for countries around the world and we can take that median income and then apply the logic on which the European poverty lines are based. In the extensive footnote here you find more details and the full calculations.{ref}The European reference incomes are national median equivalised disposable income after social transfers.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The disposable household income including all income from work (employee wages and self-employment earnings), private income from investment and property, transfers between households, and all social transfers received in cash including old-age pensions. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Eurostat applies an equivalisation factor calculated according to the OECD-modified scale first proposed in 1994. The UN/World Bank is not.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>This is according to Eurostat <a href="https://appsso.eurostat.ec.europa.eu/nui/show.do?query=BOOKMARK_DS-050270_QID_6AF25E11_UID_-3F171EB0&layout=TIME,C,X,0;GEO,L,Y,0;QUANTILE,L,Z,0;INDIC_IL,L,Z,1;CURRENCY,L,Z,2;INDICATORS,C,Z,3;&zSelection=DS-050270INDIC_IL,TC;DS-050270CURRENCY,EUR;DS-050270INDICATORS,OBS_FLAG;DS-050270QUANTILE,D1;&rankName1=INDIC-IL_1_2_-1_2&rankName2=CURRENCY_1_2_-1_2&rankName3=INDICATORS_1_2_-1_2&rankName4=QUANTILE_1_2_-1_2&rankName5=TIME_1_0_0_0&rankName6=GEO_1_2_0_1&sortC=ASC_-1_FIRST&rStp=&cStp=&rDCh=&cDCh=&rDM=true&cDM=true&footnes=false&empty=false&wai=false&time_mode=ROLLING&time_most_recent=true&lang=EN&cfo=%23%23%23%2C%23%23%23.%23%23%23">here</a>, where you also find the relevant data. (If the link should break, search on Google for ‘Distribution of income by quantiles - EU-SILC and ECHP surveys’.)</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>There are various ways of bringing the national poverty lines with reference to the national median equivalised disposable income after social transfers in line with the income/expenditure concept used in PovcalNet.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Joliffe and Prydz follow a different approach and their paper is very relevant for anyone interested in this question here. One alternative to the approach I’m following in this article would be to start from the poverty lines they estimated (based on the poverty headcount ratio) and apply the growth rate of the median income since the publication of their study. Yet another possibility would of course be to repeat their analysis with the up-to-date data. I am not following either of these approaches because I believe for a wide audience they are less transparent that the approach here – which is simply: I rely on the same dataset so that I rely on the same income concept, then look up the median income and multiply it by 0.6.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>This is the reference: Jolliffe & Prydz (2016). Estimating international poverty lines from comparable national thresholds. The Journal of Economic Inequality, 14(2), 185-198.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>–––</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The following are the relevant calculations. All of them are based on PovcalNet data:</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p><strong>Germany’s</strong> median monthly income in 2017 was $1417.29 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is 0.6$1417.29=$850.374/30=$28.35 per day</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p><strong>Sweden’s</strong> median monthly income in 2017 was $1469 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61469)/30=$29.38 per day</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p><strong>Norway’s</strong> median monthly income in 2017 was $1890 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61890)/30=$37.8 per day</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p><strong>Austria’s</strong> median monthly income in 2017 was $1534 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61534)/30=$30.68 per day</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>In the <strong>UK</strong> the median monthly income in 2017 was $1252 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61252)/30=$25.04 per day</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p><strong>France’s</strong> median monthly income in 2017 was $1364 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61364)/30=$27.28 per day</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p><strong>Switzerland’s</strong> median monthly income in 2017 was $1791 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61791)/30=$35.82 per day</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p><strong>Spain’s</strong> median monthly income in 2017 was $982 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.6982)/30=$19.64 per day</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p><strong>Iceland’s</strong> median monthly income in 2017 was $1582 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61582)/30=$31.64 per day</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p><strong>Luxembourg’s</strong> median monthly income in 2017 was $2193 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.62193)/30=$43.86 per day</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p><strong>Netherland’s</strong> median monthly income in 2017 was $1430 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61430)/30=$28.6 per day</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p><strong>Belgium’s</strong> median monthly income in 2017 was $1346 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61346)/30=$26.92 per day</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p><strong>Denmark’s</strong> median monthly income in 2017 was $1453 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61453)/30=$29.06 per day</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p><strong>Ireland’s</strong> median monthly income in 2017 was $1234 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61234)/30=$24.68 per day</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p><strong>Finland’s</strong> median monthly income in 2017 was $1361 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61361)/30=$27.22 per day{/ref}</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>As high-income European countries I’m referring to those European countries, which <a href="http://appsso.eurostat.ec.europa.eu/nui/submitViewTableAction.do">according to the Eurostat statistics</a> had a higher income in 2019 than the European average. These are the following countries: Finland, Netherlands, Belgium, Sweden, Germany, France, Iceland, Switzerland, Norway, Luxembourg, Denmark, Austria, Ireland, and the UK.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>These are the poverty lines for daily income in a number of high-income European countries (based on 60% of the median incomes from PovcalNet):</p> <!-- /wp:paragraph --> <!-- wp:list --> <ul><li>Sweden: $29.40 per da</li><li>Norway: $37.80 per day</li><li>Austria: $31 per day</li><li>UK: $25.04 per day</li><li>Switzerland: $35.82 per day</li><li>Germany: $28.35 per day</li><li>France: $27.28 per day</li><li>Luxembourg: $43.86 per day</li><li>Finland: $27.22 per day</li><li>Iceland: $31.64 per day</li><li>Ireland: $24.68 per day</li><li>Netherlands: $28.6 per day</li><li>Belgium: $26.92 per day</li><li>Denmark: $29.06 per day</li></ul> <!-- /wp:list --> <!-- wp:paragraph --> <p>The span of poverty lines in these countries ranges from $25 (for the UK and Ireland) up to $38 (for Norway); in the small country of Luxembourg the poverty line is higher.</p> <!-- /wp:paragraph --> <!-- wp:heading {"level":4} --> <h4>The poverty line in the US</h4> <!-- /wp:heading --> <!-- wp:paragraph --> <p>Unlike European countries, the US does not set the poverty line in a relative way. Instead the US poverty line dates back to the work of Mollie Orshansky, an economist working for the Social Security Administration in the early 1960s. Since then it has been of course revised for price changes, but otherwise it remained unchanged.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The US poverty line is <a href="https://en.wikipedia.org/wiki/Poverty_in_the_United_States#Measuring_poverty">very often</a> criticised as being too low. Those that criticize the US poverty line in that way therefore suggest that the severity of poverty in the US is understated in the statistics. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>How high is the poverty line in the US? In 2020 the poverty threshold for a single person under 65 was $30, measured in 2011 international-$ per day to be comparable with the other figures in this article.{ref}According to the "<a href="https://www.govinfo.gov/content/pkg/FR-2020-01-17/pdf/2020-00858.pdf">Annual Update of the HHS Poverty Guidelines</a>" the poverty line in the US is an annual income of US$12,760. That is in 2020 price. According to the <a href="https://data.worldbank.org/indicator/FP.CPI.TOTL?locations=US">World Bank</a>, the Consumer Price Index in the US in 2020 was 118.7 and in 2011 it was 103.2. So prices between the years rose by 118.7/103.2 - 1 = <strong>15%</strong>.<br><br>Deflating the poverty line in to 2011 prices we get 12,760/1.15 = $11,096. And expressing that as a per day figure that is $11,096/365 = $30.40{/ref}</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Now the problem with comparing this poverty line with the global statistics is again that the income concept is different. The US crucially relies on an equivalence scale for adjusting the income cutoff depending on the household size.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>One alternative is to use the World Bank's poverty and inequality data – which expresses incomes in per capita terms – to find a 'harmonized' poverty line: the line that yields the same poverty rate in the World Bank data as the official poverty rate.{ref}This method was introduced by Jolliffe and Prydz (2016) and used by Jolliffe et al. (2022) as an ingredient of their method for setting the World Bank's international poverty lines.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Jolliffe, Dean, and Espen Beer Prydz. 2016. <em>Estimating International Poverty Lines from Comparable National Thresholds</em>. Washington, DC.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p><em>Jolliffe, Dean Mitchell, Daniel Gerszon Mahler, Christoph Lakner, Aziz Atamanov, and Samuel Kofi Tetteh Baah. 2022. Assessing the Impact of the 2017 PPPs on the International Poverty Line and Global Poverty. The World Bank. Available to read at the </em><a href="https://documents1.worldbank.org/curated/en/353811645450974574/pdf/Assessing-the-Impact-of-the-2017-PPPs-on-the-International-Poverty-Line-and-Global-Poverty.pdf"><em>World Bank here</em></a><em>.</em>{/ref}<br><br>The official poverty rate in the US in 2019 was <strong>10.5%</strong>, <a rel="noreferrer noopener" href="https://www.census.gov/content/dam/Census/library/publications/2020/demo/p60-270.pdf" target="_blank">as reported</a> by the U.S. Census Bureau. The poverty line that yields this rate in the World Bank's data is $22.53 (measured in 2011 international-$).{ref}You can see our detailed calculations in this <a href="https://colab.research.google.com/drive/1IzHT9NikKHrY9uGWKzDzaZ4VVpdc9m5E#scrollTo=qF_GSK2FX7tU&line=1&uniqifier=1">Google Colabs document</a>.{/ref}</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>An alternative is to apply the same concept that the Europeans are using for their poverty line determination. If the US would use the 60% of median income definition of poverty their poverty line would be int.-$32.8 per day{ref}The <strong>US</strong> median monthly income in 2017 was $1640 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61640)/30=$32.8 per day{/ref} Very close to the one-person poverty line based on Orshansky’s work.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>A somewhat comparable poverty line based on these three approaches therefore falls into the range of around $23 to $35 per day. Within the range of poverty lines in European countries.</p> <!-- /wp:paragraph --> <!-- wp:heading {"level":4} --> <h4>Survey results – Below which income do you consider a person poor? </h4> <!-- /wp:heading --> <!-- wp:paragraph --> <p>The UN and Pritchett rely on the existing poverty lines in low-income and high-income countries respectively to derive their poverty lines. We can follow other approaches too. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>An obvious one is to ask what people out there believe: Who is considered poor in a high-income country by people in high-income countries?</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>For the regular poverty report of the German government, a survey is conducted that asks Germans below which income level they consider someone as poor. The latest data is from the year 2015.{ref}These reports are called ‘Armuts- und Reichtumsbericht der Bundesregierung’ online at <a href="https://www.armuts-und-reichtumsbericht.de/DE/Startseite/start.html">armuts-und-reichtumsbericht.de</a></p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The latest survey was produced by aproxima and published in 2016. It is published as <a href="https://www.armuts-und-reichtumsbericht.de/SharedDocs/Downloads/Service/Studien/forschungsprojekt-wahrnehmung-armut-reichtum.pdf?__blob=publicationFile&v=5">Wahrnehmung von Armut und Reichtum in Deutschland, Ergebnisse der repräsentativen Bevölkerungsbefragung „ARB-Survey 2015“</a>, Berlin: Bundesministerium für Arbeit und Soziales (Hrsg.).{/ref}</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The mean answer given by the German population for a cutoff below which a person is considered poor was 947€ per month. In international dollars per day this corresponds to an income of <strong>int.-$37.58</strong>.{ref}The 2011 PPP conversion factor for private consumption (LCU per international $) for Germany in 2015 is 0.84 according to the World Bank <a href="https://ourworldindata.org/grapher/ppp-conversion-factor-for-private-consumption">here</a>.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>This means the perceived poverty threshold corresponds to €947/0.84=int.-$1,127.38 per month or int.-$37.58.{/ref}</p> <!-- /wp:paragraph --> <!-- wp:heading {"level":4} --> <h4>Universal Basic Income</h4> <!-- /wp:heading --> <!-- wp:paragraph --> <p><a href="https://en.wikipedia.org/wiki/Universal_basic_income">Universal Basic Income</a> (UBI) is a political idea that is becoming rapidly more popular.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>A large UBI study in Germany – called <a href="https://de.wikipedia.org/wiki/Mein_Grundeinkommen">‘Mein Grundeinkommen’</a> – sets this income at €1200. In international-$ this corresponds to an income of <strong>int.-$48.19 per day</strong>.{ref}The 2011 PPP conversion factor for private consumption (LCU per international $) for Germany in 2017 is 0.83 according to the World Bank <a href="https://ourworldindata.org/grapher/ppp-conversion-factor-for-private-consumption">here</a>.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>This means the UBI corresponds to 1200/0.83=int.-$1,445.78 per month or int.-$48.19.{/ref}</p> <!-- /wp:paragraph --> <!-- wp:heading {"level":4} --> <h4>Social security in Germany</h4> <!-- /wp:heading --> <!-- wp:paragraph --> <p>Germany pays basic social care for its citizens. This social security payment is referred to as ‘Hartz-IV’. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>How much a person receives depends on the particular circumstances of the individual, but we can look at the average payment. In 2018 a single person <a href="https://www.sueddeutsche.de/wirtschaft/wie-viel-geld-bekommt-ein-hartz-iv-empfaenger-1.3905657">received on average</a> 783 Euro per month. That corresponds to <strong>int.-$30.78 per day</strong>.{ref}That’s €783/0.834=int.-$938.85 per month. Or int.-$938.85/30.5=int.-<strong>$30.78 per day.</strong>{/ref}</p> <!-- /wp:paragraph --> <!-- wp:heading {"level":4} --> <h4>The Roslings’ suggest a cutoff of $32 per day</h4> <!-- /wp:heading --> <!-- wp:paragraph --> <p>Anna Rosling-Rönnlund, Ola Rosling and Hans Rosling challenged the old dichotomy between developed and developing countries in their bestselling book ‘<a href="https://en.wikipedia.org/wiki/Factfulness:_Ten_Reasons_We%27re_Wrong_About_the_World_%E2%80%93_and_Why_Things_Are_Better_Than_You_Think">Factfulness</a>’. They argue that the old dichotomy corresponds to a view of the world that was accurate half a century ago when a few countries were relatively well-off, but most countries were living in very <a href="https://ourworldindata.org/life-expectancy-globally">poor conditions</a>.Today, they say, people around the world live on a large spectrum. To reflect this spectrum they proposed 4 income levels.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The first cut-off corresponds to the international poverty line (rounded to int.-$2 per day). The next income cutoff they set at $8 per day, the following one at $16 and the highest one at <strong>int.-$32 per day</strong>.</p> <!-- /wp:paragraph --> <!-- wp:heading {"level":4} --> <h4>Kahneman's and Deaton's study of income and emotional well-being</h4> <!-- /wp:heading --> <!-- wp:paragraph --> <p>Nobel laureates Daniel Kahneman and Angus Deaton published a famous study on the link between life satisfaction and income.{ref}Kahneman and Deaton (2010) – High income improves evaluation of life but not emotional well-being. Published in the Proceedings of the National Academy of Sciences. https://www.pnas.org/content/107/38/16489 {/ref}</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The authors find that higher incomes go together with higher self-reported life satisfaction, but for people’s self-reported emotional well-being this is only true up to a certain point: the study finds that above $75,000 further increases in income do not correspond with improvements in people’s emotional well-being – a finding that is often cited to argue that additional economic growth does not improve people’s lives in high-income countries.{ref}Kahneman and Deaton analyze two different concepts self-reported satisfaction:</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>– Emotional well-being refers to the “emotional quality of an individual's everyday experience – the frequency and intensity of experiences of joy, stress, sadness, anger, and affection that make one's life pleasant or unpleasant.”</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>– Life evaluation refers to the thoughts that people have about their life when they think about it. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The authors find that higher incomes go together with higher self-reported life satisfaction in both metrics. What they emphasize is that at very high incomes this is not true anymore – emotional well-being does not increase over around $75,000. Evaluation of life however continues to increase even at incomes over $75,000.{/ref} </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Again, the income concept is not the same as that in PovcalNet, and so comparisons with the global data are not directly possible. But we can ask what the daily income at which emotional well-being supposedly levels off corresponds to: $75,000 per year are <strong>int.-$205 per day</strong>.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>It is certainly worth considering whether an income up to which emotional well-being increases could be taken as the basis for a definition of poverty. A US company reacted to the research finding of Kahneman and Deaton by using it to set the minimum wage in their company: everyone in that company <a href="https://www.nytimes.com/2015/04/14/business/owner-of-gravity-payments-a-credit-card-processor-is-setting-a-new-minimum-wage-70000-a-year.html">gets paid</a> that salary. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>For the discussion of global poverty however it might be considered as an even higher poverty line, but for any practical purpose in the world today the income cutoff would be too high as only a very small fraction of the world lives on more than $75,000 per year.</p> <!-- /wp:paragraph --></div> <!-- /wp:column --> <!-- wp:column --> <div class="wp-block-column"><!-- wp:html /--></div> <!-- /wp:column --></div> <!-- /wp:columns --> <!-- /wp:owid/additional-information --> <!-- wp:heading {"level":4} --> <h4>How many people in the world live in poverty?</h4> <!-- /wp:heading --> <!-- wp:paragraph --> <p>We have seen that 10% of the world live in extreme poverty<em> </em>as defined by the UN. How large is the share of the world that lives in moderate poverty?</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The latest global data tells us that <strong>85% of the world population live on less than $30 per day</strong>. These are 6.5 billion people.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Relying on a higher poverty line of $45 per day you find that 92% live in poverty, and using a lower poverty line of $20 per day you find that 78% live in poverty. No matter which of these poverty lines you might want to choose, at least three-quarters of the world live in poverty.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>All of this data refers to pre-pandemic times. The global recession has certainly increased the share below any of these cutoff points. As soon as the new data is available you will find it on Our World in Data.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The chart shows where in the world people are poor. If we would only rely on the UN’s extreme poverty line we would conclude that barely anyone lives in poverty in high-income countries. Relying on higher poverty lines, this data here shows that even in high-income countries there is a significant share of the population that lives in poverty. No country, not even the high-income countries, has eliminated poverty. There are no ‘developed countries’ — there is work to do for all. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>But just as clear from this data is the fact that in many world regions the large majority of people are very poor. In Sub-Saharan Africa about 40% of the population lives on less than $1.90 per day as the chart shows. In all regions outside of high-income countries more than 85% of all people live in moderate poverty.</p> <!-- /wp:paragraph --> <!-- wp:image {"id":41458,"sizeSlug":"full","linkDestination":"none"} --> <figure class="wp-block-image size-full"><img src="https://owid.cloud/app/uploads/2021/03/The-global-inc-distribution-190-10-30.png" alt="" class="wp-image-41458"/></figure> <!-- /wp:image --> <!-- wp:heading {"level":4} --> <h4>Countries in which the majority do not live in poverty have only left poverty behind in recent history</h4> <!-- /wp:heading --> <!-- wp:paragraph --> <p>Two centuries ago the global income distribution was very different. Back then <a href="https://ourworldindata.org/extreme-history-methods">almost everyone in the world</a> was living in extreme poverty. Those places in which few people live in moderate poverty today only left poverty behind in the very recent past. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Denmark is one of those places. The reason why the majority of people in Denmark is not living in poverty is that the economic inequality is low and the average income high.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The fact that the inequality is low you can see on the map. It shows an inequality measure called the Gini coefficient (explained <a href="https://ourworldindata.org/income-inequality#the-gini-coefficient">here</a>) which makes clear that Denmark is among the least unequal countries in the world.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The reason that the average income in Denmark is high is due to the fact that average incomes have increased steadily for the last two centuries; this long-term development is called economic growth. As the historical data shows the average incomes in Denmark are today more than 20-times higher than in the past.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>You can add any other country to this chart. By adding one of those countries in which the majority lives in poverty – like Ethiopia – you see just how large the differences in average incomes are.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>GDP per capita is by far the most widely used measure of average income and is yet another income concept from the two I mentioned so far.{ref}The two previous ones were income/expenditure as determined in household surveys and equivalized disposable income after social transfers.{/ref} It is a more comprehensive measure of incomes and crucially takes into account government expenditures. For these and other reasons (mentioned in the long footnote) you will find that dividing GDP per capita by 365 days will let you arrive at a higher value than the income that is determined in household income surveys.{ref}There is generally a gap between GDP per capita and the averages found in both income surveys and expenditure surveys. But the reasons for the gap are different depending on which we are comparing.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>GDP includes many items that are typically not measured in household income surveys, such as an imputed rental value of owner-occupied housing, the retained earnings of firms and taxes on production such as VAT. The gap is even larger when GDP is compared to surveys of household consumption – the latter concept excluding both investment expenditure and government expenditure on public services such as education and health.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Other aggregates beyond GDP are available in the national accounts that are more comparable to the concepts applied in household income and consumption surveys. However, important differences still remain even here. For example, in addition to imputed rents, imputations for the value of certain financial services, such as bank accounts, are included in aggregate household consumption measured in national accounts, with no equivalent for these items recorded in the survey data. In many countries the consumption of ‘nonprofit institutions serving households’ (NPISH) is included as part of household consumption within national accounts, but not within household surveys.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>On top of these conceptual differences are a range of mismeasurement problems that affect both sets of data. On this topic see Deaton (2005), and Pinkovskiy and Sala-i-Martin (2016).</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Deaton, Angus. 2005. “Measuring Poverty in a Growing World (or Measuring Growth in a Poor World).” The Review of Economics and Statistics 87 (1): 1–1. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Pinkovskiy, Maxim, and Xavier Sala-i-Martin. 2016. “Lights, Camera… Income! Illuminating the Nation"{/ref}</p> <!-- /wp:paragraph --> <!-- wp:columns {"className":"is-style-side-by-side"} --> <div class="wp-block-columns is-style-side-by-side"><!-- wp:column --> <div class="wp-block-column"><!-- wp:html --> <iframe src="https://ourworldindata.org/grapher/economic-inequality-gini-index?time=earliest..latest&tab=chart&country=USA~FRA~JPN~BRA~ZAF~DNK" loading="lazy" style="width: 100%; height: 600px; border: 0px none;"></iframe> <!-- /wp:html --></div> <!-- /wp:column --> <!-- wp:column --> <div class="wp-block-column"><!-- wp:html --> <iframe src="https://ourworldindata.org/grapher/average-real-gdp-per-capita-across-countries-and-regions?time=earliest..latest&country=~DNK&tab=chart" loading="lazy" style="width: 100%; height: 600px; border: 0px none;"></iframe> <!-- /wp:html --></div> <!-- /wp:column --></div> <!-- /wp:columns --> <!-- wp:heading {"level":4} --> <h4>Billions of people live in countries where average incomes are very low</h4> <!-- /wp:heading --> <!-- wp:paragraph --> <p>The income of every person depends on two factors, the average income in the country they live in and the position that particular person has in that country’s income distribution. This chart here shows the average income in countries around the world. The height of each bar represents the average daily income in a country, the width of each country corresponds to the country’s population size. I have ordered the countries by income: from the poorest country on the very left (South Sudan where the average person lives on $1.12 per day) to the richest country on the very right (Luxembourg with an average of $86 per day).</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>After two centuries of economic growth the average income in Denmark is now $57 per day today. You find the country far to the right in this chart, which tells you that only very few countries in the world have such high average incomes. The fact that the average income is far higher than the poverty line tells us that the existing poverty in Denmark discussed at the beginning of this post is to a large extent the consequence of inequality.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>What this chart makes very clear is how low the average incomes in many countries in the world are. The huge majority of the world live in countries where the <em>average </em>income is much lower than the poverty threshold in rich countries. 82% of the world population live in countries where the mean income is less than $20 per day. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>And where incomes are low, living standards generally <a href="https://owid.cloud/app/uploads/2021/03/Correlates-of-GDP-–-How-is-life-at-different-levels-of-income.png">are poor</a>. As the last chart below shows, a child that is born into a poorer country must not just expect to live on a very low income, but also faces a much higher risk of not staying alive at all.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>As I have <a href="https://ourworldindata.org/global-inequality-of-opportunity">said before</a>, people are not poor because of who they are, but because of <em>where</em> they are. This is why economic growth is so important to leave poverty behind. By far the most important difference between those people who are not living in poverty and those who do is the average income in the country that they live in – this single factor matters more for a person’s income <a href="https://ourworldindata.org/poverty-growth-needed">than all other factors taken together</a>. The increase of average income in a country is called economic growth and for global poverty to decrease substantially economic growth for the poorest billions of people is necessary.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>→ See my previous article: <a href="https://ourworldindata.org/poverty-growth-needed">The economies that are home to the poorest billions of people need to grow if we want global poverty to decline</a>.</p> <!-- /wp:paragraph --> <!-- wp:image {"id":41459,"sizeSlug":"full","linkDestination":"none"} --> <figure class="wp-block-image size-full"><img src="https://owid.cloud/app/uploads/2021/03/mean-income-by-country.png" alt="" class="wp-image-41459"/></figure> <!-- /wp:image --> <!-- wp:heading {"level":4} --> <h4>The future of global poverty</h4> <!-- /wp:heading --> <!-- wp:paragraph --> <p>The world today is far from the ‘end of poverty’ relative to <em>any</em> poverty definition. After two centuries of <a href="https://ourworldindata.org/extreme-history-methods">unprecedented progress</a> against the very worst poverty it is still the case that every tenth person lives on less than <em>$1.90 per day</em>.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>As the world has not even ended extreme poverty it is therefore right to focus much of our attention on this very low poverty cutoff; ending extreme poverty surely is a global goal of great importance. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Yet at the same time we should consider what our aspirations for the future are. In the past our ancestors <a href="https://ourworldindata.org/breaking-the-malthusian-trap">did not know</a> that it was possible for a society to leave widespread poverty behind. Today we are in a different situation. We know from the reality of today’s rich countries that widespread poverty is not inevitable. Because we know that poverty relative to such higher cutoffs is not inevitable I believe it would be wrong to limit our ambitions to eradicating poverty based on the definition of poverty in the very poorest countries.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>What I take away from this discussion are three insights: First, we have seen from countries like Denmark that it is <em>possible</em> to reduce poverty for an entire population relative to a poverty line of about $30 per day. Second, we have seen that these countries were extremely poor in the past and were able to reduce poverty over the course of the last few generations. And third we have seen that the huge majority of the world is still living in great poverty, by any standard. What this suggests to me is that the history of global poverty reduction has only just begun.</p> <!-- /wp:paragraph --> <!-- wp:html --> <iframe src="https://ourworldindata.org/grapher/child-mortality-gdp-per-capita?time=latest" loading="lazy" style="width: 100%; height: 600px; border: 0px none;"></iframe> <!-- /wp:html --> <!-- wp:separator --> <hr class="wp-block-separator"/> <!-- /wp:separator --> <!-- wp:paragraph --> <p><em>Continue reading Our World in Data:</em> My colleague Hannah Ritchie has just published a series of posts on the drivers of deforestation and how to bring humanity's long history of deforestation to an end. You find her work <a href="https://ourworldindata.org/blog">here</a>.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p><strong>Acknowledgement:</strong> I would like to thank Joe Hasell for his thoughtful comments on draft versions of this article.</p> <!-- /wp:paragraph -->	{ "id": "wp-41450", "slug": "higher-poverty-global-line", "content": { "toc": [], "body": [ { "type": "text", "value": [ { "text": "Our World in Data presents the data and research to make progress against the world\u2019s largest problems.", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "text": "This post draws on data and research discussed in our entries on ", "spanType": "span-simple-text" }, { "children": [ { "url": "https://ourworldindata.org/income-inequality", "children": [ { "text": "Income Inequality", "spanType": "span-simple-text" } ], "spanType": "span-link" } ], "spanType": "span-bold" }, { "text": ", ", "spanType": "span-simple-text" }, { "children": [ { "url": "https://ourworldindata.org/poverty", "children": [ { "text": "Poverty", "spanType": "span-simple-text" } ], "spanType": "span-link" } ], "spanType": "span-bold" }, { "text": " and ", "spanType": "span-simple-text" }, { "children": [ { "url": "https://ourworldindata.org/economic-growth", "children": [ { "text": "Economic Growth", "spanType": "span-simple-text" } ], "spanType": "span-link" } ], "spanType": "span-bold" }, { "text": ".", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "children": [ { "children": [ { "text": "Abstract:", "spanType": "span-simple-text" } ], "spanType": "span-italic" } ], "spanType": "span-bold" }, { "children": [ { "text": " The extremely low poverty line that the UN relies on has the advantage that it draws the attention to the very poorest people in the world. It has the disadvantage that it ignores what is happening to the incomes of the 90% of the world population who live above the extreme poverty threshold.", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "text": "The global poverty line that the UN relies on is based on the national poverty lines in the world\u2019s poorest countries. In this article I ask what global poverty looks like if we rely on the notions of poverty that are common in the world\u2019s rich countries \u2013 like Denmark, the US, or Germany. Based on the evidence I ask what our aspirations for the future of global poverty reduction might be.", "spanType": "span-simple-text" } ], "spanType": "span-italic" } ], "parseErrors": [] }, { "text": [ { "text": "The World Bank has updated its poverty and inequality data", "spanType": "span-simple-text" } ], "type": "heading", "level": 3, "parseErrors": [] }, { "type": "text", "value": [ { "text": "The data in this article uses a previous release of the World Bank's poverty and inequality data in which incomes are expressed in 2011 international-$.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The World Bank has since updated its methods, and now measures incomes in 2017 international-$. As part of this change, the International Poverty Line used to measure extreme poverty has also been updated: from $1.90 (in 2011 prices) to $2.15 (in 2017 prices).", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "This has had little effect on our overall understanding of poverty and inequality around the world. But because of the change of units, many of the figures mentioned in this article will differ from the latest World Bank figures.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "url": "https://ourworldindata.org/from-1-90-to-2-15-a-day-the-updated-international-poverty-line", "type": "prominent-link", "title": "", "description": "Read more about the World Bank's updated methodology", "parseErrors": [] }, { "url": "https://ourworldindata.org/explorers/poverty-explorer", "type": "prominent-link", "title": "Explore the latest World Bank data on poverty and inequality", "description": "", "parseErrors": [] }, { "type": "text", "value": [ { "text": "In every country of the world there are people living in poverty. Even in the world\u2019s richest countries the poorest people often live in poor housing and struggle to afford basic goods and services like heating, transport, and healthy food for themselves and their family.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Those who are in monetary poverty also have much poorer living conditions more broadly. Even in a rich and relatively equal country like Denmark middle-aged men who are among the poorest 20% of the population die on average ", "spanType": "span-simple-text" }, { "children": [ { "text": "9 years", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": " earlier than those among the richest 20%.{ref}Br\u00f8nnum-Hansen H, Foverskov E, Andersen I. Income inequality in life expectancy and disability-free life expectancy in Denmark. J Epidemiol Community Health 2021;75:145-150. ", "spanType": "span-simple-text" }, { "url": "https://jech.bmj.com/content/75/2/145", "children": [ { "text": "https://jech.bmj.com/content/75/2/145", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " {/ref} In Denmark a person who lives on less than $30 per day is considered poor, and it is the declared goal of the country to reduce poverty relative to this threshold.{ref} For the moment it is important to note that this $30 per day poverty line is defined in international-$ and therefore comparable with the \u2018International Poverty Line\u2019 discussed in the following section. Much more details about how to compare incomes across countries, the income concept here, and the definition of this poverty line follows further below in this text.{/ref}\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Countries that are much poorer than Denmark also have the goal to reduce poverty. The United Nations declared the objective of ", "spanType": "span-simple-text" }, { "url": "https://sdg-tracker.org/", "children": [ { "text": "ending \u2018extreme poverty\u2019", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " to be the number 1 goal of the global ", "spanType": "span-simple-text" }, { "children": [ { "text": "Sustainable Development Goals", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": ". ", "spanType": "span-simple-text" }, { "url": "https://www.un.org/en/global-issues/ending-poverty", "children": [ { "text": "According", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " to the UN a person is considered to live in extreme poverty when he or she is living on less than $1.90 per day, this is called the ", "spanType": "span-simple-text" }, { "children": [ { "text": "International Poverty Line", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": ". According to the latest global statistics almost ", "spanType": "span-simple-text" }, { "children": [ { "url": "https://ourworldindata.org/poverty?insight=the-pandemic-pushed-millions-into-extreme-poverty#key-insights-on-poverty", "children": [ { "text": "one in ten", "spanType": "span-simple-text" } ], "spanType": "span-link" } ], "spanType": "span-italic" }, { "text": " people live in extreme poverty globally.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "If we know that poverty is a large problem even in high income countries like Denmark where the poverty line is set at around $30 a day, why should we use an International Poverty Line that is so extremely low to measure poverty globally?", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "It is the reality of our extremely unequal world \u2013 in which every tenth person lives in extreme poverty \u2013 that makes such an extremely low poverty line necessary. Without having an ", "spanType": "span-simple-text" }, { "children": [ { "text": "extremely", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": " low poverty line we would not be aware of the fact that a large share of the world lives in such extreme poverty. The UN\u2019s global poverty line is valuable because it draws attention to the reality of extreme poverty in our world.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "In a world where the majority still lives on very low incomes it would be wrong if the UN decided to measure global poverty solely by a poverty line as high as the poverty line of Denmark. It would mean that the global statistics gloss over the extremely large and important income differences among the poorest billions in the world. It would mean that the difference between those who live on only $1 per day and those who have an income that is more than 20-times higher would be entirely disregarded. They would all be considered poor, and the reality that some of them are much poorer than others would be hidden.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Slightly higher global poverty lines \u2013 such as the poverty line of $3.10 per day that Kate Raworth relies on in her \u2018Doughnut\u2019 framework, or the poverty line of $7.40 per day that anthropologist Jason Hickel uses in his work, or Bob Allen\u2019s absolute poverty line based on minimal nutritional requirements \u2013 all have the same value.{ref}Kate Raworth (2017) \u2013 A Doughnut for the Anthropocene: humanity's compass in the 21st century. In The Lancet Planetary Health. Volume 1, Issue 2, E48-E49, May 01, 2017. Open Access DOI: ", "spanType": "span-simple-text" }, { "url": "https://doi.org/10.1016/S2542-5196(17)30028-1", "children": [ { "text": "https://doi.org/10.1016/S2542-5196(17)30028-1", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " You find the metrics that the Doughnut relies on ", "spanType": "span-simple-text" }, { "url": "https://www.thelancet.com/cms/10.1016/S2542-5196(17)30028-1/attachment/2d58fdae-741c-4016-84cd-2fc0b1e94f49/mmc1.pdf", "children": [ { "text": "in the Appendix here", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ".", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "text": "Jason Hickel \u2013 ", "spanType": "span-simple-text" }, { "url": "https://www.theguardian.com/global-development-professionals-network/2015/nov/01/global-poverty-is-worse-than-you-think-could-you-live-on-190-a-day", "children": [ { "text": "Could you live on $1.90 a day? That's the international poverty line", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " and ", "spanType": "span-simple-text" }, { "url": "https://twitter.com/jasonhickel/status/1012339440113594368", "children": [ { "text": "here", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ".", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "text": "Allen, Robert C.(201). \u2013 ", "spanType": "span-simple-text" }, { "children": [ { "text": "Absolute Poverty: When Necessity Displaces Desire", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": ". American Economic Review, 107 (12): 3690-3721.DOI: 10.1257/aer.20161080{/ref}\u00a0These low poverty lines allow us to understand the material living conditions of the poorest people in the world and have been successful in drawing attention to the terrible depths of poverty experienced by a large share of the world's population. The only way to achieve these goals is to rely on extremely low poverty lines.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Indeed, there is an argument for using an even lower poverty line. To understand what is happening to the ", "spanType": "span-simple-text" }, { "children": [ { "text": "very", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": " poorest in the world, we need to look even lower than $1.90. This is because one of the biggest failures of development is that over the last decades the incomes of ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/poverty?insight=hundreds-of-millions-will-remain-in-extreme-poverty-on-current-trends#key-insights-on-poverty", "children": [ { "text": "the very poorest", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " people have not risen. A big part of the reason for why this issue doesn\u2019t get discussed enough is that the International Poverty Line we rely on is too high to see this fact.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "text": [ { "text": "Why not both?", "spanType": "span-simple-text" } ], "type": "heading", "level": 3, "parseErrors": [] }, { "type": "text", "value": [ { "text": "Yet, ", "spanType": "span-simple-text" }, { "children": [ { "text": "only ", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": "measuring global poverty relative to such extremely low poverty lines has its own large downside.\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "By focusing on an income threshold that is lower than the incomes of 90% of the global population we are ignoring what is happening to the majority of the world\u2019s population. This matters. The majority of the world do not live in extreme poverty ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/extreme-history-methods", "children": [ { "text": "anymore", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ", but billions are nevertheless living in great poverty still.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The obvious solution to the problem that the majority of the world is not considered by the International Poverty Line is to use an ", "spanType": "span-simple-text" }, { "children": [ { "text": "additional", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": " poverty line. This is not a new idea. One poverty researcher who has made the argument for an additional higher global poverty line based on the notions of poverty in rich countries is Lant Pritchett \u2013 you find it in his short, yet widely-cited essay ", "spanType": "span-simple-text" }, { "children": [ { "text": "\u2018The case for a high global poverty line\u2019 ", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": "from eight years ago.{ref}Lant Pritchett (2013) \u2013 Monitoring progress on poverty: the case for a high global poverty line. Online here ", "spanType": "span-simple-text" }, { "url": "https://web.archive.org/web/20150608125138/http://www.odi.org:80/sites/odi.org.uk/files/odi-assets/publications-opinion-files/8440.pdf", "children": [ { "text": "https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/8440.pdf", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": "{/ref}", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "text": [ { "text": "Defining global poverty lines", "spanType": "span-simple-text" } ], "type": "heading", "level": 3, "parseErrors": [] }, { "type": "text", "value": [ { "text": "The definition of poverty differs between countries. Poorer countries set much lower poverty lines than richer countries.{ref}Jolliffe and Prydz (2016){/ref} This means that if we were to simply rely on national poverty definitions for a global measure of poverty we would end up with a measurement framework in which ", "spanType": "span-simple-text" }, { "children": [ { "text": "where", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": " a person happens to live would determine whether they are poor or not: If we would count as poor those who are defined nationally as poor we would end up counting a person who lives on $20 per day as poor in a rich country, while at the same time counting a person who lives on $2 as not-poor when they happen to live in a very poor country.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "One way out of this problem is to set global poverty lines based on the national definitions, but to apply them globally. This is how the UN decided to define the International Poverty Line. In order to ground this global poverty line on something more than the views of global poverty researchers, it is based on the existing definitions of poverty adopted in countries around the world at the national level, but to avoid the problem outlined above they apply the national poverty lines globally. As we explain ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/extreme-poverty#setting-the-international-poverty-line", "children": [ { "text": "here", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " in some detail, the $1.90 per day poverty line is set to reflect the national poverty lines adopted in the world\u2019s ", "spanType": "span-simple-text" }, { "children": [ { "text": "poorest", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": " countries.{ref}Specifically, the line is set at the average national poverty line amongst 15 particular low-income countries. As Jolliffe and Prydz (2016) demonstrate however, this is also the average poverty line found among the poorest quarter of countries with available data, and also among countries falling into the World Bank\u2019s low-income category.{/ref} Applying this poverty line globally means that a person who lives on less than $1.90 per day is considered extremely poor no matter where they live.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "In recent years the World Bank has applied this same methodology to countries in the middle-income bracket, those countries with a GNI per capita between $1000 and $12,500. Based on the poverty lines in these countries they have set additional global poverty lines at $3.20 and $5.50 per day, which are now ", "spanType": "span-simple-text" }, { "url": "https://data.worldbank.org/indicator/SI.POV.LMIC", "children": [ { "text": "directly", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "url": "https://data.worldbank.org/indicator/SI.POV.UMIC", "children": [ { "text": "available", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " via the World Bank statistics.{ref}The study on which these thresholds rely is Jolliffe, D., Prydz, E.B. Estimating international poverty lines from comparable national thresholds. J Econ Inequal 14, 185\u2013198 (2016). ", "spanType": "span-simple-text" }, { "url": "https://doi.org/10.1007/s10888-016-9327-5", "children": [ { "text": "https://doi.org/10.1007/s10888-016-9327-5", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " The researchers also report an average high-income country poverty line of $21.70 per day.", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "text": "High income countries in the World Bank framework are however relatively poor compared to the countries that I\u2019m focusing on here \u2013 the cutoff for a high-income country according to the World Bank is $12,536, about a quarter of the GNI of Germany and only a fifth of the US. Accordingly, the poverty cutoff is much lower than in those countries. ", "spanType": "span-simple-text" }, { "url": "https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups", "children": [ { "text": "Here you find the World Bank income classification cutoffs", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ".{/ref}", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "What I want to do here is to see what a global poverty line would be if we rely on the notion of poverty in rich countries \u2014 countries like Denmark, the US, or Germany.{ref}The range of incomes considered \u2018middle\u2019 and \u2018high\u2019 income countries according to the World Bank are very low relative to rich countries. High-income economies are those with a GNI per capita of $12,536 or more. The range of middle-income economies begins at a GNI per capita of $1,036. In this post I want to rely on countries like Denmark; higher income countries by any standard.{/ref} That is what Pritchett suggested eight years ago: \u201cSince the origin of the [International Poverty Line] was just to adopt as a global lower bound the poverty lines used by the poorest countries, it symmetrically makes sense to say that the global upper bound poverty line is based on the poverty line used in rich countries.\u201d\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The definition of poverty is certainly not an easy ethical question and thoughtful people disagree about it in ways that have meaningful consequences for our understanding of the world. There are also interesting proposals for hybrid poverty lines that combine absolute and weakly-relative measures; see Ravallion (2019) for a recent proposal.{ref}Martin Ravallion (2019) \u2013 ", "spanType": "span-simple-text" }, { "url": "https://www.nber.org/papers/w26211", "children": [ { "text": "On Measuring Global Poverty", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ". NBER Working Paper 26211. DOI 10.3386/w26211{/ref} And I would also recommend Tony Atkinson\u2019s last book \u2018", "spanType": "span-simple-text" }, { "url": "https://www.tony-atkinson.com/book-measuring-poverty-around-the-world/", "children": [ { "text": "Measuring Poverty around the World", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": "\u2019 for an excellent recent overview of the topic.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "\u2192 To understand how it is possible to compare poverty levels and living standards across countries you need to know the basics of global poverty measurement. You find a summary of the basics in the following fold-out box.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "gray-section", "items": [ { "text": [ { "text": "Additional information", "spanType": "span-simple-text" } ], "type": "heading", "level": 2, "parseErrors": [] }, { "type": "expandable-paragraph", "items": [ { "type": "text", "value": [ { "text": "Throughout this article \u2013 and in global income and expenditure data generally \u2013 the statisticians who produce these figures are careful to make these numbers as comparable as possible.\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "First, many poorer people rely on subsistence farming and do not have a monetary income. To take this into account and make a fair comparison of their living standards, the statisticians that produce these figures estimate the monetary value of their home production and add it to their income/expenditure.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Second, price changes over time (inflation) and price differences across countries are both taken into account: all measures are adjusted for differences in purchasing power.{ref}This is possible by relying on the work of the ", "spanType": "span-simple-text" }, { "url": "https://www.worldbank.org/en/programs/icp", "children": [ { "text": "International Comparison Project", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ", which monitors the prices of goods and services around the world.{/ref} To this end incomes and expenditures are expressed in so-called ", "spanType": "span-simple-text" }, { "children": [ { "text": "international dollars", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": ". This is a hypothetical currency that results from the price adjustments across time and place. An international dollar is defined as having the same purchasing power as one US-$ ", "spanType": "span-simple-text" }, { "children": [ { "text": "in the US", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": ". This means no matter where in the world a person is living on int.-$30, they can buy the goods and services that cost $30 in the US. None of these adjustments are ever going to be perfect, but in a world where price differences are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do.{ref}Angus Deaton and Alan Heston (2010) discuss the methods behind such price adjustments and many of the difficulties and limitations involved.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Deaton, A., and Heston, A. 2010. \u201cUnderstanding PPPs and PPP-Based National Accounts.\u201d ", "spanType": "span-simple-text" }, { "children": [ { "text": "American Economic Journal: Macroeconomics", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": " 2 (4): 1\u201335. A working paper version is available online ", "spanType": "span-simple-text" }, { "url": "https://www.nber.org/papers/w14499", "children": [ { "text": "here", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ".{/ref}", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Throughout this text I\u2019m always adjusting incomes for price changes over time and price differences between countries in this way. All dollar values discussed here are presented in int.-$; the UN does the same for the $1.90 poverty line. Sometimes I leave out \u2018international\u2019 as it is awkward to repeat it all the time; but every time I mention any $ amount in this text I\u2019m referring to international-$ and not US-$.{ref}Keep in mind that in the special case of the US the US-$ equals the international-$.{/ref}", "spanType": "span-simple-text" } ], "parseErrors": [] } ], "parseErrors": [] } ], "parseErrors": [] }, { "text": [ { "text": "An additional higher poverty line of $30 per day", "spanType": "span-simple-text" } ], "type": "heading", "level": 2, "parseErrors": [] }, { "type": "text", "value": [ { "text": "Pritchett made his proposal based on data and prices a decade ago and so it is necessary to update his calculations. But I want to go beyond Pritchett\u2019s approach and additionally provide a number of other relevant comparisons to inform our understanding of who is considered poor in a rich country.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "By following this idea I find that a poverty of 30 international-$ per day corresponds to the notion of poverty in a rich country. In the following section I consider a long number of benchmarks that made me arrive at this poverty line. Here is the short summary of these comparisons:", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "list", "items": [ { "type": "text", "value": [ { "children": [ { "text": "European countries: ", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": "The span of poverty lines in high-income countries in Europe ranges from ", "spanType": "span-simple-text" }, { "children": [ { "text": "int.-$25 to int.-$38 per day", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": ".", "spanType": "span-simple-text" } ], "parseErrors": [] } ], "parseErrors": [] }, { "type": "list", "items": [ { "type": "text", "value": [ { "children": [ { "text": "The US: ", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": "A comparison with the poverty line in the US is not straightforward, as explained in some detail below; two different approaches arrive at poverty lines of ", "spanType": "span-simple-text" }, { "children": [ { "text": "int.-$23 and int.-$35 per day", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": " respectively.", "spanType": "span-simple-text" } ], "parseErrors": [] } ], "parseErrors": [] }, { "type": "list", "items": [ { "type": "text", "value": [ { "children": [ { "text": "Survey result: ", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": "A study surveyed people in a high-income country to ask at what income a person is considered poor. The study found that the mean income threshold suggested by the surveyed population corresponds to an income of ", "spanType": "span-simple-text" }, { "children": [ { "text": "int.-$37.58 per day", "spanType": "span-simple-text" } ], "spanType": "span-bold" } ], "parseErrors": [] } ], "parseErrors": [] }, { "type": "list", "items": [ { "type": "text", "value": [ { "children": [ { "text": "Proposal to replace the categorization into developing and developed countries: ", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": "In the book \u2018Factfulness\u2019 the authors recommend replacing the simplistic categorization of countries into developing and developed countries with a finer grained structure. The high-income cutoff the authors suggest is ", "spanType": "span-simple-text" }, { "children": [ { "text": "int.-$32 per day", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": ".", "spanType": "span-simple-text" } ], "parseErrors": [] } ], "parseErrors": [] }, { "type": "list", "items": [ { "type": "text", "value": [ { "children": [ { "text": "UBI: ", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": "The daily income paid as \u2018Universal Basic Income\u2019 in a pilot study in Germany corresponds to an income of ", "spanType": "span-simple-text" }, { "children": [ { "text": "int.-$48.19 per day", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": ".", "spanType": "span-simple-text" } ], "parseErrors": [] } ], "parseErrors": [] }, { "type": "list", "items": [ { "type": "text", "value": [ { "children": [ { "text": "Social care: ", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": "The average basic social care payout in Germany (\u2018Hartz-IV\u2019) corresponds to ", "spanType": "span-simple-text" }, { "children": [ { "text": "int.-$30.78 per day", "spanType": "span-simple-text" } ], "spanType": "span-bold" } ], "parseErrors": [] } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The range of possible higher poverty lines based on richer countries is wide, as the list of benchmarks suggests. At the lower end I believe that it might be as low as $25 per day, and on the higher end it might be as high as $40 or $50 per day.\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Just as someone who lives on less than $1.90 per day is defined as ", "spanType": "span-simple-text" }, { "children": [ { "text": "extremely ", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": "poor, a person who lives on less than $30 a day could be considered ", "spanType": "span-simple-text" }, { "children": [ { "text": "moderately ", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": "poor.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "A reality check for any poverty line you might want to consider is to ask yourself what you think about living on less than that poverty line yourself. I lived on less than $30 per day before and would consider myself poor if I\u2019d fall back on that income level again.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "In the following box you find the sources and calculations of the benchmarks that led me to my $30 per poverty line proposal.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "gray-section", "items": [ { "text": [ { "text": "Additional information", "spanType": "span-simple-text" } ], "type": "heading", "level": 2, "parseErrors": [] }, { "type": "expandable-paragraph", "items": [ { "text": [ { "text": "Poverty lines in European countries", "spanType": "span-simple-text" } ], "type": "heading", "level": 4, "parseErrors": [] }, { "type": "text", "value": [ { "text": "As mentioned before most European countries set their poverty line at 60% of the median income in the country. In his original proposal Pritchett was relying on this 60% of median cut-off.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Calculating the poverty line for European countries therefore means that we look up their median income and then multiply it by 0.6. This is less straightforward than it might first appear. The reason for that is that there are many different income concepts. You quickly realize that it is not easy to define a person\u2019s income if you ask yourself what your own income is. Do you take government transfers into account or not? Do you take your partner\u2019s income into account and divide it by two? How do you take into account that you have a child for which you need to pay? It is possible to take these and many other aspects into account and arrive at useful statistics, but various sensible ways of addressing such questions lead to many different income metrics. As such, in comparing different poverty thresholds across countries we have to take care to avoid mixing different income concepts as much as possible.\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "One important difference is how incomes are adjusted for the size of the household: whether the total household income is simply divided by the number of people (including children) \u2013 \u2018per capita\u2019 income \u2013 or whether some adjustment is made to account for the fact that larger households, and particularly households with children, face lower costs per person \u2013 known as \u2018equivalised\u2019 income. Whereas EU countries, like other rich countries, use equivalised income to measure poverty, the UN\u2019s measurement of global poverty is based on a global dataset of per capita incomes. This dataset is called ", "spanType": "span-simple-text" }, { "url": "http://iresearch.worldbank.org/PovcalNet/povDuplicateWB.aspx", "children": [ { "text": "PovcalNet", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ", and it is this that we must use in order to make comparisons of poverty measures in different countries according to the same income concept.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "In this dataset we find the median income for countries around the world and we can take that median income and then apply the logic on which the European poverty lines are based. In the extensive footnote here you find more details and the full calculations.{ref}The European reference incomes are national median equivalised disposable income after social transfers.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The disposable household income including all income from work (employee wages and self-employment earnings), private income from investment and property, transfers between households, and all social transfers received in cash including old-age pensions.\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Eurostat applies an equivalisation factor calculated according to the OECD-modified scale first proposed in 1994. The UN/World Bank is not.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "This is according to Eurostat ", "spanType": "span-simple-text" }, { "url": "https://appsso.eurostat.ec.europa.eu/nui/show.do?query=BOOKMARK_DS-050270_QID_6AF25E11_UID_-3F171EB0&layout=TIME,C,X,0;GEO,L,Y,0;QUANTILE,L,Z,0;INDIC_IL,L,Z,1;CURRENCY,L,Z,2;INDICATORS,C,Z,3;&zSelection=DS-050270INDIC_IL,TC;DS-050270CURRENCY,EUR;DS-050270INDICATORS,OBS_FLAG;DS-050270QUANTILE,D1;&rankName1=INDIC-IL_1_2_-1_2&rankName2=CURRENCY_1_2_-1_2&rankName3=INDICATORS_1_2_-1_2&rankName4=QUANTILE_1_2_-1_2&rankName5=TIME_1_0_0_0&rankName6=GEO_1_2_0_1&sortC=ASC_-1_FIRST&rStp=&cStp=&rDCh=&cDCh=&rDM=true&cDM=true&footnes=false&empty=false&wai=false&time_mode=ROLLING&time_most_recent=true&lang=EN&cfo=%23%23%23%2C%23%23%23.%23%23%23", "children": [ { "text": "here", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ", where you also find the relevant data. (If the link should break, search on Google for \u2018Distribution of income by quantiles - EU-SILC and ECHP surveys\u2019.)", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "There are various ways of bringing the national poverty lines with reference to the national median equivalised disposable income after social transfers in line with the income/expenditure concept used in PovcalNet.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Joliffe and Prydz follow a different approach and their paper is very relevant for anyone interested in this question here. One alternative to the approach I\u2019m following in this article would be to start from the poverty lines they estimated (based on the poverty headcount ratio) and apply the growth rate of the median income since the publication of their study. Yet another possibility would of course be to repeat their analysis with the up-to-date data. I am not following either of these approaches because I believe for a wide audience they are less transparent that the approach here \u2013\u00a0which is simply: I rely on the same dataset so that I rely on the same income concept, then look up the median income and multiply it by 0.6.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "This is the reference: Jolliffe & Prydz (2016). Estimating international poverty lines from comparable national thresholds. The Journal of Economic Inequality, 14(2), 185-198.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "\u2013\u2013\u2013", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The following are the relevant calculations. All of them are based on PovcalNet data:", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "children": [ { "text": "Germany\u2019s", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": " median monthly income in 2017 was $1417.29 according to PovcalNet.", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "text": "60% of the median expressed in daily income/consumption is 0.6$1417.29=$850.374/30=$28.35 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "children": [ { "text": "Sweden\u2019s", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": " median monthly income in 2017 was $1469 according to PovcalNet.", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "text": "60% of the median expressed in daily income/consumption is (0.61469)/30=$29.38 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "children": [ { "text": "Norway\u2019s", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": " median monthly income in 2017 was $1890 according to PovcalNet.", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "text": "60% of the median expressed in daily income/consumption is (0.61890)/30=$37.8 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "children": [ { "text": "Austria\u2019s", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": " median monthly income in 2017 was $1534 according to PovcalNet.", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "text": "60% of the median expressed in daily income/consumption is (0.61534)/30=$30.68 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "In the ", "spanType": "span-simple-text" }, { "children": [ { "text": "UK", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": " the median monthly income in 2017 was $1252 according to PovcalNet.", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "text": "60% of the median expressed in daily income/consumption is (0.61252)/30=$25.04 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "children": [ { "text": "France\u2019s", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": " median monthly income in 2017 was $1364 according to PovcalNet.", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "text": "60% of the median expressed in daily income/consumption is (0.61364)/30=$27.28 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "children": [ { "text": "Switzerland\u2019s", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": " median monthly income in 2017 was $1791 according to PovcalNet.", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "text": "60% of the median expressed in daily income/consumption is (0.61791)/30=$35.82 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "children": [ { "text": "Spain\u2019s", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": " median monthly income in 2017 was $982 according to PovcalNet.", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "text": "60% of the median expressed in daily income/consumption is (0.6982)/30=$19.64 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "children": [ { "text": "Iceland\u2019s", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": " median monthly income in 2017 was $1582 according to PovcalNet.", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "text": "60% of the median expressed in daily income/consumption is (0.61582)/30=$31.64 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "children": [ { "text": "Luxembourg\u2019s", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": " median monthly income in 2017 was $2193 according to PovcalNet.", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "text": "60% of the median expressed in daily income/consumption is (0.62193)/30=$43.86 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "children": [ { "text": "Netherland\u2019s", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": " median monthly income in 2017 was $1430 according to PovcalNet.", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "text": "60% of the median expressed in daily income/consumption is (0.61430)/30=$28.6 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "children": [ { "text": "Belgium\u2019s", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": " median monthly income in 2017 was $1346 according to PovcalNet.", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "text": "60% of the median expressed in daily income/consumption is (0.61346)/30=$26.92 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "children": [ { "text": "Denmark\u2019s", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": " median monthly income in 2017 was $1453 according to PovcalNet.", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "text": "60% of the median expressed in daily income/consumption is (0.61453)/30=$29.06 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "children": [ { "text": "Ireland\u2019s", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": " median monthly income in 2017 was $1234 according to PovcalNet.", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "text": "60% of the median expressed in daily income/consumption is (0.61234)/30=$24.68 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "children": [ { "text": "Finland\u2019s", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": " median monthly income in 2017 was $1361 according to PovcalNet.", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "text": "60% of the median expressed in daily income/consumption is (0.61361)/30=$27.22 per day{/ref}", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "As high-income European countries I\u2019m referring to those European countries, which ", "spanType": "span-simple-text" }, { "url": "http://appsso.eurostat.ec.europa.eu/nui/submitViewTableAction.do", "children": [ { "text": "according to the Eurostat statistics", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " had a higher income in 2019 than the European average. These are the following countries: Finland, Netherlands, Belgium, Sweden, Germany, France, Iceland, Switzerland, Norway, Luxembourg, Denmark, Austria, Ireland, and the UK.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "These are the poverty lines for daily income in a number of high-income European countries (based on 60% of the median incomes from PovcalNet):", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "list", "items": [ { "type": "text", "value": [ { "text": "Sweden: $29.40 per da", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Norway: $37.80 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Austria: $31 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "UK: $25.04 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Switzerland: $35.82 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Germany: $28.35 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "France: $27.28 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Luxembourg: $43.86 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Finland: $27.22 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Iceland: $31.64 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Ireland: $24.68 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Netherlands: $28.6 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Belgium: $26.92 per day", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Denmark: $29.06 per day", "spanType": "span-simple-text" } ], "parseErrors": [] } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The span of poverty lines in these countries ranges from $25 (for the UK and Ireland) up to $38 (for Norway); in the small country of Luxembourg the poverty line is higher.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "text": [ { "text": "The poverty line in the US", "spanType": "span-simple-text" } ], "type": "heading", "level": 4, "parseErrors": [] }, { "type": "text", "value": [ { "text": "Unlike European countries, the US does not set the poverty line in a relative way. Instead the US poverty line dates back to the work of Mollie Orshansky, an economist working for the Social Security Administration in the early 1960s. Since then it has been of course revised for price changes, but otherwise it remained unchanged.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The US poverty line is ", "spanType": "span-simple-text" }, { "url": "https://en.wikipedia.org/wiki/Poverty_in_the_United_States#Measuring_poverty", "children": [ { "text": "very often", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " criticised as being too low. Those that criticize the US poverty line in that way therefore suggest that the severity of poverty in the US is understated in the statistics.\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "How high is the poverty line in the US? In 2020 the poverty threshold for a single person under 65 was $30, measured in 2011 international-$ per day to be comparable with the other figures in this article.{ref}According to the \"", "spanType": "span-simple-text" }, { "url": "https://www.govinfo.gov/content/pkg/FR-2020-01-17/pdf/2020-00858.pdf", "children": [ { "text": "Annual Update of the HHS Poverty Guidelines", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": "\" the poverty line in the US is an annual income of US$12,760. That is in 2020 price. According to the ", "spanType": "span-simple-text" }, { "url": "https://data.worldbank.org/indicator/FP.CPI.TOTL?locations=US", "children": [ { "text": "World Bank", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ", the Consumer Price Index in the US in 2020 was 118.7 and in 2011 it was 103.2. So prices between the years rose by 118.7/103.2 - 1 =\u00a0", "spanType": "span-simple-text" }, { "children": [ { "text": "15%", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": ".", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "spanType": "span-newline" }, { "text": "Deflating the poverty line in to 2011 prices we get 12,760/1.15 = $11,096. And expressing that as a per day figure that is $11,096/365 = $30.40{/ref}", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Now the problem with comparing this poverty line with the global statistics is again that the income concept is different. The US crucially relies on an equivalence scale for adjusting the income cutoff depending on the household size.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "One alternative is to use the World Bank's poverty and inequality data \u2013 which expresses incomes in per capita terms \u2013 to find a 'harmonized' poverty line: the line that yields the same poverty rate in the World Bank data as the official poverty rate.{ref}This method was introduced by Jolliffe and Prydz (2016) and used by Jolliffe et al. (2022) as an ingredient of their method for setting the World Bank's international poverty lines.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Jolliffe, Dean, and Espen Beer Prydz. 2016. ", "spanType": "span-simple-text" }, { "children": [ { "text": "Estimating International Poverty Lines from Comparable National Thresholds", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": ". Washington, DC.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "children": [ { "text": "Jolliffe, Dean Mitchell, Daniel Gerszon Mahler, Christoph Lakner, Aziz Atamanov, and Samuel Kofi Tetteh Baah. 2022. Assessing the Impact of the 2017 PPPs on the International Poverty Line and Global Poverty. The World Bank. Available to read at the\u00a0", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "url": "https://documents1.worldbank.org/curated/en/353811645450974574/pdf/Assessing-the-Impact-of-the-2017-PPPs-on-the-International-Poverty-Line-and-Global-Poverty.pdf", "children": [ { "children": [ { "text": "World Bank here", "spanType": "span-simple-text" } ], "spanType": "span-italic" } ], "spanType": "span-link" }, { "children": [ { "text": ".", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": "{/ref}", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "spanType": "span-newline" }, { "text": "The official poverty rate in the US in 2019 was\u00a0", "spanType": "span-simple-text" }, { "children": [ { "text": "10.5%", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": ",\u00a0", "spanType": "span-simple-text" }, { "url": "https://www.census.gov/content/dam/Census/library/publications/2020/demo/p60-270.pdf", "children": [ { "text": "as reported", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": "\u00a0by the U.S. Census Bureau. The poverty line that yields this rate in the World Bank's data is $22.53 (measured in 2011 international-$).{ref}You can see our detailed calculations in this ", "spanType": "span-simple-text" }, { "url": "https://colab.research.google.com/drive/1IzHT9NikKHrY9uGWKzDzaZ4VVpdc9m5E#scrollTo=qF_GSK2FX7tU&line=1&uniqifier=1", "children": [ { "text": "Google Colabs document", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ".{/ref}", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "An alternative is to apply the same concept that the Europeans are using for their poverty line determination. If the US would use the 60% of median income definition of poverty their poverty line would be int.-$32.8 per day{ref}The ", "spanType": "span-simple-text" }, { "children": [ { "text": "US", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": " median monthly income in 2017 was $1640 according to PovcalNet.", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "text": "60% of the median expressed in daily income/consumption is (0.61640)/30=$32.8 per day{/ref} Very close to the one-person poverty line based on Orshansky\u2019s work.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "A somewhat comparable poverty line based on these three approaches therefore falls into the range of around $23 to $35 per day. Within the range of poverty lines in European countries.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "text": [ { "text": "Survey results \u2013 Below which income do you consider a person poor?\u00a0", "spanType": "span-simple-text" } ], "type": "heading", "level": 4, "parseErrors": [] }, { "type": "text", "value": [ { "text": "The UN and Pritchett rely on the existing poverty lines in low-income and high-income countries respectively to derive their poverty lines. We can follow other approaches too.\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "An obvious one is to ask what people out there believe: Who is considered poor in a high-income country by people in high-income countries?", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "For the regular poverty report of the German government, a survey is conducted that asks Germans below which income level they consider someone as poor. The latest data is from the year 2015.{ref}These reports are called \u2018Armuts- und Reichtumsbericht der Bundesregierung\u2019 online at ", "spanType": "span-simple-text" }, { "url": "https://www.armuts-und-reichtumsbericht.de/DE/Startseite/start.html", "children": [ { "text": "armuts-und-reichtumsbericht.de", "spanType": "span-simple-text" } ], "spanType": "span-link" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The latest survey was produced by aproxima and published in 2016. It is published as ", "spanType": "span-simple-text" }, { "url": "https://www.armuts-und-reichtumsbericht.de/SharedDocs/Downloads/Service/Studien/forschungsprojekt-wahrnehmung-armut-reichtum.pdf?__blob=publicationFile&v=5", "children": [ { "text": "Wahrnehmung von Armut und Reichtum in Deutschland, Ergebnisse der repr\u00e4sentativen Bev\u00f6lkerungsbefragung \u201eARB-Survey 2015\u201c", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ", Berlin: Bundesministerium f\u00fcr Arbeit und Soziales (Hrsg.).{/ref}", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The mean answer given by the German population for a cutoff below which a person is considered poor was 947\u20ac per month. In international dollars per day this corresponds to an income of ", "spanType": "span-simple-text" }, { "children": [ { "text": "int.-$37.58", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": ".{ref}The 2011 PPP conversion factor for private consumption (LCU per international $) for Germany in 2015 is 0.84 according to the World Bank ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/grapher/ppp-conversion-factor-for-private-consumption", "children": [ { "text": "here", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ".", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "This means the perceived poverty threshold corresponds to \u20ac947/0.84=int.-$1,127.38 per month or int.-$37.58.{/ref}", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "text": [ { "text": "Universal Basic Income", "spanType": "span-simple-text" } ], "type": "heading", "level": 4, "parseErrors": [] }, { "type": "text", "value": [ { "url": "https://en.wikipedia.org/wiki/Universal_basic_income", "children": [ { "text": "Universal Basic Income", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " (UBI) is a political idea that is becoming rapidly more popular.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "A large UBI study in Germany \u2013 called ", "spanType": "span-simple-text" }, { "url": "https://de.wikipedia.org/wiki/Mein_Grundeinkommen", "children": [ { "text": "\u2018Mein Grundeinkommen\u2019", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " \u2013 sets this income at \u20ac1200. In international-$ this corresponds to an income of ", "spanType": "span-simple-text" }, { "children": [ { "text": "int.-$48.19 per day", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": ".{ref}The 2011 PPP conversion factor for private consumption (LCU per international $) for Germany in 2017 is 0.83 according to the World Bank ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/grapher/ppp-conversion-factor-for-private-consumption", "children": [ { "text": "here", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ".", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "This means the UBI corresponds to 1200/0.83=int.-$1,445.78 per month or int.-$48.19.{/ref}", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "text": [ { "text": "Social security in Germany", "spanType": "span-simple-text" } ], "type": "heading", "level": 4, "parseErrors": [] }, { "type": "text", "value": [ { "text": "Germany pays basic social care for its citizens. This social security payment is referred to as \u2018Hartz-IV\u2019.\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "How much a person receives depends on the particular circumstances of the individual, but we can look at the average payment. In 2018 a single person ", "spanType": "span-simple-text" }, { "url": "https://www.sueddeutsche.de/wirtschaft/wie-viel-geld-bekommt-ein-hartz-iv-empfaenger-1.3905657", "children": [ { "text": "received on average", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " 783 Euro per month. That corresponds to ", "spanType": "span-simple-text" }, { "children": [ { "text": "int.-$30.78 per day", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": ".{ref}That\u2019s \u20ac783/0.834=int.-$938.85 per month. Or int.-$938.85/30.5=int.-", "spanType": "span-simple-text" }, { "children": [ { "text": "$30.78 per day.", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": "{/ref}", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "text": [ { "text": "The Roslings\u2019 suggest a cutoff of $32 per day", "spanType": "span-simple-text" } ], "type": "heading", "level": 4, "parseErrors": [] }, { "type": "text", "value": [ { "text": "Anna Rosling-R\u00f6nnlund, Ola Rosling and Hans Rosling challenged the old dichotomy between developed and developing countries in their bestselling book \u2018", "spanType": "span-simple-text" }, { "url": "https://en.wikipedia.org/wiki/Factfulness:_Ten_Reasons_We%27re_Wrong_About_the_World_%E2%80%93_and_Why_Things_Are_Better_Than_You_Think", "children": [ { "text": "Factfulness", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": "\u2019. They argue that the old dichotomy corresponds to a view of the world that was accurate half a century ago when a few countries were relatively well-off, but most countries were living in very ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/life-expectancy-globally", "children": [ { "text": "poor conditions", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ".Today, they say, people around the world live on a large spectrum. To reflect this spectrum they proposed 4 income levels.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The first cut-off corresponds to the international poverty line (rounded to int.-$2 per day). The next income cutoff they set at $8 per day, the following one at $16 and the highest one at ", "spanType": "span-simple-text" }, { "children": [ { "text": "int.-$32 per day", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": ".", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "text": [ { "text": "Kahneman's and Deaton's study of income and emotional well-being", "spanType": "span-simple-text" } ], "type": "heading", "level": 4, "parseErrors": [] }, { "type": "text", "value": [ { "text": "Nobel laureates Daniel Kahneman and Angus Deaton published a famous study on the link between life satisfaction and income.{ref}Kahneman and Deaton (2010) \u2013 High income improves evaluation of life but not emotional well-being. Published in the Proceedings of the National Academy of Sciences. https://www.pnas.org/content/107/38/16489 {/ref}", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The authors find that higher incomes go together with higher self-reported life satisfaction, but for people\u2019s self-reported emotional well-being this is only true up to a certain point: the study finds that above $75,000 further increases in income do not correspond with improvements in people\u2019s emotional well-being \u2013 a finding that is often cited to argue that additional economic growth does not improve people\u2019s lives in high-income countries.{ref}Kahneman and Deaton analyze two different concepts self-reported satisfaction:", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "\u2013 Emotional well-being refers to the \u201cemotional quality of an individual's everyday experience \u2013 the frequency and intensity of experiences of joy, stress, sadness, anger, and affection that make one's life pleasant or unpleasant.\u201d", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "\u2013 Life evaluation refers to the thoughts that people have about their life when they think about it.\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The authors find that higher incomes go together with higher self-reported life satisfaction in both metrics. What they emphasize is that at very high incomes this is not true anymore \u2013 emotional well-being does not increase over around $75,000. Evaluation of life however continues to increase even at incomes over $75,000.{/ref}\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Again, the income concept is not the same as that in PovcalNet, and so comparisons with the global data are not directly possible. But we can ask what the daily income at which emotional well-being supposedly levels off corresponds to: $75,000 per year are ", "spanType": "span-simple-text" }, { "children": [ { "text": "int.-$205 per day", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": ".", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "It is certainly worth considering whether an income up to which emotional well-being increases could be taken as the basis for a definition of poverty. A US company reacted to the research finding of Kahneman and Deaton by using it to set the minimum wage in their company: everyone in that company ", "spanType": "span-simple-text" }, { "url": "https://www.nytimes.com/2015/04/14/business/owner-of-gravity-payments-a-credit-card-processor-is-setting-a-new-minimum-wage-70000-a-year.html", "children": [ { "text": "gets paid", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " that salary.\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "For the discussion of global poverty however it might be considered as an even higher poverty line, but for any practical purpose in the world today the income cutoff would be too high as only a very small fraction of the world lives on more than $75,000 per year.", "spanType": "span-simple-text" } ], "parseErrors": [] } ], "parseErrors": [] } ], "parseErrors": [] }, { "text": [ { "text": "How many people in the world live in poverty?", "spanType": "span-simple-text" } ], "type": "heading", "level": 3, "parseErrors": [] }, { "type": "text", "value": [ { "text": "We have seen that 10% of the world live in extreme poverty", "spanType": "span-simple-text" }, { "children": [ { "text": " ", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": "as defined by the UN. How large is the share of the world that lives in moderate poverty?", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The latest global data tells us that ", "spanType": "span-simple-text" }, { "children": [ { "text": "85% of the world population live on less than $30 per day", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": ". These are 6.5 billion people.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Relying on a higher poverty line of $45 per day you find that 92% live in poverty, and using a lower poverty line of $20 per day you find that 78% live in poverty. No matter which of these poverty lines you might want to choose, at least three-quarters of the world live in poverty.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "All of this data refers to pre-pandemic times. The global recession has certainly increased the share below any of these cutoff points. As soon as the new data is available you will find it on Our World in Data.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The chart shows where in the world people are poor. If we would only rely on the UN\u2019s extreme poverty line we would conclude that barely anyone lives in poverty in high-income countries. Relying on higher poverty lines, this data here shows that even in high-income countries there is a significant share of the population that lives in poverty. No country, not even the high-income countries, has eliminated poverty. There are no \u2018developed countries\u2019 \u2014 there is work to do for all.\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "But just as clear from this data is the fact that in many world regions the large majority of people are very poor. In Sub-Saharan Africa about 40% of the population lives on less than $1.90 per day as the chart shows. In all regions outside of high-income countries more than 85% of all people live in moderate poverty.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "alt": "", "size": "wide", "type": "image", "filename": "The-global-inc-distribution-190-10-30.png", "parseErrors": [] }, { "text": [ { "text": "Countries in which the majority do not live in poverty have only left poverty behind in recent history", "spanType": "span-simple-text" } ], "type": "heading", "level": 3, "parseErrors": [] }, { "type": "text", "value": [ { "text": "Two centuries ago the global income distribution was very different. Back then ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/extreme-history-methods", "children": [ { "text": "almost everyone in the world", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " was living in extreme poverty. Those places in which few people live in moderate poverty today only left poverty behind in the very recent past.\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Denmark is one of those places. The reason why the majority of people in Denmark is not living in poverty is that the economic inequality is low and the average income high.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The fact that the inequality is low you can see on the map. It shows an inequality measure called the Gini coefficient (explained ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/income-inequality#the-gini-coefficient", "children": [ { "text": "here", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ") which makes clear that Denmark is among the least unequal countries in the world.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The reason that the average income in Denmark is high is due to the fact that average incomes have increased steadily for the last two centuries; this long-term development is called economic growth. As the historical data shows the average incomes in Denmark are today more than 20-times higher than in the past.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "You can add any other country to this chart. By adding one of those countries in which the majority lives in poverty \u2013 like Ethiopia \u2013\u00a0you see just how large the differences in average incomes are.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "GDP per capita is by far the most widely used measure of average income and is yet another income concept from the two I mentioned so far.{ref}The two previous ones were income/expenditure as determined in household surveys and equivalized disposable income after social transfers.{/ref} It is a more comprehensive measure of incomes and crucially takes into account government expenditures. For these and other reasons (mentioned in the long footnote) you will find that dividing GDP per capita by 365 days will let you arrive at a higher value than the income that is determined in household income surveys.{ref}There is generally a gap between GDP per capita and the averages found in both income surveys and expenditure surveys. But the reasons for the gap are different depending on which we are comparing.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "GDP includes many items that are typically not measured in household income surveys, such as an imputed rental value of owner-occupied housing, the retained earnings of firms and taxes on production such as VAT. The gap is even larger when GDP is compared to surveys of household consumption \u2013 the latter concept excluding both investment expenditure and government expenditure on public services such as education and health.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Other aggregates beyond GDP are available in the national accounts that are more comparable to the concepts applied in household income and consumption surveys. However, important differences still remain even here. For example, in addition to imputed rents, imputations for the value of certain financial services, such as bank accounts, are included in aggregate household consumption measured in national accounts, with no equivalent for these items recorded in the survey data. In many countries the consumption of \u2018nonprofit institutions serving households\u2019 (NPISH) is included as part of household consumption within national accounts, but not within household surveys.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "On top of these conceptual differences are a range of mismeasurement problems that affect both sets of data. On this topic see Deaton (2005), and Pinkovskiy and Sala-i-Martin (2016).", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Deaton, Angus. 2005. \u201cMeasuring Poverty in a Growing World (or Measuring Growth in a Poor World).\u201d The Review of Economics and Statistics 87 (1): 1\u20131. ", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Pinkovskiy, Maxim, and Xavier Sala-i-Martin. 2016. \u201cLights, Camera\u2026 Income! Illuminating the Nation\"{/ref}", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "left": [ { "url": "https://ourworldindata.org/grapher/economic-inequality-gini-index?time=earliest..latest&tab=chart&country=USA~FRA~JPN~BRA~ZAF~DNK", "type": "chart", "parseErrors": [] } ], "type": "sticky-right", "right": [ { "url": "https://ourworldindata.org/grapher/average-real-gdp-per-capita-across-countries-and-regions?time=earliest..latest&country=~DNK&tab=chart", "type": "chart", "parseErrors": [] } ], "parseErrors": [] }, { "text": [ { "text": "Billions of people live in countries where average incomes are very low", "spanType": "span-simple-text" } ], "type": "heading", "level": 3, "parseErrors": [] }, { "type": "text", "value": [ { "text": "The income of every person depends on two factors, the average income in the country they live in and the position that particular person has in that country\u2019s income distribution. This chart here shows the average income in countries around the world. The height of each bar represents the average daily income in a country, the width of each country corresponds to the country\u2019s population size. I have ordered the countries by income: from the poorest country on the very left (South Sudan where the average person lives on $1.12 per day) to the richest country on the very right (Luxembourg with an average of $86 per day).", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "After two centuries of economic growth the average income in Denmark is now $57 per day today. You find the country far to the right in this chart, which tells you that only very few countries in the world have such high average incomes. The fact that the average income is far higher than the poverty line tells us that the existing poverty in Denmark discussed at the beginning of this post is to a large extent the consequence of inequality.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "What this chart makes very clear is how low the average incomes in many countries in the world are. The huge majority of the world live in countries where the ", "spanType": "span-simple-text" }, { "children": [ { "text": "average ", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": "income is much lower than the poverty threshold in rich countries. 82% of the world population live in countries where the mean income is less than $20 per day. ", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "And where incomes are low, living standards generally ", "spanType": "span-simple-text" }, { "url": "https://owid.cloud/app/uploads/2021/03/Correlates-of-GDP-\u2013-How-is-life-at-different-levels-of-income.png", "children": [ { "text": "are poor", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ". As the last chart below shows, a child that is born into a poorer country must not just expect to live on a very low income, but also faces a much higher risk of not staying alive at all.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "As I have ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/global-inequality-of-opportunity", "children": [ { "text": "said before", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ", people are not poor because of who they are, but because of ", "spanType": "span-simple-text" }, { "children": [ { "text": "where", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": " they are. This is why economic growth is so important to leave poverty behind. By far the most important difference between those people who are not living in poverty and those who do is the average income in the country that they live in \u2013 this single factor matters more for a person\u2019s income ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/poverty-growth-needed", "children": [ { "text": "than all other factors taken together", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ". The increase of average income in a country is called economic growth and for global poverty to decrease substantially economic growth for the poorest billions of people is necessary.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "\u2192 See my previous article: ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/poverty-growth-needed", "children": [ { "text": "The economies that are home to the poorest billions of people need to grow if we want global poverty to decline", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ".", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "alt": "", "size": "wide", "type": "image", "filename": "mean-income-by-country.png", "parseErrors": [] }, { "text": [ { "text": "The future of global poverty", "spanType": "span-simple-text" } ], "type": "heading", "level": 3, "parseErrors": [] }, { "type": "text", "value": [ { "text": "The world today is far from the \u2018end of poverty\u2019 relative to ", "spanType": "span-simple-text" }, { "children": [ { "text": "any", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": " poverty definition. After two centuries of ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/extreme-history-methods", "children": [ { "text": "unprecedented progress", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " against the very worst poverty it is still the case that every tenth person lives on less than ", "spanType": "span-simple-text" }, { "children": [ { "text": "$1.90 per day", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": ".", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "As the world has not even ended extreme poverty it is therefore right to focus much of our attention on this very low poverty cutoff; ending extreme poverty surely is a global goal of great importance.\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Yet at the same time we should consider what our aspirations for the future are. In the past our ancestors ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/breaking-the-malthusian-trap", "children": [ { "text": "did not know", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " that it was possible for a society to leave widespread poverty behind. Today we are in a different situation. We know from the reality of today\u2019s rich countries that widespread poverty is not inevitable. Because we know that poverty relative to such higher cutoffs is not inevitable I believe it would be wrong to limit our ambitions to eradicating poverty based on the definition of poverty in the very poorest countries.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "What I take away from this discussion are three insights: First, we have seen from countries like Denmark that it is ", "spanType": "span-simple-text" }, { "children": [ { "text": "possible", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": " to reduce poverty for an entire population relative to a poverty line of about $30 per day. Second, we have seen that these countries were extremely poor in the past and were able to reduce poverty over the course of the last few generations. And third we have seen that the huge majority of the world is still living in great poverty, by any standard. What this suggests to me is that the history of global poverty reduction has only just begun.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "url": "https://ourworldindata.org/grapher/child-mortality-gdp-per-capita?time=latest", "type": "chart", "parseErrors": [] }, { "type": "text", "value": [ { "children": [ { "text": "Continue reading Our World in Data:", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": " My colleague Hannah Ritchie has just published a series of posts on the drivers of deforestation and how to bring humanity's long history of deforestation to an end. You find her work ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/blog", "children": [ { "text": "here", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ".", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "children": [ { "text": "Acknowledgement:", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": " I would like to thank Joe Hasell for his thoughtful comments on draft versions of this article.", "spanType": "span-simple-text" } ], "parseErrors": [] } ], "type": "article", "title": "Global poverty in an unequal world: Who is considered poor in a rich country? And what does this mean for our understanding of global poverty?", "authors": [ "Max Roser" ], "excerpt": "What does global poverty look like if we rely on the notions of poverty in countries like Denmark, the US, or Germany? And how should this perspective inform our aspirations for the future of global poverty?", "dateline": "March 5, 2021", "subtitle": "What does global poverty look like if we rely on the notions of poverty in countries like Denmark, the US, or Germany? 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And how should this perspective inform our aspirations for the future of global poverty?	2021-03-05 11:20:42	2023-04-06 17:29:55	https://ourworldindata.org/wp-content/uploads/2021/03/Screen-Shot-2021-03-05-at-14.35.22.png	{}	Our World in Data presents the data and research to make progress against the world’s largest problems. This post draws on data and research discussed in our entries on [Income Inequality](https://ourworldindata.org/income-inequality), [Poverty](https://ourworldindata.org/poverty) and [Economic Growth](https://ourworldindata.org/economic-growth). _Abstract:__ The extremely low poverty line that the UN relies on has the advantage that it draws the attention to the very poorest people in the world. It has the disadvantage that it ignores what is happening to the incomes of the 90% of the world population who live above the extreme poverty threshold. The global poverty line that the UN relies on is based on the national poverty lines in the world’s poorest countries. In this article I ask what global poverty looks like if we rely on the notions of poverty that are common in the world’s rich countries – like Denmark, the US, or Germany. Based on the evidence I ask what our aspirations for the future of global poverty reduction might be._ ### The World Bank has updated its poverty and inequality data The data in this article uses a previous release of the World Bank's poverty and inequality data in which incomes are expressed in 2011 international-$. The World Bank has since updated its methods, and now measures incomes in 2017 international-$. As part of this change, the International Poverty Line used to measure extreme poverty has also been updated: from $1.90 (in 2011 prices) to $2.15 (in 2017 prices). This has had little effect on our overall understanding of poverty and inequality around the world. But because of the change of units, many of the figures mentioned in this article will differ from the latest World Bank figures. ### Read more about the World Bank's updated methodology https://ourworldindata.org/from-1-90-to-2-15-a-day-the-updated-international-poverty-line ### Explore the latest World Bank data on poverty and inequality https://ourworldindata.org/explorers/poverty-explorer In every country of the world there are people living in poverty. Even in the world’s richest countries the poorest people often live in poor housing and struggle to afford basic goods and services like heating, transport, and healthy food for themselves and their family. Those who are in monetary poverty also have much poorer living conditions more broadly. Even in a rich and relatively equal country like Denmark middle-aged men who are among the poorest 20% of the population die on average _9 years_ earlier than those among the richest 20%.{ref}Brønnum-Hansen H, Foverskov E, Andersen I. Income inequality in life expectancy and disability-free life expectancy in Denmark. J Epidemiol Community Health 2021;75:145-150. [https://jech.bmj.com/content/75/2/145](https://jech.bmj.com/content/75/2/145) {/ref} In Denmark a person who lives on less than $30 per day is considered poor, and it is the declared goal of the country to reduce poverty relative to this threshold.{ref} For the moment it is important to note that this $30 per day poverty line is defined in international-$ and therefore comparable with the ‘International Poverty Line’ discussed in the following section. Much more details about how to compare incomes across countries, the income concept here, and the definition of this poverty line follows further below in this text.{/ref} Countries that are much poorer than Denmark also have the goal to reduce poverty. The United Nations declared the objective of [ending ‘extreme poverty’](https://sdg-tracker.org/) to be the number 1 goal of the global _Sustainable Development Goals_. [According](https://www.un.org/en/global-issues/ending-poverty) to the UN a person is considered to live in extreme poverty when he or she is living on less than $1.90 per day, this is called the _International Poverty Line_. According to the latest global statistics almost _[one in ten](https://ourworldindata.org/poverty?insight=the-pandemic-pushed-millions-into-extreme-poverty#key-insights-on-poverty)_ people live in extreme poverty globally. If we know that poverty is a large problem even in high income countries like Denmark where the poverty line is set at around $30 a day, why should we use an International Poverty Line that is so extremely low to measure poverty globally? It is the reality of our extremely unequal world – in which every tenth person lives in extreme poverty – that makes such an extremely low poverty line necessary. Without having an _extremely_ low poverty line we would not be aware of the fact that a large share of the world lives in such extreme poverty. The UN’s global poverty line is valuable because it draws attention to the reality of extreme poverty in our world. In a world where the majority still lives on very low incomes it would be wrong if the UN decided to measure global poverty solely by a poverty line as high as the poverty line of Denmark. It would mean that the global statistics gloss over the extremely large and important income differences among the poorest billions in the world. It would mean that the difference between those who live on only $1 per day and those who have an income that is more than 20-times higher would be entirely disregarded. They would all be considered poor, and the reality that some of them are much poorer than others would be hidden. Slightly higher global poverty lines – such as the poverty line of $3.10 per day that Kate Raworth relies on in her ‘Doughnut’ framework, or the poverty line of $7.40 per day that anthropologist Jason Hickel uses in his work, or Bob Allen’s absolute poverty line based on minimal nutritional requirements – all have the same value.{ref}Kate Raworth (2017) – A Doughnut for the Anthropocene: humanity's compass in the 21st century. In The Lancet Planetary Health. Volume 1, Issue 2, E48-E49, May 01, 2017. Open Access DOI: [https://doi.org/10.1016/S2542-5196(17)30028-1](https://doi.org/10.1016/S2542-5196(17)30028-1) You find the metrics that the Doughnut relies on [in the Appendix here](https://www.thelancet.com/cms/10.1016/S2542-5196(17)30028-1/attachment/2d58fdae-741c-4016-84cd-2fc0b1e94f49/mmc1.pdf). Jason Hickel – [Could you live on $1.90 a day? That's the international poverty line](https://www.theguardian.com/global-development-professionals-network/2015/nov/01/global-poverty-is-worse-than-you-think-could-you-live-on-190-a-day) and [here](https://twitter.com/jasonhickel/status/1012339440113594368). Allen, Robert C.(201). – _Absolute Poverty: When Necessity Displaces Desire_. American Economic Review, 107 (12): 3690-3721.DOI: 10.1257/aer.20161080{/ref} These low poverty lines allow us to understand the material living conditions of the poorest people in the world and have been successful in drawing attention to the terrible depths of poverty experienced by a large share of the world's population. The only way to achieve these goals is to rely on extremely low poverty lines. Indeed, there is an argument for using an even lower poverty line. To understand what is happening to the _very_ poorest in the world, we need to look even lower than $1.90. This is because one of the biggest failures of development is that over the last decades the incomes of [the very poorest](https://ourworldindata.org/poverty?insight=hundreds-of-millions-will-remain-in-extreme-poverty-on-current-trends#key-insights-on-poverty) people have not risen. A big part of the reason for why this issue doesn’t get discussed enough is that the International Poverty Line we rely on is too high to see this fact. ### Why not both? Yet, _only _measuring global poverty relative to such extremely low poverty lines has its own large downside. By focusing on an income threshold that is lower than the incomes of 90% of the global population we are ignoring what is happening to the majority of the world’s population. This matters. The majority of the world do not live in extreme poverty [anymore](https://ourworldindata.org/extreme-history-methods), but billions are nevertheless living in great poverty still. The obvious solution to the problem that the majority of the world is not considered by the International Poverty Line is to use an _additional_ poverty line. This is not a new idea. One poverty researcher who has made the argument for an additional higher global poverty line based on the notions of poverty in rich countries is Lant Pritchett – you find it in his short, yet widely-cited essay _‘The case for a high global poverty line’ _from eight years ago.{ref}Lant Pritchett (2013) – Monitoring progress on poverty: the case for a high global poverty line. Online here [https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/8440.pdf](https://web.archive.org/web/20150608125138/http://www.odi.org:80/sites/odi.org.uk/files/odi-assets/publications-opinion-files/8440.pdf){/ref} ### Defining global poverty lines The definition of poverty differs between countries. Poorer countries set much lower poverty lines than richer countries.{ref}Jolliffe and Prydz (2016){/ref} This means that if we were to simply rely on national poverty definitions for a global measure of poverty we would end up with a measurement framework in which _where_ a person happens to live would determine whether they are poor or not: If we would count as poor those who are defined nationally as poor we would end up counting a person who lives on $20 per day as poor in a rich country, while at the same time counting a person who lives on $2 as not-poor when they happen to live in a very poor country. One way out of this problem is to set global poverty lines based on the national definitions, but to apply them globally. This is how the UN decided to define the International Poverty Line. In order to ground this global poverty line on something more than the views of global poverty researchers, it is based on the existing definitions of poverty adopted in countries around the world at the national level, but to avoid the problem outlined above they apply the national poverty lines globally. As we explain [here](https://ourworldindata.org/extreme-poverty#setting-the-international-poverty-line) in some detail, the $1.90 per day poverty line is set to reflect the national poverty lines adopted in the world’s _poorest_ countries.{ref}Specifically, the line is set at the average national poverty line amongst 15 particular low-income countries. As Jolliffe and Prydz (2016) demonstrate however, this is also the average poverty line found among the poorest quarter of countries with available data, and also among countries falling into the World Bank’s low-income category.{/ref} Applying this poverty line globally means that a person who lives on less than $1.90 per day is considered extremely poor no matter where they live. In recent years the World Bank has applied this same methodology to countries in the middle-income bracket, those countries with a GNI per capita between $1000 and $12,500. Based on the poverty lines in these countries they have set additional global poverty lines at $3.20 and $5.50 per day, which are now [directly](https://data.worldbank.org/indicator/SI.POV.LMIC)[available](https://data.worldbank.org/indicator/SI.POV.UMIC) via the World Bank statistics.{ref}The study on which these thresholds rely is Jolliffe, D., Prydz, E.B. Estimating international poverty lines from comparable national thresholds. J Econ Inequal 14, 185–198 (2016). [https://doi.org/10.1007/s10888-016-9327-5](https://doi.org/10.1007/s10888-016-9327-5) The researchers also report an average high-income country poverty line of $21.70 per day. High income countries in the World Bank framework are however relatively poor compared to the countries that I’m focusing on here – the cutoff for a high-income country according to the World Bank is $12,536, about a quarter of the GNI of Germany and only a fifth of the US. Accordingly, the poverty cutoff is much lower than in those countries. [Here you find the World Bank income classification cutoffs](https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups).{/ref} What I want to do here is to see what a global poverty line would be if we rely on the notion of poverty in rich countries — countries like Denmark, the US, or Germany.{ref}The range of incomes considered ‘middle’ and ‘high’ income countries according to the World Bank are very low relative to rich countries. High-income economies are those with a GNI per capita of $12,536 or more. The range of middle-income economies begins at a GNI per capita of $1,036. In this post I want to rely on countries like Denmark; higher income countries by any standard.{/ref} That is what Pritchett suggested eight years ago: “Since the origin of the [International Poverty Line] was just to adopt as a global lower bound the poverty lines used by the poorest countries, it symmetrically makes sense to say that the global upper bound poverty line is based on the poverty line used in rich countries.” The definition of poverty is certainly not an easy ethical question and thoughtful people disagree about it in ways that have meaningful consequences for our understanding of the world. There are also interesting proposals for hybrid poverty lines that combine absolute and weakly-relative measures; see Ravallion (2019) for a recent proposal.{ref}Martin Ravallion (2019) – [On Measuring Global Poverty](https://www.nber.org/papers/w26211). NBER Working Paper 26211. DOI 10.3386/w26211{/ref} And I would also recommend Tony Atkinson’s last book ‘[Measuring Poverty around the World](https://www.tony-atkinson.com/book-measuring-poverty-around-the-world/)’ for an excellent recent overview of the topic. → To understand how it is possible to compare poverty levels and living standards across countries you need to know the basics of global poverty measurement. You find a summary of the basics in the following fold-out box. ## Additional information Throughout this article – and in global income and expenditure data generally – the statisticians who produce these figures are careful to make these numbers as comparable as possible. First, many poorer people rely on subsistence farming and do not have a monetary income. To take this into account and make a fair comparison of their living standards, the statisticians that produce these figures estimate the monetary value of their home production and add it to their income/expenditure. Second, price changes over time (inflation) and price differences across countries are both taken into account: all measures are adjusted for differences in purchasing power.{ref}This is possible by relying on the work of the [International Comparison Project](https://www.worldbank.org/en/programs/icp), which monitors the prices of goods and services around the world.{/ref} To this end incomes and expenditures are expressed in so-called _international dollars_. This is a hypothetical currency that results from the price adjustments across time and place. An international dollar is defined as having the same purchasing power as one US-$ _in the US_. This means no matter where in the world a person is living on int.-$30, they can buy the goods and services that cost $30 in the US. None of these adjustments are ever going to be perfect, but in a world where price differences are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do.{ref}Angus Deaton and Alan Heston (2010) discuss the methods behind such price adjustments and many of the difficulties and limitations involved. Deaton, A., and Heston, A. 2010. “Understanding PPPs and PPP-Based National Accounts.” _American Economic Journal: Macroeconomics_ 2 (4): 1–35. A working paper version is available online [here](https://www.nber.org/papers/w14499).{/ref} Throughout this text I’m always adjusting incomes for price changes over time and price differences between countries in this way. All dollar values discussed here are presented in int.-$; the UN does the same for the $1.90 poverty line. Sometimes I leave out ‘international’ as it is awkward to repeat it all the time; but every time I mention any $ amount in this text I’m referring to international-$ and not US-$.{ref}Keep in mind that in the special case of the US the US-$ equals the international-$.{/ref} ## An additional higher poverty line of $30 per day Pritchett made his proposal based on data and prices a decade ago and so it is necessary to update his calculations. But I want to go beyond Pritchett’s approach and additionally provide a number of other relevant comparisons to inform our understanding of who is considered poor in a rich country. By following this idea I find that a poverty of 30 international-$ per day corresponds to the notion of poverty in a rich country. In the following section I consider a long number of benchmarks that made me arrive at this poverty line. Here is the short summary of these comparisons: * European countries: The span of poverty lines in high-income countries in Europe ranges from int.-$25 to int.-$38 per day. * The US: A comparison with the poverty line in the US is not straightforward, as explained in some detail below; two different approaches arrive at poverty lines of int.-$23 and int.-$35 per day respectively. * Survey result: A study surveyed people in a high-income country to ask at what income a person is considered poor. The study found that the mean income threshold suggested by the surveyed population corresponds to an income of int.-$37.58 per day * Proposal to replace the categorization into developing and developed countries: In the book ‘Factfulness’ the authors recommend replacing the simplistic categorization of countries into developing and developed countries with a finer grained structure. The high-income cutoff the authors suggest is int.-$32 per day. * UBI: The daily income paid as ‘Universal Basic Income’ in a pilot study in Germany corresponds to an income of int.-$48.19 per day. * Social care: The average basic social care payout in Germany (‘Hartz-IV’) corresponds to int.-$30.78 per day The range of possible higher poverty lines based on richer countries is wide, as the list of benchmarks suggests. At the lower end I believe that it might be as low as $25 per day, and on the higher end it might be as high as $40 or $50 per day. Just as someone who lives on less than $1.90 per day is defined as _extremely _poor, a person who lives on less than $30 a day could be considered _moderately _poor. A reality check for any poverty line you might want to consider is to ask yourself what you think about living on less than that poverty line yourself. I lived on less than $30 per day before and would consider myself poor if I’d fall back on that income level again. In the following box you find the sources and calculations of the benchmarks that led me to my $30 per poverty line proposal. ## Additional information #### Poverty lines in European countries As mentioned before most European countries set their poverty line at 60% of the median income in the country. In his original proposal Pritchett was relying on this 60% of median cut-off. Calculating the poverty line for European countries therefore means that we look up their median income and then multiply it by 0.6. This is less straightforward than it might first appear. The reason for that is that there are many different income concepts. You quickly realize that it is not easy to define a person’s income if you ask yourself what your own income is. Do you take government transfers into account or not? Do you take your partner’s income into account and divide it by two? How do you take into account that you have a child for which you need to pay? It is possible to take these and many other aspects into account and arrive at useful statistics, but various sensible ways of addressing such questions lead to many different income metrics. As such, in comparing different poverty thresholds across countries we have to take care to avoid mixing different income concepts as much as possible. One important difference is how incomes are adjusted for the size of the household: whether the total household income is simply divided by the number of people (including children) – ‘per capita’ income – or whether some adjustment is made to account for the fact that larger households, and particularly households with children, face lower costs per person – known as ‘equivalised’ income. Whereas EU countries, like other rich countries, use equivalised income to measure poverty, the UN’s measurement of global poverty is based on a global dataset of per capita incomes. This dataset is called [PovcalNet](http://iresearch.worldbank.org/PovcalNet/povDuplicateWB.aspx), and it is this that we must use in order to make comparisons of poverty measures in different countries according to the same income concept. In this dataset we find the median income for countries around the world and we can take that median income and then apply the logic on which the European poverty lines are based. In the extensive footnote here you find more details and the full calculations.{ref}The European reference incomes are national median equivalised disposable income after social transfers. The disposable household income including all income from work (employee wages and self-employment earnings), private income from investment and property, transfers between households, and all social transfers received in cash including old-age pensions. Eurostat applies an equivalisation factor calculated according to the OECD-modified scale first proposed in 1994. The UN/World Bank is not. This is according to Eurostat [here](https://appsso.eurostat.ec.europa.eu/nui/show.do?query=BOOKMARK_DS-050270_QID_6AF25E11_UID_-3F171EB0&layout=TIME,C,X,0;GEO,L,Y,0;QUANTILE,L,Z,0;INDIC_IL,L,Z,1;CURRENCY,L,Z,2;INDICATORS,C,Z,3;&zSelection=DS-050270INDIC_IL,TC;DS-050270CURRENCY,EUR;DS-050270INDICATORS,OBS_FLAG;DS-050270QUANTILE,D1;&rankName1=INDIC-IL_1_2_-1_2&rankName2=CURRENCY_1_2_-1_2&rankName3=INDICATORS_1_2_-1_2&rankName4=QUANTILE_1_2_-1_2&rankName5=TIME_1_0_0_0&rankName6=GEO_1_2_0_1&sortC=ASC_-1_FIRST&rStp=&cStp=&rDCh=&cDCh=&rDM=true&cDM=true&footnes=false&empty=false&wai=false&time_mode=ROLLING&time_most_recent=true&lang=EN&cfo=%23%23%23%2C%23%23%23.%23%23%23), where you also find the relevant data. (If the link should break, search on Google for ‘Distribution of income by quantiles - EU-SILC and ECHP surveys’.) There are various ways of bringing the national poverty lines with reference to the national median equivalised disposable income after social transfers in line with the income/expenditure concept used in PovcalNet. Joliffe and Prydz follow a different approach and their paper is very relevant for anyone interested in this question here. One alternative to the approach I’m following in this article would be to start from the poverty lines they estimated (based on the poverty headcount ratio) and apply the growth rate of the median income since the publication of their study. Yet another possibility would of course be to repeat their analysis with the up-to-date data. I am not following either of these approaches because I believe for a wide audience they are less transparent that the approach here – which is simply: I rely on the same dataset so that I rely on the same income concept, then look up the median income and multiply it by 0.6. This is the reference: Jolliffe & Prydz (2016). Estimating international poverty lines from comparable national thresholds. The Journal of Economic Inequality, 14(2), 185-198. ––– The following are the relevant calculations. All of them are based on PovcalNet data: Germany’s median monthly income in 2017 was $1417.29 according to PovcalNet. 60% of the median expressed in daily income/consumption is 0.6$1417.29=$850.374/30=$28.35 per day Sweden’s* median monthly income in 2017 was $1469 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.61469)/30=$29.38 per day Norway’s* median monthly income in 2017 was $1890 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.61890)/30=$37.8 per day Austria’s* median monthly income in 2017 was $1534 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.61534)/30=$30.68 per day In the UK* the median monthly income in 2017 was $1252 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.61252)/30=$25.04 per day France’s* median monthly income in 2017 was $1364 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.61364)/30=$27.28 per day Switzerland’s* median monthly income in 2017 was $1791 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.61791)/30=$35.82 per day Spain’s* median monthly income in 2017 was $982 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6982)/30=$19.64 per day Iceland’s* median monthly income in 2017 was $1582 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.61582)/30=$31.64 per day Luxembourg’s* median monthly income in 2017 was $2193 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.62193)/30=$43.86 per day Netherland’s* median monthly income in 2017 was $1430 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.61430)/30=$28.6 per day Belgium’s* median monthly income in 2017 was $1346 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.61346)/30=$26.92 per day Denmark’s* median monthly income in 2017 was $1453 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.61453)/30=$29.06 per day Ireland’s* median monthly income in 2017 was $1234 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.61234)/30=$24.68 per day Finland’s* median monthly income in 2017 was $1361 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.61361)/30=$27.22 per day{/ref} As high-income European countries I’m referring to those European countries, which [according to the Eurostat statistics](http://appsso.eurostat.ec.europa.eu/nui/submitViewTableAction.do) had a higher income in 2019 than the European average. These are the following countries: Finland, Netherlands, Belgium, Sweden, Germany, France, Iceland, Switzerland, Norway, Luxembourg, Denmark, Austria, Ireland, and the UK. These are the poverty lines for daily income in a number of high-income European countries (based on 60% of the median incomes from PovcalNet): Sweden: $29.40 per da * Norway: $37.80 per day * Austria: $31 per day * UK: $25.04 per day * Switzerland: $35.82 per day * Germany: $28.35 per day * France: $27.28 per day * Luxembourg: $43.86 per day * Finland: $27.22 per day * Iceland: $31.64 per day * Ireland: $24.68 per day * Netherlands: $28.6 per day * Belgium: $26.92 per day * Denmark: $29.06 per day The span of poverty lines in these countries ranges from $25 (for the UK and Ireland) up to $38 (for Norway); in the small country of Luxembourg the poverty line is higher. #### The poverty line in the US Unlike European countries, the US does not set the poverty line in a relative way. Instead the US poverty line dates back to the work of Mollie Orshansky, an economist working for the Social Security Administration in the early 1960s. Since then it has been of course revised for price changes, but otherwise it remained unchanged. The US poverty line is [very often](https://en.wikipedia.org/wiki/Poverty_in_the_United_States#Measuring_poverty) criticised as being too low. Those that criticize the US poverty line in that way therefore suggest that the severity of poverty in the US is understated in the statistics. How high is the poverty line in the US? In 2020 the poverty threshold for a single person under 65 was $30, measured in 2011 international-$ per day to be comparable with the other figures in this article.{ref}According to the "[Annual Update of the HHS Poverty Guidelines](https://www.govinfo.gov/content/pkg/FR-2020-01-17/pdf/2020-00858.pdf)" the poverty line in the US is an annual income of US$12,760. That is in 2020 price. According to the [World Bank](https://data.worldbank.org/indicator/FP.CPI.TOTL?locations=US), the Consumer Price Index in the US in 2020 was 118.7 and in 2011 it was 103.2. So prices between the years rose by 118.7/103.2 - 1 = 15%. Deflating the poverty line in to 2011 prices we get 12,760/1.15 = $11,096. And expressing that as a per day figure that is $11,096/365 = $30.40{/ref} Now the problem with comparing this poverty line with the global statistics is again that the income concept is different. The US crucially relies on an equivalence scale for adjusting the income cutoff depending on the household size. One alternative is to use the World Bank's poverty and inequality data – which expresses incomes in per capita terms – to find a 'harmonized' poverty line: the line that yields the same poverty rate in the World Bank data as the official poverty rate.{ref}This method was introduced by Jolliffe and Prydz (2016) and used by Jolliffe et al. (2022) as an ingredient of their method for setting the World Bank's international poverty lines. Jolliffe, Dean, and Espen Beer Prydz. 2016. _Estimating International Poverty Lines from Comparable National Thresholds_. Washington, DC. _Jolliffe, Dean Mitchell, Daniel Gerszon Mahler, Christoph Lakner, Aziz Atamanov, and Samuel Kofi Tetteh Baah. 2022. Assessing the Impact of the 2017 PPPs on the International Poverty Line and Global Poverty. The World Bank. Available to read at the _[_World Bank here_](https://documents1.worldbank.org/curated/en/353811645450974574/pdf/Assessing-the-Impact-of-the-2017-PPPs-on-the-International-Poverty-Line-and-Global-Poverty.pdf)_._{/ref} The official poverty rate in the US in 2019 was 10.5%, [as reported](https://www.census.gov/content/dam/Census/library/publications/2020/demo/p60-270.pdf) by the U.S. Census Bureau. The poverty line that yields this rate in the World Bank's data is $22.53 (measured in 2011 international-$).{ref}You can see our detailed calculations in this [Google Colabs document](https://colab.research.google.com/drive/1IzHT9NikKHrY9uGWKzDzaZ4VVpdc9m5E#scrollTo=qF_GSK2FX7tU&line=1&uniqifier=1).{/ref} An alternative is to apply the same concept that the Europeans are using for their poverty line determination. If the US would use the 60% of median income definition of poverty their poverty line would be int.-$32.8 per day{ref}The US median monthly income in 2017 was $1640 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.61640)/30=$32.8 per day{/ref} Very close to the one-person poverty line based on Orshansky’s work. A somewhat comparable poverty line based on these three approaches therefore falls into the range of around $23 to $35 per day. Within the range of poverty lines in European countries. #### Survey results – Below which income do you consider a person poor? The UN and Pritchett rely on the existing poverty lines in low-income and high-income countries respectively to derive their poverty lines. We can follow other approaches too. An obvious one is to ask what people out there believe: Who is considered poor in a high-income country by people in high-income countries? For the regular poverty report of the German government, a survey is conducted that asks Germans below which income level they consider someone as poor. The latest data is from the year 2015.{ref}These reports are called ‘Armuts- und Reichtumsbericht der Bundesregierung’ online at [armuts-und-reichtumsbericht.de](https://www.armuts-und-reichtumsbericht.de/DE/Startseite/start.html) The latest survey was produced by aproxima and published in 2016. It is published as [Wahrnehmung von Armut und Reichtum in Deutschland, Ergebnisse der repräsentativen Bevölkerungsbefragung „ARB-Survey 2015“](https://www.armuts-und-reichtumsbericht.de/SharedDocs/Downloads/Service/Studien/forschungsprojekt-wahrnehmung-armut-reichtum.pdf?__blob=publicationFile&v=5), Berlin: Bundesministerium für Arbeit und Soziales (Hrsg.).{/ref} The mean answer given by the German population for a cutoff below which a person is considered poor was 947€ per month. In international dollars per day this corresponds to an income of int.-$37.58.{ref}The 2011 PPP conversion factor for private consumption (LCU per international $) for Germany in 2015 is 0.84 according to the World Bank [here](https://ourworldindata.org/grapher/ppp-conversion-factor-for-private-consumption). This means the perceived poverty threshold corresponds to €947/0.84=int.-$1,127.38 per month or int.-$37.58.{/ref} #### Universal Basic Income [Universal Basic Income](https://en.wikipedia.org/wiki/Universal_basic_income) (UBI) is a political idea that is becoming rapidly more popular. A large UBI study in Germany – called [‘Mein Grundeinkommen’](https://de.wikipedia.org/wiki/Mein_Grundeinkommen) – sets this income at €1200. In international-$ this corresponds to an income of int.-$48.19 per day.{ref}The 2011 PPP conversion factor for private consumption (LCU per international $) for Germany in 2017 is 0.83 according to the World Bank [here](https://ourworldindata.org/grapher/ppp-conversion-factor-for-private-consumption). This means the UBI corresponds to 1200/0.83=int.-$1,445.78 per month or int.-$48.19.{/ref} #### Social security in Germany Germany pays basic social care for its citizens. This social security payment is referred to as ‘Hartz-IV’. How much a person receives depends on the particular circumstances of the individual, but we can look at the average payment. In 2018 a single person [received on average](https://www.sueddeutsche.de/wirtschaft/wie-viel-geld-bekommt-ein-hartz-iv-empfaenger-1.3905657) 783 Euro per month. That corresponds to int.-$30.78 per day.{ref}That’s €783/0.834=int.-$938.85 per month. Or int.-$938.85/30.5=int.-$30.78 per day.{/ref} #### The Roslings’ suggest a cutoff of $32 per day Anna Rosling-Rönnlund, Ola Rosling and Hans Rosling challenged the old dichotomy between developed and developing countries in their bestselling book ‘[Factfulness](https://en.wikipedia.org/wiki/Factfulness:_Ten_Reasons_We%27re_Wrong_About_the_World_%E2%80%93_and_Why_Things_Are_Better_Than_You_Think)’. They argue that the old dichotomy corresponds to a view of the world that was accurate half a century ago when a few countries were relatively well-off, but most countries were living in very [poor conditions](https://ourworldindata.org/life-expectancy-globally).Today, they say, people around the world live on a large spectrum. To reflect this spectrum they proposed 4 income levels. The first cut-off corresponds to the international poverty line (rounded to int.-$2 per day). The next income cutoff they set at $8 per day, the following one at $16 and the highest one at int.-$32 per day. #### Kahneman's and Deaton's study of income and emotional well-being Nobel laureates Daniel Kahneman and Angus Deaton published a famous study on the link between life satisfaction and income.{ref}Kahneman and Deaton (2010) – High income improves evaluation of life but not emotional well-being. Published in the Proceedings of the National Academy of Sciences. https://www.pnas.org/content/107/38/16489 {/ref} The authors find that higher incomes go together with higher self-reported life satisfaction, but for people’s self-reported emotional well-being this is only true up to a certain point: the study finds that above $75,000 further increases in income do not correspond with improvements in people’s emotional well-being – a finding that is often cited to argue that additional economic growth does not improve people’s lives in high-income countries.{ref}Kahneman and Deaton analyze two different concepts self-reported satisfaction: – Emotional well-being refers to the “emotional quality of an individual's everyday experience – the frequency and intensity of experiences of joy, stress, sadness, anger, and affection that make one's life pleasant or unpleasant.” – Life evaluation refers to the thoughts that people have about their life when they think about it. The authors find that higher incomes go together with higher self-reported life satisfaction in both metrics. What they emphasize is that at very high incomes this is not true anymore – emotional well-being does not increase over around $75,000. Evaluation of life however continues to increase even at incomes over $75,000.{/ref} Again, the income concept is not the same as that in PovcalNet, and so comparisons with the global data are not directly possible. But we can ask what the daily income at which emotional well-being supposedly levels off corresponds to: $75,000 per year are int.-$205 per day. It is certainly worth considering whether an income up to which emotional well-being increases could be taken as the basis for a definition of poverty. A US company reacted to the research finding of Kahneman and Deaton by using it to set the minimum wage in their company: everyone in that company [gets paid](https://www.nytimes.com/2015/04/14/business/owner-of-gravity-payments-a-credit-card-processor-is-setting-a-new-minimum-wage-70000-a-year.html) that salary. For the discussion of global poverty however it might be considered as an even higher poverty line, but for any practical purpose in the world today the income cutoff would be too high as only a very small fraction of the world lives on more than $75,000 per year. ### How many people in the world live in poverty? We have seen that 10% of the world live in extreme poverty_ _as defined by the UN. How large is the share of the world that lives in moderate poverty? The latest global data tells us that 85% of the world population live on less than $30 per day. These are 6.5 billion people. Relying on a higher poverty line of $45 per day you find that 92% live in poverty, and using a lower poverty line of $20 per day you find that 78% live in poverty. No matter which of these poverty lines you might want to choose, at least three-quarters of the world live in poverty. All of this data refers to pre-pandemic times. The global recession has certainly increased the share below any of these cutoff points. As soon as the new data is available you will find it on Our World in Data. The chart shows where in the world people are poor. If we would only rely on the UN’s extreme poverty line we would conclude that barely anyone lives in poverty in high-income countries. Relying on higher poverty lines, this data here shows that even in high-income countries there is a significant share of the population that lives in poverty. No country, not even the high-income countries, has eliminated poverty. There are no ‘developed countries’ — there is work to do for all. But just as clear from this data is the fact that in many world regions the large majority of people are very poor. In Sub-Saharan Africa about 40% of the population lives on less than $1.90 per day as the chart shows. In all regions outside of high-income countries more than 85% of all people live in moderate poverty. <Image filename="The-global-inc-distribution-190-10-30.png" alt=""/> ### Countries in which the majority do not live in poverty have only left poverty behind in recent history Two centuries ago the global income distribution was very different. Back then [almost everyone in the world](https://ourworldindata.org/extreme-history-methods) was living in extreme poverty. Those places in which few people live in moderate poverty today only left poverty behind in the very recent past. Denmark is one of those places. The reason why the majority of people in Denmark is not living in poverty is that the economic inequality is low and the average income high. The fact that the inequality is low you can see on the map. It shows an inequality measure called the Gini coefficient (explained [here](https://ourworldindata.org/income-inequality#the-gini-coefficient)) which makes clear that Denmark is among the least unequal countries in the world. The reason that the average income in Denmark is high is due to the fact that average incomes have increased steadily for the last two centuries; this long-term development is called economic growth. As the historical data shows the average incomes in Denmark are today more than 20-times higher than in the past. You can add any other country to this chart. By adding one of those countries in which the majority lives in poverty – like Ethiopia – you see just how large the differences in average incomes are. GDP per capita is by far the most widely used measure of average income and is yet another income concept from the two I mentioned so far.{ref}The two previous ones were income/expenditure as determined in household surveys and equivalized disposable income after social transfers.{/ref} It is a more comprehensive measure of incomes and crucially takes into account government expenditures. For these and other reasons (mentioned in the long footnote) you will find that dividing GDP per capita by 365 days will let you arrive at a higher value than the income that is determined in household income surveys.{ref}There is generally a gap between GDP per capita and the averages found in both income surveys and expenditure surveys. But the reasons for the gap are different depending on which we are comparing. GDP includes many items that are typically not measured in household income surveys, such as an imputed rental value of owner-occupied housing, the retained earnings of firms and taxes on production such as VAT. The gap is even larger when GDP is compared to surveys of household consumption – the latter concept excluding both investment expenditure and government expenditure on public services such as education and health. Other aggregates beyond GDP are available in the national accounts that are more comparable to the concepts applied in household income and consumption surveys. However, important differences still remain even here. For example, in addition to imputed rents, imputations for the value of certain financial services, such as bank accounts, are included in aggregate household consumption measured in national accounts, with no equivalent for these items recorded in the survey data. In many countries the consumption of ‘nonprofit institutions serving households’ (NPISH) is included as part of household consumption within national accounts, but not within household surveys. On top of these conceptual differences are a range of mismeasurement problems that affect both sets of data. On this topic see Deaton (2005), and Pinkovskiy and Sala-i-Martin (2016). Deaton, Angus. 2005. “Measuring Poverty in a Growing World (or Measuring Growth in a Poor World).” The Review of Economics and Statistics 87 (1): 1–1. Pinkovskiy, Maxim, and Xavier Sala-i-Martin. 2016. “Lights, Camera… Income! Illuminating the Nation"{/ref} <Chart url="https://ourworldindata.org/grapher/economic-inequality-gini-index?time=earliest..latest&tab=chart&country=USA~FRA~JPN~BRA~ZAF~DNK"/> <Chart url="https://ourworldindata.org/grapher/average-real-gdp-per-capita-across-countries-and-regions?time=earliest..latest&country=~DNK&tab=chart"/> ### Billions of people live in countries where average incomes are very low The income of every person depends on two factors, the average income in the country they live in and the position that particular person has in that country’s income distribution. This chart here shows the average income in countries around the world. The height of each bar represents the average daily income in a country, the width of each country corresponds to the country’s population size. I have ordered the countries by income: from the poorest country on the very left (South Sudan where the average person lives on $1.12 per day) to the richest country on the very right (Luxembourg with an average of $86 per day). After two centuries of economic growth the average income in Denmark is now $57 per day today. You find the country far to the right in this chart, which tells you that only very few countries in the world have such high average incomes. The fact that the average income is far higher than the poverty line tells us that the existing poverty in Denmark discussed at the beginning of this post is to a large extent the consequence of inequality. What this chart makes very clear is how low the average incomes in many countries in the world are. The huge majority of the world live in countries where the _average _income is much lower than the poverty threshold in rich countries. 82% of the world population live in countries where the mean income is less than $20 per day. And where incomes are low, living standards generally [are poor](https://owid.cloud/app/uploads/2021/03/Correlates-of-GDP-–-How-is-life-at-different-levels-of-income.png). As the last chart below shows, a child that is born into a poorer country must not just expect to live on a very low income, but also faces a much higher risk of not staying alive at all. As I have [said before](https://ourworldindata.org/global-inequality-of-opportunity), people are not poor because of who they are, but because of _where_ they are. This is why economic growth is so important to leave poverty behind. By far the most important difference between those people who are not living in poverty and those who do is the average income in the country that they live in – this single factor matters more for a person’s income [than all other factors taken together](https://ourworldindata.org/poverty-growth-needed). The increase of average income in a country is called economic growth and for global poverty to decrease substantially economic growth for the poorest billions of people is necessary. → See my previous article: [The economies that are home to the poorest billions of people need to grow if we want global poverty to decline](https://ourworldindata.org/poverty-growth-needed). <Image filename="mean-income-by-country.png" alt=""/> ### The future of global poverty The world today is far from the ‘end of poverty’ relative to _any_ poverty definition. After two centuries of [unprecedented progress](https://ourworldindata.org/extreme-history-methods) against the very worst poverty it is still the case that every tenth person lives on less than _$1.90 per day_. As the world has not even ended extreme poverty it is therefore right to focus much of our attention on this very low poverty cutoff; ending extreme poverty surely is a global goal of great importance. Yet at the same time we should consider what our aspirations for the future are. In the past our ancestors [did not know](https://ourworldindata.org/breaking-the-malthusian-trap) that it was possible for a society to leave widespread poverty behind. Today we are in a different situation. We know from the reality of today’s rich countries that widespread poverty is not inevitable. Because we know that poverty relative to such higher cutoffs is not inevitable I believe it would be wrong to limit our ambitions to eradicating poverty based on the definition of poverty in the very poorest countries. What I take away from this discussion are three insights: First, we have seen from countries like Denmark that it is _possible_ to reduce poverty for an entire population relative to a poverty line of about $30 per day. Second, we have seen that these countries were extremely poor in the past and were able to reduce poverty over the course of the last few generations. And third we have seen that the huge majority of the world is still living in great poverty, by any standard. What this suggests to me is that the history of global poverty reduction has only just begun. <Chart url="https://ourworldindata.org/grapher/child-mortality-gdp-per-capita?time=latest"/> _Continue reading Our World in Data:_ My colleague Hannah Ritchie has just published a series of posts on the drivers of deforestation and how to bring humanity's long history of deforestation to an end. You find her work [here](https://ourworldindata.org/blog). Acknowledgement:* I would like to thank Joe Hasell for his thoughtful comments on draft versions of this article.	{ "id": 41450, "date": "2021-03-05T11:02:06", "guid": { "rendered": "https://owid.cloud/?p=41450" }, "link": "https://owid.cloud/higher-poverty-global-line", "meta": { "owid_publication_context_meta_field": { "latest": true, "homepage": true, "immediate_newsletter": true } }, "slug": "higher-poverty-global-line", "tags": [], "type": "post", "title": { "rendered": "Global poverty in an unequal world: Who is considered poor in a rich country? And what does this mean for our understanding of global poverty?" }, "_links": { "self": [ { "href": "https://owid.cloud/wp-json/wp/v2/posts/41450" } ], "about": [ { "href": "https://owid.cloud/wp-json/wp/v2/types/post" } ], "author": [ { "href": "https://owid.cloud/wp-json/wp/v2/users/2", "embeddable": true } ], "curies": [ { "href": "https://api.w.org/{rel}", "name": "wp", "templated": true } ], "replies": [ { "href": "https://owid.cloud/wp-json/wp/v2/comments?post=41450", "embeddable": true } ], "wp:term": [ { "href": "https://owid.cloud/wp-json/wp/v2/categories?post=41450", "taxonomy": "category", "embeddable": true }, { "href": "https://owid.cloud/wp-json/wp/v2/tags?post=41450", "taxonomy": "post_tag", "embeddable": true } ], "collection": [ { "href": "https://owid.cloud/wp-json/wp/v2/posts" } ], "wp:attachment": [ { "href": "https://owid.cloud/wp-json/wp/v2/media?parent=41450" } ], "version-history": [ { "href": "https://owid.cloud/wp-json/wp/v2/posts/41450/revisions", "count": 28 } ], "wp:featuredmedia": [ { "href": "https://owid.cloud/wp-json/wp/v2/media/41496", "embeddable": true } ], "predecessor-version": [ { "id": 56627, "href": "https://owid.cloud/wp-json/wp/v2/posts/41450/revisions/56627" } ] }, "author": 2, "format": "standard", "status": "publish", "sticky": false, "content": { "rendered": "\n<div class=\"blog-info\">\n<p>Our World in Data presents the data and research to make progress against the world\u2019s largest problems.<br>This post draws on data and research discussed in our entries on <strong><a href=\"https://ourworldindata.org/income-inequality\" target=\"_blank\" rel=\"noopener\">Income Inequality</a></strong>, <strong><a href=\"https://ourworldindata.org/poverty\" target=\"_blank\" rel=\"noopener\">Poverty</a></strong> and <strong><a href=\"https://ourworldindata.org/economic-growth\" target=\"_blank\" rel=\"noopener\">Economic Growth</a></strong>.</p>\n</div>\n\n\n\n<p><strong><em>Abstract:</em></strong><em> The extremely low poverty line that the UN relies on has the advantage that it draws the attention to the very poorest people in the world. It has the disadvantage that it ignores what is happening to the incomes of the 90% of the world population who live above the extreme poverty threshold.<br>The global poverty line that the UN relies on is based on the national poverty lines in the world\u2019s poorest countries. In this article I ask what global poverty looks like if we rely on the notions of poverty that are common in the world\u2019s rich countries \u2013 like Denmark, the US, or Germany. Based on the evidence I ask what our aspirations for the future of global poverty reduction might be.</em></p>\n\n\n\n<hr class=\"wp-block-separator\"/>\n\n\n\t<block type=\"help\">\n\t\t<content>\n\n<h4>The World Bank has updated its poverty and inequality data</h4>\n\n\n\n<p>The data in this article uses a previous release of the World Bank’s poverty and inequality data in which incomes are expressed in 2011 international-$.</p>\n\n\n\n<p>The World Bank has since updated its methods, and now measures incomes in 2017 international-$. As part of this change, the International Poverty Line used to measure extreme poverty has also been updated: from $1.90 (in 2011 prices) to $2.15 (in 2017 prices).</p>\n\n\n\n<p>This has had little effect on our overall understanding of poverty and inequality around the world. But because of the change of units, many of the figures mentioned in this article will differ from the latest World Bank figures.</p>\n\n\n <block type=\"prominent-link\" style=\"is-style-thin\">\n <link-url>https://ourworldindata.org/from-1-90-to-2-15-a-day-the-updated-international-poverty-line</link-url>\n <title></title>\n <content>\n\n<p>Read more about the World Bank’s updated methodology</p>\n\n</content>\n <figure></figure>\n </block>\n\n <block type=\"prominent-link\" style=\"is-style-thin\">\n <link-url>https://ourworldindata.org/explorers/poverty-explorer</link-url>\n <title>Explore the latest World Bank data on poverty and inequality</title>\n <content>\n\n<p></p>\n\n</content>\n <figure></figure>\n </block>\n</content>\n\t</block>\n\n\n<p>In every country of the world there are people living in poverty. Even in the world\u2019s richest countries the poorest people often live in poor housing and struggle to afford basic goods and services like heating, transport, and healthy food for themselves and their family.</p>\n\n\n\n<p>Those who are in monetary poverty also have much poorer living conditions more broadly. Even in a rich and relatively equal country like Denmark middle-aged men who are among the poorest 20% of the population die on average <em>9 years</em> earlier than those among the richest 20%.{ref}Br\u00f8nnum-Hansen H, Foverskov E, Andersen I. Income inequality in life expectancy and disability-free life expectancy in Denmark. J Epidemiol Community Health 2021;75:145-150. <a href=\"https://jech.bmj.com/content/75/2/145\">https://jech.bmj.com/content/75/2/145</a> {/ref} In Denmark a person who lives on less than $30 per day is considered poor, and it is the declared goal of the country to reduce poverty relative to this threshold.{ref} For the moment it is important to note that this $30 per day poverty line is defined in international-$ and therefore comparable with the \u2018International Poverty Line\u2019 discussed in the following section. Much more details about how to compare incomes across countries, the income concept here, and the definition of this poverty line follows further below in this text.{/ref} </p>\n\n\n\n<p>Countries that are much poorer than Denmark also have the goal to reduce poverty. The United Nations declared the objective of <a href=\"https://sdg-tracker.org/\">ending \u2018extreme poverty\u2019</a> to be the number 1 goal of the global <em>Sustainable Development Goals</em>. <a href=\"https://www.un.org/en/global-issues/ending-poverty\">According</a> to the UN a person is considered to live in extreme poverty when he or she is living on less than $1.90 per day, this is called the <em>International Poverty Line</em>. According to the latest global statistics almost <em><a href=\"https://ourworldindata.org/poverty?insight=the-pandemic-pushed-millions-into-extreme-poverty#key-insights-on-poverty\">one in ten</a></em> people live in extreme poverty globally.</p>\n\n\n\n<p>If we know that poverty is a large problem even in high income countries like Denmark where the poverty line is set at around $30 a day, why should we use an International Poverty Line that is so extremely low to measure poverty globally?</p>\n\n\n\n<p>It is the reality of our extremely unequal world \u2013 in which every tenth person lives in extreme poverty \u2013 that makes such an extremely low poverty line necessary. Without having an <em>extremely</em> low poverty line we would not be aware of the fact that a large share of the world lives in such extreme poverty. The UN\u2019s global poverty line is valuable because it draws attention to the reality of extreme poverty in our world.</p>\n\n\n\n<p>In a world where the majority still lives on very low incomes it would be wrong if the UN decided to measure global poverty solely by a poverty line as high as the poverty line of Denmark. It would mean that the global statistics gloss over the extremely large and important income differences among the poorest billions in the world. It would mean that the difference between those who live on only $1 per day and those who have an income that is more than 20-times higher would be entirely disregarded. They would all be considered poor, and the reality that some of them are much poorer than others would be hidden.</p>\n\n\n\n<p>Slightly higher global poverty lines \u2013 such as the poverty line of $3.10 per day that Kate Raworth relies on in her \u2018Doughnut\u2019 framework, or the poverty line of $7.40 per day that anthropologist Jason Hickel uses in his work, or Bob Allen\u2019s absolute poverty line based on minimal nutritional requirements \u2013 all have the same value.{ref}Kate Raworth (2017) \u2013 A Doughnut for the Anthropocene: humanity’s compass in the 21st century. In The Lancet Planetary Health. Volume 1, Issue 2, E48-E49, May 01, 2017. Open Access DOI: <a href=\"https://doi.org/10.1016/S2542-5196(17)30028-1\">https://doi.org/10.1016/S2542-5196(17)30028-1</a> You find the metrics that the Doughnut relies on <a href=\"https://www.thelancet.com/cms/10.1016/S2542-5196(17)30028-1/attachment/2d58fdae-741c-4016-84cd-2fc0b1e94f49/mmc1.pdf\">in the Appendix here</a>.<br>Jason Hickel \u2013 <a href=\"https://www.theguardian.com/global-development-professionals-network/2015/nov/01/global-poverty-is-worse-than-you-think-could-you-live-on-190-a-day\">Could you live on $1.90 a day? That’s the international poverty line</a> and <a href=\"https://twitter.com/jasonhickel/status/1012339440113594368\">here</a>.<br>Allen, Robert C.(201). \u2013 <em>Absolute Poverty: When Necessity Displaces Desire</em>. American Economic Review, 107 (12): 3690-3721.DOI: 10.1257/aer.20161080{/ref} These low poverty lines allow us to understand the material living conditions of the poorest people in the world and have been successful in drawing attention to the terrible depths of poverty experienced by a large share of the world’s population. The only way to achieve these goals is to rely on extremely low poverty lines.</p>\n\n\n\n<p>Indeed, there is an argument for using an even lower poverty line. To understand what is happening to the <em>very</em> poorest in the world, we need to look even lower than $1.90. This is because one of the biggest failures of development is that over the last decades the incomes of <a href=\"https://ourworldindata.org/poverty?insight=hundreds-of-millions-will-remain-in-extreme-poverty-on-current-trends#key-insights-on-poverty\">the very poorest</a> people have not risen. A big part of the reason for why this issue doesn\u2019t get discussed enough is that the International Poverty Line we rely on is too high to see this fact.</p>\n\n\n\n<h4>Why not both?</h4>\n\n\n\n<p>Yet, <em>only </em>measuring global poverty relative to such extremely low poverty lines has its own large downside. </p>\n\n\n\n<p>By focusing on an income threshold that is lower than the incomes of 90% of the global population we are ignoring what is happening to the majority of the world\u2019s population. This matters. The majority of the world do not live in extreme poverty <a href=\"https://ourworldindata.org/extreme-history-methods\">anymore</a>, but billions are nevertheless living in great poverty still.</p>\n\n\n\n<p>The obvious solution to the problem that the majority of the world is not considered by the International Poverty Line is to use an <em>additional</em> poverty line. This is not a new idea. One poverty researcher who has made the argument for an additional higher global poverty line based on the notions of poverty in rich countries is Lant Pritchett \u2013 you find it in his short, yet widely-cited essay <em>\u2018The case for a high global poverty line\u2019 </em>from eight years ago.{ref}Lant Pritchett (2013) \u2013 Monitoring progress on poverty: the case for a high global poverty line. Online here <a href=\"https://web.archive.org/web/20150608125138/http://www.odi.org:80/sites/odi.org.uk/files/odi-assets/publications-opinion-files/8440.pdf\">https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/8440.pdf</a>{/ref}</p>\n\n\n\n<h4>Defining global poverty lines</h4>\n\n\n\n<p>The definition of poverty differs between countries. Poorer countries set much lower poverty lines than richer countries.{ref}Jolliffe and Prydz (2016){/ref} This means that if we were to simply rely on national poverty definitions for a global measure of poverty we would end up with a measurement framework in which <em>where</em> a person happens to live would determine whether they are poor or not: If we would count as poor those who are defined nationally as poor we would end up counting a person who lives on $20 per day as poor in a rich country, while at the same time counting a person who lives on $2 as not-poor when they happen to live in a very poor country.</p>\n\n\n\n<p>One way out of this problem is to set global poverty lines based on the national definitions, but to apply them globally. This is how the UN decided to define the International Poverty Line. In order to ground this global poverty line on something more than the views of global poverty researchers, it is based on the existing definitions of poverty adopted in countries around the world at the national level, but to avoid the problem outlined above they apply the national poverty lines globally. As we explain <a href=\"https://ourworldindata.org/extreme-poverty#setting-the-international-poverty-line\">here</a> in some detail, the $1.90 per day poverty line is set to reflect the national poverty lines adopted in the world\u2019s <em>poorest</em> countries.{ref}Specifically, the line is set at the average national poverty line amongst 15 particular low-income countries. As Jolliffe and Prydz (2016) demonstrate however, this is also the average poverty line found among the poorest quarter of countries with available data, and also among countries falling into the World Bank\u2019s low-income category.{/ref} Applying this poverty line globally means that a person who lives on less than $1.90 per day is considered extremely poor no matter where they live.</p>\n\n\n\n<p>In recent years the World Bank has applied this same methodology to countries in the middle-income bracket, those countries with a GNI per capita between $1000 and $12,500. Based on the poverty lines in these countries they have set additional global poverty lines at $3.20 and $5.50 per day, which are now <a href=\"https://data.worldbank.org/indicator/SI.POV.LMIC\">directly</a> <a href=\"https://data.worldbank.org/indicator/SI.POV.UMIC\">available</a> via the World Bank statistics.{ref}The study on which these thresholds rely is Jolliffe, D., Prydz, E.B. Estimating international poverty lines from comparable national thresholds. J Econ Inequal 14, 185\u2013198 (2016). <a href=\"https://doi.org/10.1007/s10888-016-9327-5\">https://doi.org/10.1007/s10888-016-9327-5</a> The researchers also report an average high-income country poverty line of $21.70 per day.<br>High income countries in the World Bank framework are however relatively poor compared to the countries that I\u2019m focusing on here \u2013 the cutoff for a high-income country according to the World Bank is $12,536, about a quarter of the GNI of Germany and only a fifth of the US. Accordingly, the poverty cutoff is much lower than in those countries. <a href=\"https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups\">Here you find the World Bank income classification cutoffs</a>.{/ref}</p>\n\n\n\n<p>What I want to do here is to see what a global poverty line would be if we rely on the notion of poverty in rich countries \u2014 countries like Denmark, the US, or Germany.{ref}The range of incomes considered \u2018middle\u2019 and \u2018high\u2019 income countries according to the World Bank are very low relative to rich countries. High-income economies are those with a GNI per capita of $12,536 or more. The range of middle-income economies begins at a GNI per capita of $1,036. In this post I want to rely on countries like Denmark; higher income countries by any standard.{/ref} That is what Pritchett suggested eight years ago: \u201cSince the origin of the [International Poverty Line] was just to adopt as a global lower bound the poverty lines used by the poorest countries, it symmetrically makes sense to say that the global upper bound poverty line is based on the poverty line used in rich countries.\u201d </p>\n\n\n\n<p>The definition of poverty is certainly not an easy ethical question and thoughtful people disagree about it in ways that have meaningful consequences for our understanding of the world. There are also interesting proposals for hybrid poverty lines that combine absolute and weakly-relative measures; see Ravallion (2019) for a recent proposal.{ref}Martin Ravallion (2019) \u2013 <a href=\"https://www.nber.org/papers/w26211\">On Measuring Global Poverty</a>. NBER Working Paper 26211. DOI 10.3386/w26211{/ref} And I would also recommend Tony Atkinson\u2019s last book \u2018<a href=\"https://www.tony-atkinson.com/book-measuring-poverty-around-the-world/\">Measuring Poverty around the World</a>\u2019 for an excellent recent overview of the topic.</p>\n\n\n\n<p>\u2192 To understand how it is possible to compare poverty levels and living standards across countries you need to know the basics of global poverty measurement. You find a summary of the basics in the following fold-out box.</p>\n\n\n\t<block type=\"additional-information\" default-open=\"false\">\n\t\t<content>\n\n<h3>The basics of global poverty measurement</h3>\n\n\n\n<div class=\"wp-block-columns is-style-sticky-right\">\n<div class=\"wp-block-column\">\n<p>Throughout this article \u2013 and in global income and expenditure data generally \u2013 the statisticians who produce these figures are careful to make these numbers as comparable as possible. </p>\n\n\n\n<p>First, many poorer people rely on subsistence farming and do not have a monetary income. To take this into account and make a fair comparison of their living standards, the statisticians that produce these figures estimate the monetary value of their home production and add it to their income/expenditure.</p>\n\n\n\n<p>Second, price changes over time (inflation) and price differences across countries are both taken into account: all measures are adjusted for differences in purchasing power.{ref}This is possible by relying on the work of the <a href=\"https://www.worldbank.org/en/programs/icp\">International Comparison Project</a>, which monitors the prices of goods and services around the world.{/ref} To this end incomes and expenditures are expressed in so-called <em>international dollars</em>. This is a hypothetical currency that results from the price adjustments across time and place. An international dollar is defined as having the same purchasing power as one US-$ <em>in the US</em>. This means no matter where in the world a person is living on int.-$30, they can buy the goods and services that cost $30 in the US. None of these adjustments are ever going to be perfect, but in a world where price differences are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do.{ref}Angus Deaton and Alan Heston (2010) discuss the methods behind such price adjustments and many of the difficulties and limitations involved.</p>\n\n\n\n<p>Deaton, A., and Heston, A. 2010. \u201cUnderstanding PPPs and PPP-Based National Accounts.\u201d <em>American Economic Journal: Macroeconomics</em> 2 (4): 1\u201335. A working paper version is available online <a href=\"https://www.nber.org/papers/w14499\">here</a>.{/ref}</p>\n\n\n\n<p>Throughout this text I\u2019m always adjusting incomes for price changes over time and price differences between countries in this way. All dollar values discussed here are presented in int.-$; the UN does the same for the $1.90 poverty line. Sometimes I leave out \u2018international\u2019 as it is awkward to repeat it all the time; but every time I mention any $ amount in this text I\u2019m referring to international-$ and not US-$.{ref}Keep in mind that in the special case of the US the US-$ equals the international-$.{/ref}</p>\n</div>\n\n\n\n<div class=\"wp-block-column\"></div>\n</div>\n\n</content>\n\t</block>\n\n\n<h3>An additional higher poverty line of $30 per day</h3>\n\n\n\n<p>Pritchett made his proposal based on data and prices a decade ago and so it is necessary to update his calculations. But I want to go beyond Pritchett\u2019s approach and additionally provide a number of other relevant comparisons to inform our understanding of who is considered poor in a rich country.</p>\n\n\n\n<p>By following this idea I find that a poverty of 30 international-$ per day corresponds to the notion of poverty in a rich country. In the following section I consider a long number of benchmarks that made me arrive at this poverty line. Here is the short summary of these comparisons:</p>\n\n\n\n<ul><li><strong>European countries: </strong>The span of poverty lines in high-income countries in Europe ranges from <strong>int.-$25 to int.-$38 per day</strong>.</li></ul>\n\n\n\n<ul><li><strong>The US: </strong>A comparison with the poverty line in the US is not straightforward, as explained in some detail below; two different approaches arrive at poverty lines of <strong>int.-$23 and int.-$35 per day</strong> respectively.</li></ul>\n\n\n\n<ul><li><strong>Survey result: </strong>A study surveyed people in a high-income country to ask at what income a person is considered poor. The study found that the mean income threshold suggested by the surveyed population corresponds to an income of <strong>int.-$37.58 per day</strong></li></ul>\n\n\n\n<ul><li><strong>Proposal to replace the categorization into developing and developed countries: </strong>In the book \u2018Factfulness\u2019 the authors recommend replacing the simplistic categorization of countries into developing and developed countries with a finer grained structure. The high-income cutoff the authors suggest is <strong>int.-$32 per day</strong>.</li></ul>\n\n\n\n<ul><li><strong>UBI: </strong>The daily income paid as \u2018Universal Basic Income\u2019 in a pilot study in Germany corresponds to an income of <strong>int.-$48.19 per day</strong>.</li></ul>\n\n\n\n<ul><li><strong>Social care: </strong>The average basic social care payout in Germany (\u2018Hartz-IV\u2019) corresponds to <strong>int.-$30.78 per day</strong></li></ul>\n\n\n\n<p>The range of possible higher poverty lines based on richer countries is wide, as the list of benchmarks suggests. At the lower end I believe that it might be as low as $25 per day, and on the higher end it might be as high as $40 or $50 per day. </p>\n\n\n\n<p>Just as someone who lives on less than $1.90 per day is defined as <em>extremely </em>poor, a person who lives on less than $30 a day could be considered <em>moderately </em>poor.</p>\n\n\n\n<p>A reality check for any poverty line you might want to consider is to ask yourself what you think about living on less than that poverty line yourself. I lived on less than $30 per day before and would consider myself poor if I\u2019d fall back on that income level again.</p>\n\n\n\n<p>In the following box you find the sources and calculations of the benchmarks that led me to my $30 per poverty line proposal.</p>\n\n\n\t<block type=\"additional-information\" default-open=\"false\">\n\t\t<content>\n\n<h3>Who is considered poor in rich countries? Poverty lines and other relevant benchmarks</h3>\n\n\n\n<div class=\"wp-block-columns is-style-sticky-right\">\n<div class=\"wp-block-column\">\n<h4>Poverty lines in European countries</h4>\n\n\n\n<p>As mentioned before most European countries set their poverty line at 60% of the median income in the country. In his original proposal Pritchett was relying on this 60% of median cut-off.</p>\n\n\n\n<p>Calculating the poverty line for European countries therefore means that we look up their median income and then multiply it by 0.6. This is less straightforward than it might first appear. The reason for that is that there are many different income concepts. You quickly realize that it is not easy to define a person\u2019s income if you ask yourself what your own income is. Do you take government transfers into account or not? Do you take your partner\u2019s income into account and divide it by two? How do you take into account that you have a child for which you need to pay? It is possible to take these and many other aspects into account and arrive at useful statistics, but various sensible ways of addressing such questions lead to many different income metrics. As such, in comparing different poverty thresholds across countries we have to take care to avoid mixing different income concepts as much as possible. </p>\n\n\n\n<p>One important difference is how incomes are adjusted for the size of the household: whether the total household income is simply divided by the number of people (including children) \u2013 \u2018per capita\u2019 income \u2013 or whether some adjustment is made to account for the fact that larger households, and particularly households with children, face lower costs per person \u2013 known as \u2018equivalised\u2019 income. Whereas EU countries, like other rich countries, use equivalised income to measure poverty, the UN\u2019s measurement of global poverty is based on a global dataset of per capita incomes. This dataset is called <a href=\"http://iresearch.worldbank.org/PovcalNet/povDuplicateWB.aspx\">PovcalNet</a>, and it is this that we must use in order to make comparisons of poverty measures in different countries according to the same income concept.</p>\n\n\n\n<p>In this dataset we find the median income for countries around the world and we can take that median income and then apply the logic on which the European poverty lines are based. In the extensive footnote here you find more details and the full calculations.{ref}The European reference incomes are national median equivalised disposable income after social transfers.</p>\n\n\n\n<p>The disposable household income including all income from work (employee wages and self-employment earnings), private income from investment and property, transfers between households, and all social transfers received in cash including old-age pensions. </p>\n\n\n\n<p>Eurostat applies an equivalisation factor calculated according to the OECD-modified scale first proposed in 1994. The UN/World Bank is not.</p>\n\n\n\n<p>This is according to Eurostat <a href=\"https://appsso.eurostat.ec.europa.eu/nui/show.do?query=BOOKMARK_DS-050270_QID_6AF25E11_UID_-3F171EB0&layout=TIME,C,X,0;GEO,L,Y,0;QUANTILE,L,Z,0;INDIC_IL,L,Z,1;CURRENCY,L,Z,2;INDICATORS,C,Z,3;&zSelection=DS-050270INDIC_IL,TC;DS-050270CURRENCY,EUR;DS-050270INDICATORS,OBS_FLAG;DS-050270QUANTILE,D1;&rankName1=INDIC-IL_1_2_-1_2&rankName2=CURRENCY_1_2_-1_2&rankName3=INDICATORS_1_2_-1_2&rankName4=QUANTILE_1_2_-1_2&rankName5=TIME_1_0_0_0&rankName6=GEO_1_2_0_1&sortC=ASC_-1_FIRST&rStp=&cStp=&rDCh=&cDCh=&rDM=true&cDM=true&footnes=false&empty=false&wai=false&time_mode=ROLLING&time_most_recent=true&lang=EN&cfo=%23%23%23%2C%23%23%23.%23%23%23\">here</a>, where you also find the relevant data. (If the link should break, search on Google for \u2018Distribution of income by quantiles – EU-SILC and ECHP surveys\u2019.)</p>\n\n\n\n<p>There are various ways of bringing the national poverty lines with reference to the national median equivalised disposable income after social transfers in line with the income/expenditure concept used in PovcalNet.</p>\n\n\n\n<p>Joliffe and Prydz follow a different approach and their paper is very relevant for anyone interested in this question here. One alternative to the approach I\u2019m following in this article would be to start from the poverty lines they estimated (based on the poverty headcount ratio) and apply the growth rate of the median income since the publication of their study. Yet another possibility would of course be to repeat their analysis with the up-to-date data. I am not following either of these approaches because I believe for a wide audience they are less transparent that the approach here \u2013 which is simply: I rely on the same dataset so that I rely on the same income concept, then look up the median income and multiply it by 0.6.</p>\n\n\n\n<p>This is the reference: Jolliffe & Prydz (2016). Estimating international poverty lines from comparable national thresholds. The Journal of Economic Inequality, 14(2), 185-198.</p>\n\n\n\n<p>\u2013\u2013\u2013</p>\n\n\n\n<p>The following are the relevant calculations. All of them are based on PovcalNet data:</p>\n\n\n\n<p><strong>Germany\u2019s</strong> median monthly income in 2017 was $1417.29 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is 0.6$1417.29=$850.374/30=$28.35 per day</p>\n\n\n\n<p><strong>Sweden\u2019s</strong> median monthly income in 2017 was $1469 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61469)/30=$29.38 per day</p>\n\n\n\n<p><strong>Norway\u2019s</strong> median monthly income in 2017 was $1890 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61890)/30=$37.8 per day</p>\n\n\n\n<p><strong>Austria\u2019s</strong> median monthly income in 2017 was $1534 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61534)/30=$30.68 per day</p>\n\n\n\n<p>In the <strong>UK</strong> the median monthly income in 2017 was $1252 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61252)/30=$25.04 per day</p>\n\n\n\n<p><strong>France\u2019s</strong> median monthly income in 2017 was $1364 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61364)/30=$27.28 per day</p>\n\n\n\n<p><strong>Switzerland\u2019s</strong> median monthly income in 2017 was $1791 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61791)/30=$35.82 per day</p>\n\n\n\n<p><strong>Spain\u2019s</strong> median monthly income in 2017 was $982 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.6982)/30=$19.64 per day</p>\n\n\n\n<p><strong>Iceland\u2019s</strong> median monthly income in 2017 was $1582 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61582)/30=$31.64 per day</p>\n\n\n\n<p><strong>Luxembourg\u2019s</strong> median monthly income in 2017 was $2193 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.62193)/30=$43.86 per day</p>\n\n\n\n<p><strong>Netherland\u2019s</strong> median monthly income in 2017 was $1430 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61430)/30=$28.6 per day</p>\n\n\n\n<p><strong>Belgium\u2019s</strong> median monthly income in 2017 was $1346 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61346)/30=$26.92 per day</p>\n\n\n\n<p><strong>Denmark\u2019s</strong> median monthly income in 2017 was $1453 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61453)/30=$29.06 per day</p>\n\n\n\n<p><strong>Ireland\u2019s</strong> median monthly income in 2017 was $1234 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61234)/30=$24.68 per day</p>\n\n\n\n<p><strong>Finland\u2019s</strong> median monthly income in 2017 was $1361 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61361)/30=$27.22 per day{/ref}</p>\n\n\n\n<p>As high-income European countries I\u2019m referring to those European countries, which <a href=\"http://appsso.eurostat.ec.europa.eu/nui/submitViewTableAction.do\">according to the Eurostat statistics</a> had a higher income in 2019 than the European average. These are the following countries: Finland, Netherlands, Belgium, Sweden, Germany, France, Iceland, Switzerland, Norway, Luxembourg, Denmark, Austria, Ireland, and the UK.</p>\n\n\n\n<p>These are the poverty lines for daily income in a number of high-income European countries (based on 60% of the median incomes from PovcalNet):</p>\n\n\n\n<ul><li>Sweden: $29.40 per da</li><li>Norway: $37.80 per day</li><li>Austria: $31 per day</li><li>UK: $25.04 per day</li><li>Switzerland: $35.82 per day</li><li>Germany: $28.35 per day</li><li>France: $27.28 per day</li><li>Luxembourg: $43.86 per day</li><li>Finland: $27.22 per day</li><li>Iceland: $31.64 per day</li><li>Ireland: $24.68 per day</li><li>Netherlands: $28.6 per day</li><li>Belgium: $26.92 per day</li><li>Denmark: $29.06 per day</li></ul>\n\n\n\n<p>The span of poverty lines in these countries ranges from $25 (for the UK and Ireland) up to $38 (for Norway); in the small country of Luxembourg the poverty line is higher.</p>\n\n\n\n<h4>The poverty line in the US</h4>\n\n\n\n<p>Unlike European countries, the US does not set the poverty line in a relative way. Instead the US poverty line dates back to the work of Mollie Orshansky, an economist working for the Social Security Administration in the early 1960s. Since then it has been of course revised for price changes, but otherwise it remained unchanged.</p>\n\n\n\n<p>The US poverty line is <a href=\"https://en.wikipedia.org/wiki/Poverty_in_the_United_States#Measuring_poverty\">very often</a> criticised as being too low. Those that criticize the US poverty line in that way therefore suggest that the severity of poverty in the US is understated in the statistics. </p>\n\n\n\n<p>How high is the poverty line in the US? In 2020 the poverty threshold for a single person under 65 was $30, measured in 2011 international-$ per day to be comparable with the other figures in this article.{ref}According to the “<a href=\"https://www.govinfo.gov/content/pkg/FR-2020-01-17/pdf/2020-00858.pdf\">Annual Update of the HHS Poverty Guidelines</a>” the poverty line in the US is an annual income of US$12,760. That is in 2020 price. According to the <a href=\"https://data.worldbank.org/indicator/FP.CPI.TOTL?locations=US\">World Bank</a>, the Consumer Price Index in the US in 2020 was 118.7 and in 2011 it was 103.2. So prices between the years rose by 118.7/103.2 – 1 = <strong>15%</strong>.<br><br>Deflating the poverty line in to 2011 prices we get 12,760/1.15 = $11,096. And expressing that as a per day figure that is $11,096/365 = $30.40{/ref}</p>\n\n\n\n<p>Now the problem with comparing this poverty line with the global statistics is again that the income concept is different. The US crucially relies on an equivalence scale for adjusting the income cutoff depending on the household size.</p>\n\n\n\n<p>One alternative is to use the World Bank’s poverty and inequality data \u2013 which expresses incomes in per capita terms \u2013 to find a ‘harmonized’ poverty line: the line that yields the same poverty rate in the World Bank data as the official poverty rate.{ref}This method was introduced by Jolliffe and Prydz (2016) and used by Jolliffe et al. (2022) as an ingredient of their method for setting the World Bank’s international poverty lines.</p>\n\n\n\n<p>Jolliffe, Dean, and Espen Beer Prydz. 2016. <em>Estimating International Poverty Lines from Comparable National Thresholds</em>. Washington, DC.</p>\n\n\n\n<p><em>Jolliffe, Dean Mitchell, Daniel Gerszon Mahler, Christoph Lakner, Aziz Atamanov, and Samuel Kofi Tetteh Baah. 2022. Assessing the Impact of the 2017 PPPs on the International Poverty Line and Global Poverty. The World Bank. Available to read at the </em><a href=\"https://documents1.worldbank.org/curated/en/353811645450974574/pdf/Assessing-the-Impact-of-the-2017-PPPs-on-the-International-Poverty-Line-and-Global-Poverty.pdf\"><em>World Bank here</em></a><em>.</em>{/ref}<br><br>The official poverty rate in the US in 2019 was <strong>10.5%</strong>, <a rel=\"noreferrer noopener\" href=\"https://www.census.gov/content/dam/Census/library/publications/2020/demo/p60-270.pdf\" target=\"_blank\">as reported</a> by the U.S. Census Bureau. The poverty line that yields this rate in the World Bank’s data is $22.53 (measured in 2011 international-$).{ref}You can see our detailed calculations in this <a href=\"https://colab.research.google.com/drive/1IzHT9NikKHrY9uGWKzDzaZ4VVpdc9m5E#scrollTo=qF_GSK2FX7tU&line=1&uniqifier=1\">Google Colabs document</a>.{/ref}</p>\n\n\n\n<p>An alternative is to apply the same concept that the Europeans are using for their poverty line determination. If the US would use the 60% of median income definition of poverty their poverty line would be int.-$32.8 per day{ref}The <strong>US</strong> median monthly income in 2017 was $1640 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.61640)/30=$32.8 per day{/ref} Very close to the one-person poverty line based on Orshansky\u2019s work.</p>\n\n\n\n<p>A somewhat comparable poverty line based on these three approaches therefore falls into the range of around $23 to $35 per day. Within the range of poverty lines in European countries.</p>\n\n\n\n<h4>Survey results \u2013 Below which income do you consider a person poor? </h4>\n\n\n\n<p>The UN and Pritchett rely on the existing poverty lines in low-income and high-income countries respectively to derive their poverty lines. We can follow other approaches too. </p>\n\n\n\n<p>An obvious one is to ask what people out there believe: Who is considered poor in a high-income country by people in high-income countries?</p>\n\n\n\n<p>For the regular poverty report of the German government, a survey is conducted that asks Germans below which income level they consider someone as poor. The latest data is from the year 2015.{ref}These reports are called \u2018Armuts- und Reichtumsbericht der Bundesregierung\u2019 online at <a href=\"https://www.armuts-und-reichtumsbericht.de/DE/Startseite/start.html\">armuts-und-reichtumsbericht.de</a></p>\n\n\n\n<p>The latest survey was produced by aproxima and published in 2016. It is published as <a href=\"https://www.armuts-und-reichtumsbericht.de/SharedDocs/Downloads/Service/Studien/forschungsprojekt-wahrnehmung-armut-reichtum.pdf?__blob=publicationFile&v=5\">Wahrnehmung von Armut und Reichtum in Deutschland, Ergebnisse der repr\u00e4sentativen Bev\u00f6lkerungsbefragung \u201eARB-Survey 2015\u201c</a>, Berlin: Bundesministerium f\u00fcr Arbeit und Soziales (Hrsg.).{/ref}</p>\n\n\n\n<p>The mean answer given by the German population for a cutoff below which a person is considered poor was 947\u20ac per month. In international dollars per day this corresponds to an income of <strong>int.-$37.58</strong>.{ref}The 2011 PPP conversion factor for private consumption (LCU per international $) for Germany in 2015 is 0.84 according to the World Bank <a href=\"https://ourworldindata.org/grapher/ppp-conversion-factor-for-private-consumption\">here</a>.</p>\n\n\n\n<p>This means the perceived poverty threshold corresponds to \u20ac947/0.84=int.-$1,127.38 per month or int.-$37.58.{/ref}</p>\n\n\n\n<h4>Universal Basic Income</h4>\n\n\n\n<p><a href=\"https://en.wikipedia.org/wiki/Universal_basic_income\">Universal Basic Income</a> (UBI) is a political idea that is becoming rapidly more popular.</p>\n\n\n\n<p>A large UBI study in Germany \u2013 called <a href=\"https://de.wikipedia.org/wiki/Mein_Grundeinkommen\">\u2018Mein Grundeinkommen\u2019</a> \u2013 sets this income at \u20ac1200. In international-$ this corresponds to an income of <strong>int.-$48.19 per day</strong>.{ref}The 2011 PPP conversion factor for private consumption (LCU per international $) for Germany in 2017 is 0.83 according to the World Bank <a href=\"https://ourworldindata.org/grapher/ppp-conversion-factor-for-private-consumption\">here</a>.</p>\n\n\n\n<p>This means the UBI corresponds to 1200/0.83=int.-$1,445.78 per month or int.-$48.19.{/ref}</p>\n\n\n\n<h4>Social security in Germany</h4>\n\n\n\n<p>Germany pays basic social care for its citizens. This social security payment is referred to as \u2018Hartz-IV\u2019. </p>\n\n\n\n<p>How much a person receives depends on the particular circumstances of the individual, but we can look at the average payment. In 2018 a single person <a href=\"https://www.sueddeutsche.de/wirtschaft/wie-viel-geld-bekommt-ein-hartz-iv-empfaenger-1.3905657\">received on average</a> 783 Euro per month. That corresponds to <strong>int.-$30.78 per day</strong>.{ref}That\u2019s \u20ac783/0.834=int.-$938.85 per month. Or int.-$938.85/30.5=int.-<strong>$30.78 per day.</strong>{/ref}</p>\n\n\n\n<h4>The Roslings\u2019 suggest a cutoff of $32 per day</h4>\n\n\n\n<p>Anna Rosling-R\u00f6nnlund, Ola Rosling and Hans Rosling challenged the old dichotomy between developed and developing countries in their bestselling book \u2018<a href=\"https://en.wikipedia.org/wiki/Factfulness:_Ten_Reasons_We%27re_Wrong_About_the_World_%E2%80%93_and_Why_Things_Are_Better_Than_You_Think\">Factfulness</a>\u2019. They argue that the old dichotomy corresponds to a view of the world that was accurate half a century ago when a few countries were relatively well-off, but most countries were living in very <a href=\"https://ourworldindata.org/life-expectancy-globally\">poor conditions</a>.Today, they say, people around the world live on a large spectrum. To reflect this spectrum they proposed 4 income levels.</p>\n\n\n\n<p>The first cut-off corresponds to the international poverty line (rounded to int.-$2 per day). The next income cutoff they set at $8 per day, the following one at $16 and the highest one at <strong>int.-$32 per day</strong>.</p>\n\n\n\n<h4>Kahneman’s and Deaton’s study of income and emotional well-being</h4>\n\n\n\n<p>Nobel laureates Daniel Kahneman and Angus Deaton published a famous study on the link between life satisfaction and income.{ref}Kahneman and Deaton (2010) \u2013 High income improves evaluation of life but not emotional well-being. Published in the Proceedings of the National Academy of Sciences. https://www.pnas.org/content/107/38/16489 {/ref}</p>\n\n\n\n<p>The authors find that higher incomes go together with higher self-reported life satisfaction, but for people\u2019s self-reported emotional well-being this is only true up to a certain point: the study finds that above $75,000 further increases in income do not correspond with improvements in people\u2019s emotional well-being \u2013 a finding that is often cited to argue that additional economic growth does not improve people\u2019s lives in high-income countries.{ref}Kahneman and Deaton analyze two different concepts self-reported satisfaction:</p>\n\n\n\n<p>\u2013 Emotional well-being refers to the \u201cemotional quality of an individual’s everyday experience \u2013 the frequency and intensity of experiences of joy, stress, sadness, anger, and affection that make one’s life pleasant or unpleasant.\u201d</p>\n\n\n\n<p>\u2013 Life evaluation refers to the thoughts that people have about their life when they think about it. </p>\n\n\n\n<p>The authors find that higher incomes go together with higher self-reported life satisfaction in both metrics. What they emphasize is that at very high incomes this is not true anymore \u2013 emotional well-being does not increase over around $75,000. Evaluation of life however continues to increase even at incomes over $75,000.{/ref} </p>\n\n\n\n<p>Again, the income concept is not the same as that in PovcalNet, and so comparisons with the global data are not directly possible. But we can ask what the daily income at which emotional well-being supposedly levels off corresponds to: $75,000 per year are <strong>int.-$205 per day</strong>.</p>\n\n\n\n<p>It is certainly worth considering whether an income up to which emotional well-being increases could be taken as the basis for a definition of poverty. A US company reacted to the research finding of Kahneman and Deaton by using it to set the minimum wage in their company: everyone in that company <a href=\"https://www.nytimes.com/2015/04/14/business/owner-of-gravity-payments-a-credit-card-processor-is-setting-a-new-minimum-wage-70000-a-year.html\">gets paid</a> that salary. </p>\n\n\n\n<p>For the discussion of global poverty however it might be considered as an even higher poverty line, but for any practical purpose in the world today the income cutoff would be too high as only a very small fraction of the world lives on more than $75,000 per year.</p>\n</div>\n\n\n\n<div class=\"wp-block-column\"></div>\n</div>\n\n</content>\n\t</block>\n\n\n<h4>How many people in the world live in poverty?</h4>\n\n\n\n<p>We have seen that 10% of the world live in extreme poverty<em> </em>as defined by the UN. How large is the share of the world that lives in moderate poverty?</p>\n\n\n\n<p>The latest global data tells us that <strong>85% of the world population live on less than $30 per day</strong>. These are 6.5 billion people.</p>\n\n\n\n<p>Relying on a higher poverty line of $45 per day you find that 92% live in poverty, and using a lower poverty line of $20 per day you find that 78% live in poverty. No matter which of these poverty lines you might want to choose, at least three-quarters of the world live in poverty.</p>\n\n\n\n<p>All of this data refers to pre-pandemic times. The global recession has certainly increased the share below any of these cutoff points. As soon as the new data is available you will find it on Our World in Data.</p>\n\n\n\n<p>The chart shows where in the world people are poor. If we would only rely on the UN\u2019s extreme poverty line we would conclude that barely anyone lives in poverty in high-income countries. Relying on higher poverty lines, this data here shows that even in high-income countries there is a significant share of the population that lives in poverty. No country, not even the high-income countries, has eliminated poverty. There are no \u2018developed countries\u2019 \u2014 there is work to do for all. </p>\n\n\n\n<p>But just as clear from this data is the fact that in many world regions the large majority of people are very poor. In Sub-Saharan Africa about 40% of the population lives on less than $1.90 per day as the chart shows. In all regions outside of high-income countries more than 85% of all people live in moderate poverty.</p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" width=\"3000\" height=\"1874\" src=\"https://owid.cloud/app/uploads/2021/03/The-global-inc-distribution-190-10-30.png\" alt=\"\" class=\"wp-image-41458\" srcset=\"https://owid.cloud/app/uploads/2021/03/The-global-inc-distribution-190-10-30.png 3000w, https://owid.cloud/app/uploads/2021/03/The-global-inc-distribution-190-10-30-400x250.png 400w, https://owid.cloud/app/uploads/2021/03/The-global-inc-distribution-190-10-30-800x500.png 800w, https://owid.cloud/app/uploads/2021/03/The-global-inc-distribution-190-10-30-150x94.png 150w, https://owid.cloud/app/uploads/2021/03/The-global-inc-distribution-190-10-30-768x480.png 768w, https://owid.cloud/app/uploads/2021/03/The-global-inc-distribution-190-10-30-1536x959.png 1536w, https://owid.cloud/app/uploads/2021/03/The-global-inc-distribution-190-10-30-2048x1279.png 2048w\" sizes=\"(max-width: 3000px) 100vw, 3000px\" /></figure>\n\n\n\n<h4>Countries in which the majority do not live in poverty have only left poverty behind in recent history</h4>\n\n\n\n<p>Two centuries ago the global income distribution was very different. Back then <a href=\"https://ourworldindata.org/extreme-history-methods\">almost everyone in the world</a> was living in extreme poverty. Those places in which few people live in moderate poverty today only left poverty behind in the very recent past. </p>\n\n\n\n<p>Denmark is one of those places. The reason why the majority of people in Denmark is not living in poverty is that the economic inequality is low and the average income high.</p>\n\n\n\n<p>The fact that the inequality is low you can see on the map. It shows an inequality measure called the Gini coefficient (explained <a href=\"https://ourworldindata.org/income-inequality#the-gini-coefficient\">here</a>) which makes clear that Denmark is among the least unequal countries in the world.</p>\n\n\n\n<p>The reason that the average income in Denmark is high is due to the fact that average incomes have increased steadily for the last two centuries; this long-term development is called economic growth. As the historical data shows the average incomes in Denmark are today more than 20-times higher than in the past.</p>\n\n\n\n<p>You can add any other country to this chart. By adding one of those countries in which the majority lives in poverty \u2013 like Ethiopia \u2013 you see just how large the differences in average incomes are.</p>\n\n\n\n<p>GDP per capita is by far the most widely used measure of average income and is yet another income concept from the two I mentioned so far.{ref}The two previous ones were income/expenditure as determined in household surveys and equivalized disposable income after social transfers.{/ref} It is a more comprehensive measure of incomes and crucially takes into account government expenditures. For these and other reasons (mentioned in the long footnote) you will find that dividing GDP per capita by 365 days will let you arrive at a higher value than the income that is determined in household income surveys.{ref}There is generally a gap between GDP per capita and the averages found in both income surveys and expenditure surveys. But the reasons for the gap are different depending on which we are comparing.</p>\n\n\n\n<p>GDP includes many items that are typically not measured in household income surveys, such as an imputed rental value of owner-occupied housing, the retained earnings of firms and taxes on production such as VAT. The gap is even larger when GDP is compared to surveys of household consumption \u2013 the latter concept excluding both investment expenditure and government expenditure on public services such as education and health.</p>\n\n\n\n<p>Other aggregates beyond GDP are available in the national accounts that are more comparable to the concepts applied in household income and consumption surveys. However, important differences still remain even here. For example, in addition to imputed rents, imputations for the value of certain financial services, such as bank accounts, are included in aggregate household consumption measured in national accounts, with no equivalent for these items recorded in the survey data. In many countries the consumption of \u2018nonprofit institutions serving households\u2019 (NPISH) is included as part of household consumption within national accounts, but not within household surveys.</p>\n\n\n\n<p>On top of these conceptual differences are a range of mismeasurement problems that affect both sets of data. On this topic see Deaton (2005), and Pinkovskiy and Sala-i-Martin (2016).</p>\n\n\n\n<p>Deaton, Angus. 2005. \u201cMeasuring Poverty in a Growing World (or Measuring Growth in a Poor World).\u201d The Review of Economics and Statistics 87 (1): 1\u20131. </p>\n\n\n\n<p>Pinkovskiy, Maxim, and Xavier Sala-i-Martin. 2016. \u201cLights, Camera\u2026 Income! Illuminating the Nation”{/ref}</p>\n\n\n\n<div class=\"wp-block-columns is-style-side-by-side\">\n<div class=\"wp-block-column\">\n<iframe src=\"https://ourworldindata.org/grapher/economic-inequality-gini-index?time=earliest..latest&tab=chart&country=USA~FRA~JPN~BRA~ZAF~DNK\" loading=\"lazy\" style=\"width: 100%; height: 600px; border: 0px none;\"></iframe>\n</div>\n\n\n\n<div class=\"wp-block-column\">\n<iframe src=\"https://ourworldindata.org/grapher/average-real-gdp-per-capita-across-countries-and-regions?time=earliest..latest&country=~DNK&tab=chart\" loading=\"lazy\" style=\"width: 100%; height: 600px; border: 0px none;\"></iframe>\n</div>\n</div>\n\n\n\n<h4>Billions of people live in countries where average incomes are very low</h4>\n\n\n\n<p>The income of every person depends on two factors, the average income in the country they live in and the position that particular person has in that country\u2019s income distribution. This chart here shows the average income in countries around the world. The height of each bar represents the average daily income in a country, the width of each country corresponds to the country\u2019s population size. I have ordered the countries by income: from the poorest country on the very left (South Sudan where the average person lives on $1.12 per day) to the richest country on the very right (Luxembourg with an average of $86 per day).</p>\n\n\n\n<p>After two centuries of economic growth the average income in Denmark is now $57 per day today. You find the country far to the right in this chart, which tells you that only very few countries in the world have such high average incomes. The fact that the average income is far higher than the poverty line tells us that the existing poverty in Denmark discussed at the beginning of this post is to a large extent the consequence of inequality.</p>\n\n\n\n<p>What this chart makes very clear is how low the average incomes in many countries in the world are. The huge majority of the world live in countries where the <em>average </em>income is much lower than the poverty threshold in rich countries. 82% of the world population live in countries where the mean income is less than $20 per day. </p>\n\n\n\n<p>And where incomes are low, living standards generally <a href=\"https://owid.cloud/app/uploads/2021/03/Correlates-of-GDP-\u2013-How-is-life-at-different-levels-of-income.png\">are poor</a>. As the last chart below shows, a child that is born into a poorer country must not just expect to live on a very low income, but also faces a much higher risk of not staying alive at all.</p>\n\n\n\n<p>As I have <a href=\"https://ourworldindata.org/global-inequality-of-opportunity\">said before</a>, people are not poor because of who they are, but because of <em>where</em> they are. This is why economic growth is so important to leave poverty behind. By far the most important difference between those people who are not living in poverty and those who do is the average income in the country that they live in \u2013 this single factor matters more for a person\u2019s income <a href=\"https://ourworldindata.org/poverty-growth-needed\">than all other factors taken together</a>. The increase of average income in a country is called economic growth and for global poverty to decrease substantially economic growth for the poorest billions of people is necessary.</p>\n\n\n\n<p>\u2192 See my previous article: <a href=\"https://ourworldindata.org/poverty-growth-needed\">The economies that are home to the poorest billions of people need to grow if we want global poverty to decline</a>.</p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" width=\"2921\" height=\"2474\" src=\"https://owid.cloud/app/uploads/2021/03/mean-income-by-country.png\" alt=\"\" class=\"wp-image-41459\" srcset=\"https://owid.cloud/app/uploads/2021/03/mean-income-by-country.png 2921w, https://owid.cloud/app/uploads/2021/03/mean-income-by-country-400x339.png 400w, https://owid.cloud/app/uploads/2021/03/mean-income-by-country-649x550.png 649w, https://owid.cloud/app/uploads/2021/03/mean-income-by-country-150x127.png 150w, https://owid.cloud/app/uploads/2021/03/mean-income-by-country-768x650.png 768w, https://owid.cloud/app/uploads/2021/03/mean-income-by-country-1536x1301.png 1536w, https://owid.cloud/app/uploads/2021/03/mean-income-by-country-2048x1735.png 2048w\" sizes=\"(max-width: 2921px) 100vw, 2921px\" /></figure>\n\n\n\n<h4>The future of global poverty</h4>\n\n\n\n<p>The world today is far from the \u2018end of poverty\u2019 relative to <em>any</em> poverty definition. After two centuries of <a href=\"https://ourworldindata.org/extreme-history-methods\">unprecedented progress</a> against the very worst poverty it is still the case that every tenth person lives on less than <em>$1.90 per day</em>.</p>\n\n\n\n<p>As the world has not even ended extreme poverty it is therefore right to focus much of our attention on this very low poverty cutoff; ending extreme poverty surely is a global goal of great importance. </p>\n\n\n\n<p>Yet at the same time we should consider what our aspirations for the future are. In the past our ancestors <a href=\"https://ourworldindata.org/breaking-the-malthusian-trap\">did not know</a> that it was possible for a society to leave widespread poverty behind. Today we are in a different situation. We know from the reality of today\u2019s rich countries that widespread poverty is not inevitable. Because we know that poverty relative to such higher cutoffs is not inevitable I believe it would be wrong to limit our ambitions to eradicating poverty based on the definition of poverty in the very poorest countries.</p>\n\n\n\n<p>What I take away from this discussion are three insights: First, we have seen from countries like Denmark that it is <em>possible</em> to reduce poverty for an entire population relative to a poverty line of about $30 per day. Second, we have seen that these countries were extremely poor in the past and were able to reduce poverty over the course of the last few generations. And third we have seen that the huge majority of the world is still living in great poverty, by any standard. What this suggests to me is that the history of global poverty reduction has only just begun.</p>\n\n\n\n<iframe src=\"https://ourworldindata.org/grapher/child-mortality-gdp-per-capita?time=latest\" loading=\"lazy\" style=\"width: 100%; height: 600px; border: 0px none;\"></iframe>\n\n\n\n<hr class=\"wp-block-separator\"/>\n\n\n\n<p><em>Continue reading Our World in Data:</em> My colleague Hannah Ritchie has just published a series of posts on the drivers of deforestation and how to bring humanity’s long history of deforestation to an end. You find her work <a href=\"https://ourworldindata.org/blog\">here</a>.</p>\n\n\n\n<p><strong>Acknowledgement:</strong> I would like to thank Joe Hasell for his thoughtful comments on draft versions of this article.</p>\n", "protected": false }, "excerpt": { "rendered": "What does global poverty look like if we rely on the notions of poverty in countries like Denmark, the US, or Germany? And how should this perspective inform our aspirations for the future of global poverty?", "protected": false }, "date_gmt": "2021-03-05T11:02:06", "modified": "2023-04-06T18:29:55", "template": "", "categories": [ 1 ], "ping_status": "closed", "authors_name": [ "Max Roser" ], "modified_gmt": "2023-04-06T17:29:55", "comment_status": "closed", "featured_media": 41496, "featured_media_paths": { "thumbnail": "/app/uploads/2021/03/Screen-Shot-2021-03-05-at-14.35.22-150x71.png", "medium_large": "/app/uploads/2021/03/Screen-Shot-2021-03-05-at-14.35.22-768x364.png" } }

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Global poverty in an unequal world: Who is considered poor in a rich country? And what does this mean for our understanding of global poverty?

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<div class="blog-info"> Our World in Data presents the data and research to make progress against the world’s largest problems. This post draws on data and research discussed in our entries on <a href="https://ourworldindata.org/income-inequality" target="_blank" rel="noopener">Income Inequality</a>, <a href="https://ourworldindata.org/poverty" target="_blank" rel="noopener">Poverty</a> and <a href="https://ourworldindata.org/economic-growth" target="_blank" rel="noopener">Economic Growth</a>. </div>   Abstract: The extremely low poverty line that the UN relies on has the advantage that it draws the attention to the very poorest people in the world. It has the disadvantage that it ignores what is happening to the incomes of the 90% of the world population who live above the extreme poverty threshold. The global poverty line that the UN relies on is based on the national poverty lines in the world’s poorest countries. In this article I ask what global poverty looks like if we rely on the notions of poverty that are common in the world’s rich countries – like Denmark, the US, or Germany. Based on the evidence I ask what our aspirations for the future of global poverty reduction might be.   <hr class="wp-block-separator"/>     <h4>The World Bank has updated its poverty and inequality data</h4>   The data in this article uses a previous release of the World Bank's poverty and inequality data in which incomes are expressed in 2011 international-$.   The World Bank has since updated its methods, and now measures incomes in 2017 international-$. As part of this change, the International Poverty Line used to measure extreme poverty has also been updated: from $1.90 (in 2011 prices) to $2.15 (in 2017 prices).   This has had little effect on our overall understanding of poverty and inequality around the world. But because of the change of units, many of the figures mentioned in this article will differ from the latest World Bank figures.    Read more about the World Bank's updated methodology         In every country of the world there are people living in poverty. Even in the world’s richest countries the poorest people often live in poor housing and struggle to afford basic goods and services like heating, transport, and healthy food for themselves and their family.   Those who are in monetary poverty also have much poorer living conditions more broadly. Even in a rich and relatively equal country like Denmark middle-aged men who are among the poorest 20% of the population die on average 9 years earlier than those among the richest 20%.{ref}Brønnum-Hansen H, Foverskov E, Andersen I. Income inequality in life expectancy and disability-free life expectancy in Denmark. J Epidemiol Community Health 2021;75:145-150. <a href="https://jech.bmj.com/content/75/2/145">https://jech.bmj.com/content/75/2/145</a> {/ref} In Denmark a person who lives on less than $30 per day is considered poor, and it is the declared goal of the country to reduce poverty relative to this threshold.{ref} For the moment it is important to note that this $30 per day poverty line is defined in international-$ and therefore comparable with the ‘International Poverty Line’ discussed in the following section. Much more details about how to compare incomes across countries, the income concept here, and the definition of this poverty line follows further below in this text.{/ref}    Countries that are much poorer than Denmark also have the goal to reduce poverty. The United Nations declared the objective of <a href="https://sdg-tracker.org/">ending ‘extreme poverty’</a> to be the number 1 goal of the global Sustainable Development Goals. <a href="https://www.un.org/en/global-issues/ending-poverty">According</a> to the UN a person is considered to live in extreme poverty when he or she is living on less than $1.90 per day, this is called the International Poverty Line. According to the latest global statistics almost <a href="https://ourworldindata.org/poverty?insight=the-pandemic-pushed-millions-into-extreme-poverty#key-insights-on-poverty">one in ten</a> people live in extreme poverty globally.   If we know that poverty is a large problem even in high income countries like Denmark where the poverty line is set at around $30 a day, why should we use an International Poverty Line that is so extremely low to measure poverty globally?   It is the reality of our extremely unequal world – in which every tenth person lives in extreme poverty – that makes such an extremely low poverty line necessary. Without having an extremely low poverty line we would not be aware of the fact that a large share of the world lives in such extreme poverty. The UN’s global poverty line is valuable because it draws attention to the reality of extreme poverty in our world.   In a world where the majority still lives on very low incomes it would be wrong if the UN decided to measure global poverty solely by a poverty line as high as the poverty line of Denmark. It would mean that the global statistics gloss over the extremely large and important income differences among the poorest billions in the world. It would mean that the difference between those who live on only $1 per day and those who have an income that is more than 20-times higher would be entirely disregarded. They would all be considered poor, and the reality that some of them are much poorer than others would be hidden.   Slightly higher global poverty lines – such as the poverty line of $3.10 per day that Kate Raworth relies on in her ‘Doughnut’ framework, or the poverty line of $7.40 per day that anthropologist Jason Hickel uses in his work, or Bob Allen’s absolute poverty line based on minimal nutritional requirements – all have the same value.{ref}Kate Raworth (2017) – A Doughnut for the Anthropocene: humanity's compass in the 21st century. In The Lancet Planetary Health. Volume 1, Issue 2, E48-E49, May 01, 2017. Open Access DOI: <a href="https://doi.org/10.1016/S2542-5196(17)30028-1">https://doi.org/10.1016/S2542-5196(17)30028-1</a> You find the metrics that the Doughnut relies on <a href="https://www.thelancet.com/cms/10.1016/S2542-5196(17)30028-1/attachment/2d58fdae-741c-4016-84cd-2fc0b1e94f49/mmc1.pdf">in the Appendix here</a>. Jason Hickel – <a href="https://www.theguardian.com/global-development-professionals-network/2015/nov/01/global-poverty-is-worse-than-you-think-could-you-live-on-190-a-day">Could you live on $1.90 a day? That's the international poverty line</a> and <a href="https://twitter.com/jasonhickel/status/1012339440113594368">here</a>. Allen, Robert C.(201). – Absolute Poverty: When Necessity Displaces Desire. American Economic Review, 107 (12): 3690-3721.DOI: 10.1257/aer.20161080{/ref} These low poverty lines allow us to understand the material living conditions of the poorest people in the world and have been successful in drawing attention to the terrible depths of poverty experienced by a large share of the world's population. The only way to achieve these goals is to rely on extremely low poverty lines.   Indeed, there is an argument for using an even lower poverty line. To understand what is happening to the very poorest in the world, we need to look even lower than $1.90. This is because one of the biggest failures of development is that over the last decades the incomes of <a href="https://ourworldindata.org/poverty?insight=hundreds-of-millions-will-remain-in-extreme-poverty-on-current-trends#key-insights-on-poverty">the very poorest</a> people have not risen. A big part of the reason for why this issue doesn’t get discussed enough is that the International Poverty Line we rely on is too high to see this fact.   <h4>Why not both?</h4>   Yet, only measuring global poverty relative to such extremely low poverty lines has its own large downside.    By focusing on an income threshold that is lower than the incomes of 90% of the global population we are ignoring what is happening to the majority of the world’s population. This matters. The majority of the world do not live in extreme poverty <a href="https://ourworldindata.org/extreme-history-methods">anymore</a>, but billions are nevertheless living in great poverty still.   The obvious solution to the problem that the majority of the world is not considered by the International Poverty Line is to use an additional poverty line. This is not a new idea. One poverty researcher who has made the argument for an additional higher global poverty line based on the notions of poverty in rich countries is Lant Pritchett – you find it in his short, yet widely-cited essay ‘The case for a high global poverty line’ from eight years ago.{ref}Lant Pritchett (2013) – Monitoring progress on poverty: the case for a high global poverty line. Online here <a href="https://web.archive.org/web/20150608125138/http://www.odi.org:80/sites/odi.org.uk/files/odi-assets/publications-opinion-files/8440.pdf">https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/8440.pdf</a>{/ref}   <h4>Defining global poverty lines</h4>   The definition of poverty differs between countries. Poorer countries set much lower poverty lines than richer countries.{ref}Jolliffe and Prydz (2016){/ref} This means that if we were to simply rely on national poverty definitions for a global measure of poverty we would end up with a measurement framework in which where a person happens to live would determine whether they are poor or not: If we would count as poor those who are defined nationally as poor we would end up counting a person who lives on $20 per day as poor in a rich country, while at the same time counting a person who lives on $2 as not-poor when they happen to live in a very poor country.   One way out of this problem is to set global poverty lines based on the national definitions, but to apply them globally. This is how the UN decided to define the International Poverty Line. In order to ground this global poverty line on something more than the views of global poverty researchers, it is based on the existing definitions of poverty adopted in countries around the world at the national level, but to avoid the problem outlined above they apply the national poverty lines globally. As we explain <a href="https://ourworldindata.org/extreme-poverty#setting-the-international-poverty-line">here</a> in some detail, the $1.90 per day poverty line is set to reflect the national poverty lines adopted in the world’s poorest countries.{ref}Specifically, the line is set at the average national poverty line amongst 15 particular low-income countries. As Jolliffe and Prydz (2016) demonstrate however, this is also the average poverty line found among the poorest quarter of countries with available data, and also among countries falling into the World Bank’s low-income category.{/ref} Applying this poverty line globally means that a person who lives on less than $1.90 per day is considered extremely poor no matter where they live.   In recent years the World Bank has applied this same methodology to countries in the middle-income bracket, those countries with a GNI per capita between $1000 and $12,500. Based on the poverty lines in these countries they have set additional global poverty lines at $3.20 and $5.50 per day, which are now <a href="https://data.worldbank.org/indicator/SI.POV.LMIC">directly</a> <a href="https://data.worldbank.org/indicator/SI.POV.UMIC">available</a> via the World Bank statistics.{ref}The study on which these thresholds rely is Jolliffe, D., Prydz, E.B. Estimating international poverty lines from comparable national thresholds. J Econ Inequal 14, 185–198 (2016). <a href="https://doi.org/10.1007/s10888-016-9327-5">https://doi.org/10.1007/s10888-016-9327-5</a> The researchers also report an average high-income country poverty line of $21.70 per day. High income countries in the World Bank framework are however relatively poor compared to the countries that I’m focusing on here – the cutoff for a high-income country according to the World Bank is $12,536, about a quarter of the GNI of Germany and only a fifth of the US. Accordingly, the poverty cutoff is much lower than in those countries. <a href="https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups">Here you find the World Bank income classification cutoffs</a>.{/ref}   What I want to do here is to see what a global poverty line would be if we rely on the notion of poverty in rich countries — countries like Denmark, the US, or Germany.{ref}The range of incomes considered ‘middle’ and ‘high’ income countries according to the World Bank are very low relative to rich countries. High-income economies are those with a GNI per capita of $12,536 or more. The range of middle-income economies begins at a GNI per capita of $1,036. In this post I want to rely on countries like Denmark; higher income countries by any standard.{/ref} That is what Pritchett suggested eight years ago: “Since the origin of the [International Poverty Line] was just to adopt as a global lower bound the poverty lines used by the poorest countries, it symmetrically makes sense to say that the global upper bound poverty line is based on the poverty line used in rich countries.”    The definition of poverty is certainly not an easy ethical question and thoughtful people disagree about it in ways that have meaningful consequences for our understanding of the world. There are also interesting proposals for hybrid poverty lines that combine absolute and weakly-relative measures; see Ravallion (2019) for a recent proposal.{ref}Martin Ravallion (2019) – <a href="https://www.nber.org/papers/w26211">On Measuring Global Poverty</a>. NBER Working Paper 26211. DOI 10.3386/w26211{/ref} And I would also recommend Tony Atkinson’s last book ‘<a href="https://www.tony-atkinson.com/book-measuring-poverty-around-the-world/">Measuring Poverty around the World</a>’ for an excellent recent overview of the topic.   → To understand how it is possible to compare poverty levels and living standards across countries you need to know the basics of global poverty measurement. You find a summary of the basics in the following fold-out box.    <h3>The basics of global poverty measurement</h3>   <div class="wp-block-columns is-style-sticky-right"> <div class="wp-block-column"> Throughout this article – and in global income and expenditure data generally – the statisticians who produce these figures are careful to make these numbers as comparable as possible.    First, many poorer people rely on subsistence farming and do not have a monetary income. To take this into account and make a fair comparison of their living standards, the statisticians that produce these figures estimate the monetary value of their home production and add it to their income/expenditure.   Second, price changes over time (inflation) and price differences across countries are both taken into account: all measures are adjusted for differences in purchasing power.{ref}This is possible by relying on the work of the <a href="https://www.worldbank.org/en/programs/icp">International Comparison Project</a>, which monitors the prices of goods and services around the world.{/ref} To this end incomes and expenditures are expressed in so-called international dollars. This is a hypothetical currency that results from the price adjustments across time and place. An international dollar is defined as having the same purchasing power as one US-$ in the US. This means no matter where in the world a person is living on int.-$30, they can buy the goods and services that cost $30 in the US. None of these adjustments are ever going to be perfect, but in a world where price differences are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do.{ref}Angus Deaton and Alan Heston (2010) discuss the methods behind such price adjustments and many of the difficulties and limitations involved.   Deaton, A., and Heston, A. 2010. “Understanding PPPs and PPP-Based National Accounts.” American Economic Journal: Macroeconomics 2 (4): 1–35. A working paper version is available online <a href="https://www.nber.org/papers/w14499">here</a>.{/ref}   Throughout this text I’m always adjusting incomes for price changes over time and price differences between countries in this way. All dollar values discussed here are presented in int.-$; the UN does the same for the $1.90 poverty line. Sometimes I leave out ‘international’ as it is awkward to repeat it all the time; but every time I mention any $ amount in this text I’m referring to international-$ and not US-$.{ref}Keep in mind that in the special case of the US the US-$ equals the international-$.{/ref} </div>   <div class="wp-block-column"></div> </div>    <h3>An additional higher poverty line of $30 per day</h3>   Pritchett made his proposal based on data and prices a decade ago and so it is necessary to update his calculations. But I want to go beyond Pritchett’s approach and additionally provide a number of other relevant comparisons to inform our understanding of who is considered poor in a rich country.   By following this idea I find that a poverty of 30 international-$ per day corresponds to the notion of poverty in a rich country. In the following section I consider a long number of benchmarks that made me arrive at this poverty line. Here is the short summary of these comparisons:   <ul><li>European countries: The span of poverty lines in high-income countries in Europe ranges from int.-$25 to int.-$38 per day.</li></ul>   <ul><li>The US: A comparison with the poverty line in the US is not straightforward, as explained in some detail below; two different approaches arrive at poverty lines of int.-$23 and int.-$35 per day respectively.</li></ul>   <ul><li>Survey result: A study surveyed people in a high-income country to ask at what income a person is considered poor. The study found that the mean income threshold suggested by the surveyed population corresponds to an income of int.-$37.58 per day</li></ul>   <ul><li>Proposal to replace the categorization into developing and developed countries: In the book ‘Factfulness’ the authors recommend replacing the simplistic categorization of countries into developing and developed countries with a finer grained structure. The high-income cutoff the authors suggest is int.-$32 per day.</li></ul>   <ul><li>UBI: The daily income paid as ‘Universal Basic Income’ in a pilot study in Germany corresponds to an income of int.-$48.19 per day.</li></ul>   <ul><li>Social care: The average basic social care payout in Germany (‘Hartz-IV’) corresponds to int.-$30.78 per day</li></ul>   The range of possible higher poverty lines based on richer countries is wide, as the list of benchmarks suggests. At the lower end I believe that it might be as low as $25 per day, and on the higher end it might be as high as $40 or $50 per day.    Just as someone who lives on less than $1.90 per day is defined as extremely poor, a person who lives on less than $30 a day could be considered moderately poor.   A reality check for any poverty line you might want to consider is to ask yourself what you think about living on less than that poverty line yourself. I lived on less than $30 per day before and would consider myself poor if I’d fall back on that income level again.   In the following box you find the sources and calculations of the benchmarks that led me to my $30 per poverty line proposal.    <h3>Who is considered poor in rich countries? Poverty lines and other relevant benchmarks</h3>   <div class="wp-block-columns is-style-sticky-right"> <div class="wp-block-column"> <h4>Poverty lines in European countries</h4>   As mentioned before most European countries set their poverty line at 60% of the median income in the country. In his original proposal Pritchett was relying on this 60% of median cut-off.   Calculating the poverty line for European countries therefore means that we look up their median income and then multiply it by 0.6. This is less straightforward than it might first appear. The reason for that is that there are many different income concepts. You quickly realize that it is not easy to define a person’s income if you ask yourself what your own income is. Do you take government transfers into account or not? Do you take your partner’s income into account and divide it by two? How do you take into account that you have a child for which you need to pay? It is possible to take these and many other aspects into account and arrive at useful statistics, but various sensible ways of addressing such questions lead to many different income metrics. As such, in comparing different poverty thresholds across countries we have to take care to avoid mixing different income concepts as much as possible.    One important difference is how incomes are adjusted for the size of the household: whether the total household income is simply divided by the number of people (including children) – ‘per capita’ income – or whether some adjustment is made to account for the fact that larger households, and particularly households with children, face lower costs per person – known as ‘equivalised’ income. Whereas EU countries, like other rich countries, use equivalised income to measure poverty, the UN’s measurement of global poverty is based on a global dataset of per capita incomes. This dataset is called <a href="http://iresearch.worldbank.org/PovcalNet/povDuplicateWB.aspx">PovcalNet</a>, and it is this that we must use in order to make comparisons of poverty measures in different countries according to the same income concept.   In this dataset we find the median income for countries around the world and we can take that median income and then apply the logic on which the European poverty lines are based. In the extensive footnote here you find more details and the full calculations.{ref}The European reference incomes are national median equivalised disposable income after social transfers.   The disposable household income including all income from work (employee wages and self-employment earnings), private income from investment and property, transfers between households, and all social transfers received in cash including old-age pensions.    Eurostat applies an equivalisation factor calculated according to the OECD-modified scale first proposed in 1994. The UN/World Bank is not.   This is according to Eurostat <a href="https://appsso.eurostat.ec.europa.eu/nui/show.do?query=BOOKMARK_DS-050270_QID_6AF25E11_UID_-3F171EB0&layout=TIME,C,X,0;GEO,L,Y,0;QUANTILE,L,Z,0;INDIC_IL,L,Z,1;CURRENCY,L,Z,2;INDICATORS,C,Z,3;&zSelection=DS-050270INDIC_IL,TC;DS-050270CURRENCY,EUR;DS-050270INDICATORS,OBS_FLAG;DS-050270QUANTILE,D1;&rankName1=INDIC-IL_1_2_-1_2&rankName2=CURRENCY_1_2_-1_2&rankName3=INDICATORS_1_2_-1_2&rankName4=QUANTILE_1_2_-1_2&rankName5=TIME_1_0_0_0&rankName6=GEO_1_2_0_1&sortC=ASC_-1_FIRST&rStp=&cStp=&rDCh=&cDCh=&rDM=true&cDM=true&footnes=false&empty=false&wai=false&time_mode=ROLLING&time_most_recent=true&lang=EN&cfo=%23%23%23%2C%23%23%23.%23%23%23">here</a>, where you also find the relevant data. (If the link should break, search on Google for ‘Distribution of income by quantiles - EU-SILC and ECHP surveys’.)   There are various ways of bringing the national poverty lines with reference to the national median equivalised disposable income after social transfers in line with the income/expenditure concept used in PovcalNet.   Joliffe and Prydz follow a different approach and their paper is very relevant for anyone interested in this question here. One alternative to the approach I’m following in this article would be to start from the poverty lines they estimated (based on the poverty headcount ratio) and apply the growth rate of the median income since the publication of their study. Yet another possibility would of course be to repeat their analysis with the up-to-date data. I am not following either of these approaches because I believe for a wide audience they are less transparent that the approach here – which is simply: I rely on the same dataset so that I rely on the same income concept, then look up the median income and multiply it by 0.6.   This is the reference: Jolliffe & Prydz (2016). Estimating international poverty lines from comparable national thresholds. The Journal of Economic Inequality, 14(2), 185-198.   –––   The following are the relevant calculations. All of them are based on PovcalNet data:   Germany’s median monthly income in 2017 was $1417.29 according to PovcalNet. 60% of the median expressed in daily income/consumption is 0.6*$1417.29=$850.374/30=$28.35 per day   Sweden’s median monthly income in 2017 was $1469 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1469)/30=$29.38 per day   Norway’s median monthly income in 2017 was $1890 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1890)/30=$37.8 per day   Austria’s median monthly income in 2017 was $1534 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1534)/30=$30.68 per day   In the UK the median monthly income in 2017 was $1252 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1252)/30=$25.04 per day   France’s median monthly income in 2017 was $1364 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1364)/30=$27.28 per day   Switzerland’s median monthly income in 2017 was $1791 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1791)/30=$35.82 per day   Spain’s median monthly income in 2017 was $982 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*982)/30=$19.64 per day   Iceland’s median monthly income in 2017 was $1582 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1582)/30=$31.64 per day   Luxembourg’s median monthly income in 2017 was $2193 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*2193)/30=$43.86 per day   Netherland’s median monthly income in 2017 was $1430 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1430)/30=$28.6 per day   Belgium’s median monthly income in 2017 was $1346 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1346)/30=$26.92 per day   Denmark’s median monthly income in 2017 was $1453 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1453)/30=$29.06 per day   Ireland’s median monthly income in 2017 was $1234 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1234)/30=$24.68 per day   Finland’s median monthly income in 2017 was $1361 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1361)/30=$27.22 per day{/ref}   As high-income European countries I’m referring to those European countries, which <a href="http://appsso.eurostat.ec.europa.eu/nui/submitViewTableAction.do">according to the Eurostat statistics</a> had a higher income in 2019 than the European average. These are the following countries: Finland, Netherlands, Belgium, Sweden, Germany, France, Iceland, Switzerland, Norway, Luxembourg, Denmark, Austria, Ireland, and the UK.   These are the poverty lines for daily income in a number of high-income European countries (based on 60% of the median incomes from PovcalNet):   <ul><li>Sweden: $29.40 per da</li><li>Norway: $37.80 per day</li><li>Austria: $31 per day</li><li>UK: $25.04 per day</li><li>Switzerland: $35.82 per day</li><li>Germany: $28.35 per day</li><li>France: $27.28 per day</li><li>Luxembourg: $43.86 per day</li><li>Finland: $27.22 per day</li><li>Iceland: $31.64 per day</li><li>Ireland: $24.68 per day</li><li>Netherlands: $28.6 per day</li><li>Belgium: $26.92 per day</li><li>Denmark: $29.06 per day</li></ul>   The span of poverty lines in these countries ranges from $25 (for the UK and Ireland) up to $38 (for Norway); in the small country of Luxembourg the poverty line is higher.   <h4>The poverty line in the US</h4>   Unlike European countries, the US does not set the poverty line in a relative way. Instead the US poverty line dates back to the work of Mollie Orshansky, an economist working for the Social Security Administration in the early 1960s. Since then it has been of course revised for price changes, but otherwise it remained unchanged.   The US poverty line is <a href="https://en.wikipedia.org/wiki/Poverty_in_the_United_States#Measuring_poverty">very often</a> criticised as being too low. Those that criticize the US poverty line in that way therefore suggest that the severity of poverty in the US is understated in the statistics.    How high is the poverty line in the US? In 2020 the poverty threshold for a single person under 65 was $30, measured in 2011 international-$ per day to be comparable with the other figures in this article.{ref}According to the "<a href="https://www.govinfo.gov/content/pkg/FR-2020-01-17/pdf/2020-00858.pdf">Annual Update of the HHS Poverty Guidelines</a>" the poverty line in the US is an annual income of US$12,760. That is in 2020 price. According to the <a href="https://data.worldbank.org/indicator/FP.CPI.TOTL?locations=US">World Bank</a>, the Consumer Price Index in the US in 2020 was 118.7 and in 2011 it was 103.2. So prices between the years rose by 118.7/103.2 - 1 = 15%. Deflating the poverty line in to 2011 prices we get 12,760/1.15 = $11,096. And expressing that as a per day figure that is $11,096/365 = $30.40{/ref}   Now the problem with comparing this poverty line with the global statistics is again that the income concept is different. The US crucially relies on an equivalence scale for adjusting the income cutoff depending on the household size.   One alternative is to use the World Bank's poverty and inequality data – which expresses incomes in per capita terms – to find a 'harmonized' poverty line: the line that yields the same poverty rate in the World Bank data as the official poverty rate.{ref}This method was introduced by Jolliffe and Prydz (2016) and used by Jolliffe et al. (2022) as an ingredient of their method for setting the World Bank's international poverty lines.   Jolliffe, Dean, and Espen Beer Prydz. 2016. Estimating International Poverty Lines from Comparable National Thresholds. Washington, DC.   Jolliffe, Dean Mitchell, Daniel Gerszon Mahler, Christoph Lakner, Aziz Atamanov, and Samuel Kofi Tetteh Baah. 2022. Assessing the Impact of the 2017 PPPs on the International Poverty Line and Global Poverty. The World Bank. Available to read at the <a href="https://documents1.worldbank.org/curated/en/353811645450974574/pdf/Assessing-the-Impact-of-the-2017-PPPs-on-the-International-Poverty-Line-and-Global-Poverty.pdf">World Bank here</a>.{/ref} The official poverty rate in the US in 2019 was 10.5%, <a rel="noreferrer noopener" href="https://www.census.gov/content/dam/Census/library/publications/2020/demo/p60-270.pdf" target="_blank">as reported</a> by the U.S. Census Bureau. The poverty line that yields this rate in the World Bank's data is $22.53 (measured in 2011 international-$).{ref}You can see our detailed calculations in this <a href="https://colab.research.google.com/drive/1IzHT9NikKHrY9uGWKzDzaZ4VVpdc9m5E#scrollTo=qF_GSK2FX7tU&line=1&uniqifier=1">Google Colabs document</a>.{/ref}   An alternative is to apply the same concept that the Europeans are using for their poverty line determination. If the US would use the 60% of median income definition of poverty their poverty line would be int.-$32.8 per day{ref}The US median monthly income in 2017 was $1640 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1640)/30=$32.8 per day{/ref} Very close to the one-person poverty line based on Orshansky’s work.   A somewhat comparable poverty line based on these three approaches therefore falls into the range of around $23 to $35 per day. Within the range of poverty lines in European countries.   <h4>Survey results – Below which income do you consider a person poor? </h4>   The UN and Pritchett rely on the existing poverty lines in low-income and high-income countries respectively to derive their poverty lines. We can follow other approaches too.    An obvious one is to ask what people out there believe: Who is considered poor in a high-income country by people in high-income countries?   For the regular poverty report of the German government, a survey is conducted that asks Germans below which income level they consider someone as poor. The latest data is from the year 2015.{ref}These reports are called ‘Armuts- und Reichtumsbericht der Bundesregierung’ online at <a href="https://www.armuts-und-reichtumsbericht.de/DE/Startseite/start.html">armuts-und-reichtumsbericht.de</a>   The latest survey was produced by aproxima and published in 2016. It is published as <a href="https://www.armuts-und-reichtumsbericht.de/SharedDocs/Downloads/Service/Studien/forschungsprojekt-wahrnehmung-armut-reichtum.pdf?__blob=publicationFile&v=5">Wahrnehmung von Armut und Reichtum in Deutschland, Ergebnisse der repräsentativen Bevölkerungsbefragung „ARB-Survey 2015“</a>, Berlin: Bundesministerium für Arbeit und Soziales (Hrsg.).{/ref}   The mean answer given by the German population for a cutoff below which a person is considered poor was 947€ per month. In international dollars per day this corresponds to an income of int.-$37.58.{ref}The 2011 PPP conversion factor for private consumption (LCU per international $) for Germany in 2015 is 0.84 according to the World Bank <a href="https://ourworldindata.org/grapher/ppp-conversion-factor-for-private-consumption">here</a>.   This means the perceived poverty threshold corresponds to €947/0.84=int.-$1,127.38 per month or int.-$37.58.{/ref}   <h4>Universal Basic Income</h4>   <a href="https://en.wikipedia.org/wiki/Universal_basic_income">Universal Basic Income</a> (UBI) is a political idea that is becoming rapidly more popular.   A large UBI study in Germany – called <a href="https://de.wikipedia.org/wiki/Mein_Grundeinkommen">‘Mein Grundeinkommen’</a> – sets this income at €1200. In international-$ this corresponds to an income of int.-$48.19 per day.{ref}The 2011 PPP conversion factor for private consumption (LCU per international $) for Germany in 2017 is 0.83 according to the World Bank <a href="https://ourworldindata.org/grapher/ppp-conversion-factor-for-private-consumption">here</a>.   This means the UBI corresponds to 1200/0.83=int.-$1,445.78 per month or int.-$48.19.{/ref}   <h4>Social security in Germany</h4>   Germany pays basic social care for its citizens. This social security payment is referred to as ‘Hartz-IV’.    How much a person receives depends on the particular circumstances of the individual, but we can look at the average payment. In 2018 a single person <a href="https://www.sueddeutsche.de/wirtschaft/wie-viel-geld-bekommt-ein-hartz-iv-empfaenger-1.3905657">received on average</a> 783 Euro per month. That corresponds to int.-$30.78 per day.{ref}That’s €783/0.834=int.-$938.85 per month. Or int.-$938.85/30.5=int.-$30.78 per day.{/ref}   <h4>The Roslings’ suggest a cutoff of $32 per day</h4>   Anna Rosling-Rönnlund, Ola Rosling and Hans Rosling challenged the old dichotomy between developed and developing countries in their bestselling book ‘<a href="https://en.wikipedia.org/wiki/Factfulness:_Ten_Reasons_We%27re_Wrong_About_the_World_%E2%80%93_and_Why_Things_Are_Better_Than_You_Think">Factfulness</a>’. They argue that the old dichotomy corresponds to a view of the world that was accurate half a century ago when a few countries were relatively well-off, but most countries were living in very <a href="https://ourworldindata.org/life-expectancy-globally">poor conditions</a>.Today, they say, people around the world live on a large spectrum. To reflect this spectrum they proposed 4 income levels.   The first cut-off corresponds to the international poverty line (rounded to int.-$2 per day). The next income cutoff they set at $8 per day, the following one at $16 and the highest one at int.-$32 per day.   <h4>Kahneman's and Deaton's study of income and emotional well-being</h4>   Nobel laureates Daniel Kahneman and Angus Deaton published a famous study on the link between life satisfaction and income.{ref}Kahneman and Deaton (2010) – High income improves evaluation of life but not emotional well-being. Published in the Proceedings of the National Academy of Sciences. https://www.pnas.org/content/107/38/16489 {/ref}   The authors find that higher incomes go together with higher self-reported life satisfaction, but for people’s self-reported emotional well-being this is only true up to a certain point: the study finds that above $75,000 further increases in income do not correspond with improvements in people’s emotional well-being – a finding that is often cited to argue that additional economic growth does not improve people’s lives in high-income countries.{ref}Kahneman and Deaton analyze two different concepts self-reported satisfaction:   – Emotional well-being refers to the “emotional quality of an individual's everyday experience – the frequency and intensity of experiences of joy, stress, sadness, anger, and affection that make one's life pleasant or unpleasant.”   – Life evaluation refers to the thoughts that people have about their life when they think about it.    The authors find that higher incomes go together with higher self-reported life satisfaction in both metrics. What they emphasize is that at very high incomes this is not true anymore – emotional well-being does not increase over around $75,000. Evaluation of life however continues to increase even at incomes over $75,000.{/ref}    Again, the income concept is not the same as that in PovcalNet, and so comparisons with the global data are not directly possible. But we can ask what the daily income at which emotional well-being supposedly levels off corresponds to: $75,000 per year are int.-$205 per day.   It is certainly worth considering whether an income up to which emotional well-being increases could be taken as the basis for a definition of poverty. A US company reacted to the research finding of Kahneman and Deaton by using it to set the minimum wage in their company: everyone in that company <a href="https://www.nytimes.com/2015/04/14/business/owner-of-gravity-payments-a-credit-card-processor-is-setting-a-new-minimum-wage-70000-a-year.html">gets paid</a> that salary.    For the discussion of global poverty however it might be considered as an even higher poverty line, but for any practical purpose in the world today the income cutoff would be too high as only a very small fraction of the world lives on more than $75,000 per year. </div>   <div class="wp-block-column"></div> </div>    <h4>How many people in the world live in poverty?</h4>   We have seen that 10% of the world live in extreme poverty as defined by the UN. How large is the share of the world that lives in moderate poverty?   The latest global data tells us that 85% of the world population live on less than $30 per day. These are 6.5 billion people.   Relying on a higher poverty line of $45 per day you find that 92% live in poverty, and using a lower poverty line of $20 per day you find that 78% live in poverty. No matter which of these poverty lines you might want to choose, at least three-quarters of the world live in poverty.   All of this data refers to pre-pandemic times. The global recession has certainly increased the share below any of these cutoff points. As soon as the new data is available you will find it on Our World in Data.   The chart shows where in the world people are poor. If we would only rely on the UN’s extreme poverty line we would conclude that barely anyone lives in poverty in high-income countries. Relying on higher poverty lines, this data here shows that even in high-income countries there is a significant share of the population that lives in poverty. No country, not even the high-income countries, has eliminated poverty. There are no ‘developed countries’ — there is work to do for all.    But just as clear from this data is the fact that in many world regions the large majority of people are very poor. In Sub-Saharan Africa about 40% of the population lives on less than $1.90 per day as the chart shows. In all regions outside of high-income countries more than 85% of all people live in moderate poverty.   <figure class="wp-block-image size-full"><img src="https://owid.cloud/app/uploads/2021/03/The-global-inc-distribution-190-10-30.png" alt="" class="wp-image-41458"/></figure>   <h4>Countries in which the majority do not live in poverty have only left poverty behind in recent history</h4>   Two centuries ago the global income distribution was very different. Back then <a href="https://ourworldindata.org/extreme-history-methods">almost everyone in the world</a> was living in extreme poverty. Those places in which few people live in moderate poverty today only left poverty behind in the very recent past.    Denmark is one of those places. The reason why the majority of people in Denmark is not living in poverty is that the economic inequality is low and the average income high.   The fact that the inequality is low you can see on the map. It shows an inequality measure called the Gini coefficient (explained <a href="https://ourworldindata.org/income-inequality#the-gini-coefficient">here</a>) which makes clear that Denmark is among the least unequal countries in the world.   The reason that the average income in Denmark is high is due to the fact that average incomes have increased steadily for the last two centuries; this long-term development is called economic growth. As the historical data shows the average incomes in Denmark are today more than 20-times higher than in the past.   You can add any other country to this chart. By adding one of those countries in which the majority lives in poverty – like Ethiopia – you see just how large the differences in average incomes are.   GDP per capita is by far the most widely used measure of average income and is yet another income concept from the two I mentioned so far.{ref}The two previous ones were income/expenditure as determined in household surveys and equivalized disposable income after social transfers.{/ref} It is a more comprehensive measure of incomes and crucially takes into account government expenditures. For these and other reasons (mentioned in the long footnote) you will find that dividing GDP per capita by 365 days will let you arrive at a higher value than the income that is determined in household income surveys.{ref}There is generally a gap between GDP per capita and the averages found in both income surveys and expenditure surveys. But the reasons for the gap are different depending on which we are comparing.   GDP includes many items that are typically not measured in household income surveys, such as an imputed rental value of owner-occupied housing, the retained earnings of firms and taxes on production such as VAT. The gap is even larger when GDP is compared to surveys of household consumption – the latter concept excluding both investment expenditure and government expenditure on public services such as education and health.   Other aggregates beyond GDP are available in the national accounts that are more comparable to the concepts applied in household income and consumption surveys. However, important differences still remain even here. For example, in addition to imputed rents, imputations for the value of certain financial services, such as bank accounts, are included in aggregate household consumption measured in national accounts, with no equivalent for these items recorded in the survey data. In many countries the consumption of ‘nonprofit institutions serving households’ (NPISH) is included as part of household consumption within national accounts, but not within household surveys.   On top of these conceptual differences are a range of mismeasurement problems that affect both sets of data. On this topic see Deaton (2005), and Pinkovskiy and Sala-i-Martin (2016).   Deaton, Angus. 2005. “Measuring Poverty in a Growing World (or Measuring Growth in a Poor World).” The Review of Economics and Statistics 87 (1): 1–1.   Pinkovskiy, Maxim, and Xavier Sala-i-Martin. 2016. “Lights, Camera… Income! Illuminating the Nation"{/ref}   <div class="wp-block-columns is-style-side-by-side"> <div class="wp-block-column"> <iframe src="https://ourworldindata.org/grapher/economic-inequality-gini-index?time=earliest..latest&tab=chart&country=USA~FRA~JPN~BRA~ZAF~DNK" loading="lazy" style="width: 100%; height: 600px; border: 0px none;"></iframe> </div>   <div class="wp-block-column"> <iframe src="https://ourworldindata.org/grapher/average-real-gdp-per-capita-across-countries-and-regions?time=earliest..latest&country=~DNK&tab=chart" loading="lazy" style="width: 100%; height: 600px; border: 0px none;"></iframe> </div> </div>   <h4>Billions of people live in countries where average incomes are very low</h4>   The income of every person depends on two factors, the average income in the country they live in and the position that particular person has in that country’s income distribution. This chart here shows the average income in countries around the world. The height of each bar represents the average daily income in a country, the width of each country corresponds to the country’s population size. I have ordered the countries by income: from the poorest country on the very left (South Sudan where the average person lives on $1.12 per day) to the richest country on the very right (Luxembourg with an average of $86 per day).   After two centuries of economic growth the average income in Denmark is now $57 per day today. You find the country far to the right in this chart, which tells you that only very few countries in the world have such high average incomes. The fact that the average income is far higher than the poverty line tells us that the existing poverty in Denmark discussed at the beginning of this post is to a large extent the consequence of inequality.   What this chart makes very clear is how low the average incomes in many countries in the world are. The huge majority of the world live in countries where the average income is much lower than the poverty threshold in rich countries. 82% of the world population live in countries where the mean income is less than $20 per day.   And where incomes are low, living standards generally <a href="https://owid.cloud/app/uploads/2021/03/Correlates-of-GDP-–-How-is-life-at-different-levels-of-income.png">are poor</a>. As the last chart below shows, a child that is born into a poorer country must not just expect to live on a very low income, but also faces a much higher risk of not staying alive at all.   As I have <a href="https://ourworldindata.org/global-inequality-of-opportunity">said before</a>, people are not poor because of who they are, but because of where they are. This is why economic growth is so important to leave poverty behind. By far the most important difference between those people who are not living in poverty and those who do is the average income in the country that they live in – this single factor matters more for a person’s income <a href="https://ourworldindata.org/poverty-growth-needed">than all other factors taken together</a>. The increase of average income in a country is called economic growth and for global poverty to decrease substantially economic growth for the poorest billions of people is necessary.   → See my previous article: <a href="https://ourworldindata.org/poverty-growth-needed">The economies that are home to the poorest billions of people need to grow if we want global poverty to decline</a>.   <figure class="wp-block-image size-full"><img src="https://owid.cloud/app/uploads/2021/03/mean-income-by-country.png" alt="" class="wp-image-41459"/></figure>   <h4>The future of global poverty</h4>   The world today is far from the ‘end of poverty’ relative to any poverty definition. After two centuries of <a href="https://ourworldindata.org/extreme-history-methods">unprecedented progress</a> against the very worst poverty it is still the case that every tenth person lives on less than $1.90 per day.   As the world has not even ended extreme poverty it is therefore right to focus much of our attention on this very low poverty cutoff; ending extreme poverty surely is a global goal of great importance.    Yet at the same time we should consider what our aspirations for the future are. In the past our ancestors <a href="https://ourworldindata.org/breaking-the-malthusian-trap">did not know</a> that it was possible for a society to leave widespread poverty behind. Today we are in a different situation. We know from the reality of today’s rich countries that widespread poverty is not inevitable. Because we know that poverty relative to such higher cutoffs is not inevitable I believe it would be wrong to limit our ambitions to eradicating poverty based on the definition of poverty in the very poorest countries.   What I take away from this discussion are three insights: First, we have seen from countries like Denmark that it is possible to reduce poverty for an entire population relative to a poverty line of about $30 per day. Second, we have seen that these countries were extremely poor in the past and were able to reduce poverty over the course of the last few generations. And third we have seen that the huge majority of the world is still living in great poverty, by any standard. What this suggests to me is that the history of global poverty reduction has only just begun.   <iframe src="https://ourworldindata.org/grapher/child-mortality-gdp-per-capita?time=latest" loading="lazy" style="width: 100%; height: 600px; border: 0px none;"></iframe>   <hr class="wp-block-separator"/>   Continue reading Our World in Data: My colleague Hannah Ritchie has just published a series of posts on the drivers of deforestation and how to bring humanity's long history of deforestation to an end. You find her work <a href="https://ourworldindata.org/blog">here</a>.   Acknowledgement: I would like to thank Joe Hasell for his thoughtful comments on draft versions of this article.

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                    },
                    {
                        "spanType": "span-newline"
                    },
                    {
                        "text": "This post draws on data and research discussed in our entries on ",
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                    },
                    {
                        "children": [
                            {
                                "url": "https://ourworldindata.org/income-inequality",
                                "children": [
                                    {
                                        "text": "Income Inequality",
                                        "spanType": "span-simple-text"
                                    }
                                ],
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                        "text": ", ",
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                    {
                        "children": [
                            {
                                "url": "https://ourworldindata.org/poverty",
                                "children": [
                                    {
                                        "text": "Poverty",
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                                ],
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                        "text": " and ",
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                    {
                        "children": [
                            {
                                "url": "https://ourworldindata.org/economic-growth",
                                "children": [
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                                        "text": "Economic Growth",
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                                        "text": "Abstract:",
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                                "text": " The extremely low poverty line that the UN relies on has the advantage that it draws the attention to the very poorest people in the world. It has the disadvantage that it ignores what is happening to the incomes of the 90% of the world population who live above the extreme poverty threshold.",
                                "spanType": "span-simple-text"
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                                "spanType": "span-newline"
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                            {
                                "text": "The global poverty line that the UN relies on is based on the national poverty lines in the world\u2019s poorest countries. In this article I ask what global poverty looks like if we rely on the notions of poverty that are common in the world\u2019s rich countries \u2013 like Denmark, the US, or Germany. Based on the evidence I ask what our aspirations for the future of global poverty reduction might be.",
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                "text": [
                    {
                        "text": "The World Bank has updated its poverty and inequality data",
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                "level": 3,
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                        "text": "The data in this article uses a previous release of the World Bank's poverty and inequality data in which incomes are expressed in 2011 international-$.",
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                        "text": "The World Bank has since updated its methods, and now measures incomes in 2017 international-$. As part of this change, the International Poverty Line used to measure extreme poverty has also been updated: from $1.90 (in 2011 prices) to $2.15 (in 2017 prices).",
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                "value": [
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                        "text": "This has had little effect on our overall understanding of poverty and inequality around the world. But because of the change of units, many of the figures mentioned in this article will differ from the latest World Bank figures.",
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                "url": "https://ourworldindata.org/from-1-90-to-2-15-a-day-the-updated-international-poverty-line",
                "type": "prominent-link",
                "title": "",
                "description": "Read more about the World Bank's updated methodology",
                "parseErrors": []
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            {
                "url": "https://ourworldindata.org/explorers/poverty-explorer",
                "type": "prominent-link",
                "title": "Explore the latest World Bank data on poverty and inequality",
                "description": "",
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                "value": [
                    {
                        "text": "In every country of the world there are people living in poverty. Even in the world\u2019s richest countries the poorest people often live in poor housing and struggle to afford basic goods and services like heating, transport, and healthy food for themselves and their family.",
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                "value": [
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                        "text": "Those who are in monetary poverty also have much poorer living conditions more broadly. Even in a rich and relatively equal country like Denmark middle-aged men who are among the poorest 20% of the population die on average ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "children": [
                            {
                                "text": "9 years",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-italic"
                    },
                    {
                        "text": " earlier than those among the richest 20%.{ref}Br\u00f8nnum-Hansen H, Foverskov E, Andersen I. Income inequality in life expectancy and disability-free life expectancy in Denmark. J Epidemiol Community Health 2021;75:145-150. ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://jech.bmj.com/content/75/2/145",
                        "children": [
                            {
                                "text": "https://jech.bmj.com/content/75/2/145",
                                "spanType": "span-simple-text"
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                    {
                        "text": " {/ref} In Denmark a person who lives on less than $30 per day is considered poor, and it is the declared goal of the country to reduce poverty relative to this threshold.{ref} For the moment it is important to note that this $30 per day poverty line is defined in international-$ and therefore comparable with the \u2018International Poverty Line\u2019 discussed in the following section. Much more details about how to compare incomes across countries, the income concept here, and the definition of this poverty line follows further below in this text.{/ref}\u00a0",
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                "value": [
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                        "text": "Countries that are much poorer than Denmark also have the goal to reduce poverty. The United Nations declared the objective of ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://sdg-tracker.org/",
                        "children": [
                            {
                                "text": "ending \u2018extreme poverty\u2019",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
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                    {
                        "text": " to be the number 1 goal of the global ",
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                    },
                    {
                        "children": [
                            {
                                "text": "Sustainable Development Goals",
                                "spanType": "span-simple-text"
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                        ],
                        "spanType": "span-italic"
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                    {
                        "text": ". ",
                        "spanType": "span-simple-text"
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                    {
                        "url": "https://www.un.org/en/global-issues/ending-poverty",
                        "children": [
                            {
                                "text": "According",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": " to the UN a person is considered to live in extreme poverty when he or she is living on less than $1.90 per day, this is called the ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "children": [
                            {
                                "text": "International Poverty Line",
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                        ],
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                    {
                        "text": ". According to the latest global statistics almost ",
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                    },
                    {
                        "children": [
                            {
                                "url": "https://ourworldindata.org/poverty?insight=the-pandemic-pushed-millions-into-extreme-poverty#key-insights-on-poverty",
                                "children": [
                                    {
                                        "text": "one in ten",
                                        "spanType": "span-simple-text"
                                    }
                                ],
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                            }
                        ],
                        "spanType": "span-italic"
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                        "text": " people live in extreme poverty globally.",
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                "type": "text",
                "value": [
                    {
                        "text": "If we know that poverty is a large problem even in high income countries like Denmark where the poverty line is set at around $30 a day, why should we use an International Poverty Line that is so extremely low to measure poverty globally?",
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                "type": "text",
                "value": [
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                        "text": "It is the reality of our extremely unequal world \u2013 in which every tenth person lives in extreme poverty \u2013 that makes such an extremely low poverty line necessary. Without having an ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "children": [
                            {
                                "text": "extremely",
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                        ],
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                    {
                        "text": " low poverty line we would not be aware of the fact that a large share of the world lives in such extreme poverty. The UN\u2019s global poverty line is valuable because it draws attention to the reality of extreme poverty in our world.",
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                        "text": "In a world where the majority still lives on very low incomes it would be wrong if the UN decided to measure global poverty solely by a poverty line as high as the poverty line of Denmark. It would mean that the global statistics gloss over the extremely large and important income differences among the poorest billions in the world. It would mean that the difference between those who live on only $1 per day and those who have an income that is more than 20-times higher would be entirely disregarded. They would all be considered poor, and the reality that some of them are much poorer than others would be hidden.",
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                "type": "text",
                "value": [
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                        "text": "Slightly higher global poverty lines \u2013 such as the poverty line of $3.10 per day that Kate Raworth relies on in her \u2018Doughnut\u2019 framework, or the poverty line of $7.40 per day that anthropologist Jason Hickel uses in his work, or Bob Allen\u2019s absolute poverty line based on minimal nutritional requirements \u2013 all have the same value.{ref}Kate Raworth (2017) \u2013 A Doughnut for the Anthropocene: humanity's compass in the 21st century. In The Lancet Planetary Health. Volume 1, Issue 2, E48-E49, May 01, 2017. Open Access DOI: ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://doi.org/10.1016/S2542-5196(17)30028-1",
                        "children": [
                            {
                                "text": "https://doi.org/10.1016/S2542-5196(17)30028-1",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": " You find the metrics that the Doughnut relies on ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://www.thelancet.com/cms/10.1016/S2542-5196(17)30028-1/attachment/2d58fdae-741c-4016-84cd-2fc0b1e94f49/mmc1.pdf",
                        "children": [
                            {
                                "text": "in the Appendix here",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": ".",
                        "spanType": "span-simple-text"
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                    {
                        "spanType": "span-newline"
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                    {
                        "text": "Jason Hickel \u2013 ",
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                    },
                    {
                        "url": "https://www.theguardian.com/global-development-professionals-network/2015/nov/01/global-poverty-is-worse-than-you-think-could-you-live-on-190-a-day",
                        "children": [
                            {
                                "text": "Could you live on $1.90 a day? That's the international poverty line",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": " and ",
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                    },
                    {
                        "url": "https://twitter.com/jasonhickel/status/1012339440113594368",
                        "children": [
                            {
                                "text": "here",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": ".",
                        "spanType": "span-simple-text"
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                    {
                        "spanType": "span-newline"
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                    {
                        "text": "Allen, Robert C.(201). \u2013 ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "children": [
                            {
                                "text": "Absolute Poverty: When Necessity Displaces Desire",
                                "spanType": "span-simple-text"
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                        "spanType": "span-italic"
                    },
                    {
                        "text": ". American Economic Review, 107 (12): 3690-3721.DOI: 10.1257/aer.20161080{/ref}\u00a0These low poverty lines allow us to understand the material living conditions of the poorest people in the world and have been successful in drawing attention to the terrible depths of poverty experienced by a large share of the world's population. The only way to achieve these goals is to rely on extremely low poverty lines.",
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                "value": [
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                        "text": "Indeed, there is an argument for using an even lower poverty line. To understand what is happening to the ",
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                    {
                        "children": [
                            {
                                "text": "very",
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                    {
                        "text": " poorest in the world, we need to look even lower than $1.90. This is because one of the biggest failures of development is that over the last decades the incomes of ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://ourworldindata.org/poverty?insight=hundreds-of-millions-will-remain-in-extreme-poverty-on-current-trends#key-insights-on-poverty",
                        "children": [
                            {
                                "text": "the very poorest",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": " people have not risen. A big part of the reason for why this issue doesn\u2019t get discussed enough is that the International Poverty Line we rely on is too high to see this fact.",
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                    }
                ],
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                "text": [
                    {
                        "text": "Why not both?",
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                ],
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                "level": 3,
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                "value": [
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                        "text": "Yet, ",
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                        "children": [
                            {
                                "text": "only ",
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                        ],
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                    {
                        "text": "measuring global poverty relative to such extremely low poverty lines has its own large downside.\u00a0",
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                ],
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                "value": [
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                        "text": "By focusing on an income threshold that is lower than the incomes of 90% of the global population we are ignoring what is happening to the majority of the world\u2019s population. This matters. The majority of the world do not live in extreme poverty ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://ourworldindata.org/extreme-history-methods",
                        "children": [
                            {
                                "text": "anymore",
                                "spanType": "span-simple-text"
                            }
                        ],
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                    {
                        "text": ", but billions are nevertheless living in great poverty still.",
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                ],
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                "type": "text",
                "value": [
                    {
                        "text": "The obvious solution to the problem that the majority of the world is not considered by the International Poverty Line is to use an ",
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                    },
                    {
                        "children": [
                            {
                                "text": "additional",
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                    {
                        "text": " poverty line. This is not a new idea. One poverty researcher who has made the argument for an additional higher global poverty line based on the notions of poverty in rich countries is Lant Pritchett \u2013 you find it in his short, yet widely-cited essay ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "children": [
                            {
                                "text": "\u2018The case for a high global poverty line\u2019 ",
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                            }
                        ],
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                    },
                    {
                        "text": "from eight years ago.{ref}Lant Pritchett (2013) \u2013 Monitoring progress on poverty: the case for a high global poverty line. Online here ",
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                    },
                    {
                        "url": "https://web.archive.org/web/20150608125138/http://www.odi.org:80/sites/odi.org.uk/files/odi-assets/publications-opinion-files/8440.pdf",
                        "children": [
                            {
                                "text": "https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/8440.pdf",
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                        ],
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                    {
                        "text": "{/ref}",
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            {
                "text": [
                    {
                        "text": "Defining global poverty lines",
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                        "text": "The definition of poverty differs between countries. Poorer countries set much lower poverty lines than richer countries.{ref}Jolliffe and Prydz (2016){/ref} This means that if we were to simply rely on national poverty definitions for a global measure of poverty we would end up with a measurement framework in which ",
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                    {
                        "children": [
                            {
                                "text": "where",
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                        ],
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                    {
                        "text": " a person happens to live would determine whether they are poor or not: If we would count as poor those who are defined nationally as poor we would end up counting a person who lives on $20 per day as poor in a rich country, while at the same time counting a person who lives on $2 as not-poor when they happen to live in a very poor country.",
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                        "text": "One way out of this problem is to set global poverty lines based on the national definitions, but to apply them globally. This is how the UN decided to define the International Poverty Line. In order to ground this global poverty line on something more than the views of global poverty researchers, it is based on the existing definitions of poverty adopted in countries around the world at the national level, but to avoid the problem outlined above they apply the national poverty lines globally. As we explain ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://ourworldindata.org/extreme-poverty#setting-the-international-poverty-line",
                        "children": [
                            {
                                "text": "here",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": " in some detail, the $1.90 per day poverty line is set to reflect the national poverty lines adopted in the world\u2019s ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "children": [
                            {
                                "text": "poorest",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-italic"
                    },
                    {
                        "text": " countries.{ref}Specifically, the line is set at the average national poverty line amongst 15 particular low-income countries. As Jolliffe and Prydz (2016) demonstrate however, this is also the average poverty line found among the poorest quarter of countries with available data, and also among countries falling into the World Bank\u2019s low-income category.{/ref} Applying this poverty line globally means that a person who lives on less than $1.90 per day is considered extremely poor no matter where they live.",
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                        "text": "In recent years the World Bank has applied this same methodology to countries in the middle-income bracket, those countries with a GNI per capita between $1000 and $12,500. Based on the poverty lines in these countries they have set additional global poverty lines at $3.20 and $5.50 per day, which are now ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://data.worldbank.org/indicator/SI.POV.LMIC",
                        "children": [
                            {
                                "text": "directly",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "url": "https://data.worldbank.org/indicator/SI.POV.UMIC",
                        "children": [
                            {
                                "text": "available",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": " via the World Bank statistics.{ref}The study on which these thresholds rely is Jolliffe, D., Prydz, E.B. Estimating international poverty lines from comparable national thresholds. J Econ Inequal 14, 185\u2013198 (2016). ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://doi.org/10.1007/s10888-016-9327-5",
                        "children": [
                            {
                                "text": "https://doi.org/10.1007/s10888-016-9327-5",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": " The researchers also report an average high-income country poverty line of $21.70 per day.",
                        "spanType": "span-simple-text"
                    },
                    {
                        "spanType": "span-newline"
                    },
                    {
                        "text": "High income countries in the World Bank framework are however relatively poor compared to the countries that I\u2019m focusing on here \u2013 the cutoff for a high-income country according to the World Bank is $12,536, about a quarter of the GNI of Germany and only a fifth of the US. Accordingly, the poverty cutoff is much lower than in those countries. ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups",
                        "children": [
                            {
                                "text": "Here you find the World Bank income classification cutoffs",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": ".{/ref}",
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                    }
                ],
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                "value": [
                    {
                        "text": "What I want to do here is to see what a global poverty line would be if we rely on the notion of poverty in rich countries \u2014 countries like Denmark, the US, or Germany.{ref}The range of incomes considered \u2018middle\u2019 and \u2018high\u2019 income countries according to the World Bank are very low relative to rich countries. High-income economies are those with a GNI per capita of $12,536 or more. The range of middle-income economies begins at a GNI per capita of $1,036. In this post I want to rely on countries like Denmark; higher income countries by any standard.{/ref} That is what Pritchett suggested eight years ago: \u201cSince the origin of the [International Poverty Line] was just to adopt as a global lower bound the poverty lines used by the poorest countries, it symmetrically makes sense to say that the global upper bound poverty line is based on the poverty line used in rich countries.\u201d\u00a0",
                        "spanType": "span-simple-text"
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                        "text": "The definition of poverty is certainly not an easy ethical question and thoughtful people disagree about it in ways that have meaningful consequences for our understanding of the world. There are also interesting proposals for hybrid poverty lines that combine absolute and weakly-relative measures; see Ravallion (2019) for a recent proposal.{ref}Martin Ravallion (2019) \u2013 ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://www.nber.org/papers/w26211",
                        "children": [
                            {
                                "text": "On Measuring Global Poverty",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": ". NBER Working Paper 26211. DOI 10.3386/w26211{/ref} And I would also recommend Tony Atkinson\u2019s last book \u2018",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://www.tony-atkinson.com/book-measuring-poverty-around-the-world/",
                        "children": [
                            {
                                "text": "Measuring Poverty around the World",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": "\u2019 for an excellent recent overview of the topic.",
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                        "text": "\u2192 To understand how it is possible to compare poverty levels and living standards across countries you need to know the basics of global poverty measurement. You find a summary of the basics in the following fold-out box.",
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                        "text": [
                            {
                                "text": "Additional information",
                                "spanType": "span-simple-text"
                            }
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                        "type": "heading",
                        "level": 2,
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                        "type": "expandable-paragraph",
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                                        "text": "Throughout this article \u2013 and in global income and expenditure data generally \u2013 the statisticians who produce these figures are careful to make these numbers as comparable as possible.\u00a0",
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                                        "text": "First, many poorer people rely on subsistence farming and do not have a monetary income. To take this into account and make a fair comparison of their living standards, the statisticians that produce these figures estimate the monetary value of their home production and add it to their income/expenditure.",
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                                "type": "text",
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                                        "text": "Second, price changes over time (inflation) and price differences across countries are both taken into account: all measures are adjusted for differences in purchasing power.{ref}This is possible by relying on the work of the ",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "url": "https://www.worldbank.org/en/programs/icp",
                                        "children": [
                                            {
                                                "text": "International Comparison Project",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-link"
                                    },
                                    {
                                        "text": ", which monitors the prices of goods and services around the world.{/ref} To this end incomes and expenditures are expressed in so-called ",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "children": [
                                            {
                                                "text": "international dollars",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-italic"
                                    },
                                    {
                                        "text": ". This is a hypothetical currency that results from the price adjustments across time and place. An international dollar is defined as having the same purchasing power as one US-$ ",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "children": [
                                            {
                                                "text": "in the US",
                                                "spanType": "span-simple-text"
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                                        "spanType": "span-italic"
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                                    {
                                        "text": ". This means no matter where in the world a person is living on int.-$30, they can buy the goods and services that cost $30 in the US. None of these adjustments are ever going to be perfect, but in a world where price differences are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do.{ref}Angus Deaton and Alan Heston (2010) discuss the methods behind such price adjustments and many of the difficulties and limitations involved.",
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                                "type": "text",
                                "value": [
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                                        "text": "Deaton, A., and Heston, A. 2010. \u201cUnderstanding PPPs and PPP-Based National Accounts.\u201d ",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "children": [
                                            {
                                                "text": "American Economic Journal: Macroeconomics",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-italic"
                                    },
                                    {
                                        "text": " 2 (4): 1\u201335. A working paper version is available online ",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "url": "https://www.nber.org/papers/w14499",
                                        "children": [
                                            {
                                                "text": "here",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-link"
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                                    {
                                        "text": ".{/ref}",
                                        "spanType": "span-simple-text"
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                                        "text": "Throughout this text I\u2019m always adjusting incomes for price changes over time and price differences between countries in this way. All dollar values discussed here are presented in int.-$; the UN does the same for the $1.90 poverty line. Sometimes I leave out \u2018international\u2019 as it is awkward to repeat it all the time; but every time I mention any $ amount in this text I\u2019m referring to international-$ and not US-$.{ref}Keep in mind that in the special case of the US the US-$ equals the international-$.{/ref}",
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                "text": [
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                        "text": "An additional higher poverty line of $30 per day",
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                        "text": "Pritchett made his proposal based on data and prices a decade ago and so it is necessary to update his calculations. But I want to go beyond Pritchett\u2019s approach and additionally provide a number of other relevant comparisons to inform our understanding of who is considered poor in a rich country.",
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                        "text": "By following this idea I find that a poverty of 30 international-$ per day corresponds to the notion of poverty in a rich country. In the following section I consider a long number of benchmarks that made me arrive at this poverty line. Here is the short summary of these comparisons:",
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                                        "text": "European countries: ",
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                                ],
                                "spanType": "span-bold"
                            },
                            {
                                "text": "The span of poverty lines in high-income countries in Europe ranges from ",
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                            {
                                "children": [
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                                        "text": "int.-$25 to int.-$38 per day",
                                        "spanType": "span-simple-text"
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                            {
                                "text": ".",
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                                        "text": "The US: ",
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                            {
                                "text": "A comparison with the poverty line in the US is not straightforward, as explained in some detail below; two different approaches arrive at poverty lines of ",
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                            {
                                "children": [
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                                        "text": "int.-$23 and int.-$35 per day",
                                        "spanType": "span-simple-text"
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                                "spanType": "span-bold"
                            },
                            {
                                "text": " respectively.",
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                "type": "list",
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                                "children": [
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                                        "text": "Survey result: ",
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                            },
                            {
                                "text": "A study surveyed people in a high-income country to ask at what income a person is considered poor. The study found that the mean income threshold suggested by the surveyed population corresponds to an income of ",
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                            },
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                                "children": [
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                                        "text": "int.-$37.58 per day",
                                        "spanType": "span-simple-text"
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                                        "text": "Proposal to replace the categorization into developing and developed countries: ",
                                        "spanType": "span-simple-text"
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                            },
                            {
                                "text": "In the book \u2018Factfulness\u2019 the authors recommend replacing the simplistic categorization of countries into developing and developed countries with a finer grained structure. The high-income cutoff the authors suggest is ",
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                            },
                            {
                                "children": [
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                                        "text": "int.-$32 per day",
                                        "spanType": "span-simple-text"
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                            },
                            {
                                "text": ".",
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                                        "text": "UBI: ",
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                                "spanType": "span-bold"
                            },
                            {
                                "text": "The daily income paid as \u2018Universal Basic Income\u2019 in a pilot study in Germany corresponds to an income of ",
                                "spanType": "span-simple-text"
                            },
                            {
                                "children": [
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                                        "text": "int.-$48.19 per day",
                                        "spanType": "span-simple-text"
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                                "text": ".",
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                                        "text": "Social care: ",
                                        "spanType": "span-simple-text"
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                            },
                            {
                                "text": "The average basic social care payout in Germany (\u2018Hartz-IV\u2019) corresponds to ",
                                "spanType": "span-simple-text"
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                                "children": [
                                    {
                                        "text": "int.-$30.78 per day",
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                        "text": "The range of possible higher poverty lines based on richer countries is wide, as the list of benchmarks suggests. At the lower end I believe that it might be as low as $25 per day, and on the higher end it might be as high as $40 or $50 per day.\u00a0",
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                        "text": "Just as someone who lives on less than $1.90 per day is defined as ",
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                        "children": [
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                                "text": "extremely ",
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                        "text": "poor, a person who lives on less than $30 a day could be considered ",
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                        "children": [
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                                "text": "moderately ",
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                        "text": "poor.",
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                        "text": "A reality check for any poverty line you might want to consider is to ask yourself what you think about living on less than that poverty line yourself. I lived on less than $30 per day before and would consider myself poor if I\u2019d fall back on that income level again.",
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                        "text": "In the following box you find the sources and calculations of the benchmarks that led me to my $30 per poverty line proposal.",
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                        "text": [
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                                "text": "Additional information",
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                        "level": 2,
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                        "type": "expandable-paragraph",
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                                "text": [
                                    {
                                        "text": "Poverty lines in European countries",
                                        "spanType": "span-simple-text"
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                                        "text": "As mentioned before most European countries set their poverty line at 60% of the median income in the country. In his original proposal Pritchett was relying on this 60% of median cut-off.",
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                                        "text": "Calculating the poverty line for European countries therefore means that we look up their median income and then multiply it by 0.6. This is less straightforward than it might first appear. The reason for that is that there are many different income concepts. You quickly realize that it is not easy to define a person\u2019s income if you ask yourself what your own income is. Do you take government transfers into account or not? Do you take your partner\u2019s income into account and divide it by two? How do you take into account that you have a child for which you need to pay? It is possible to take these and many other aspects into account and arrive at useful statistics, but various sensible ways of addressing such questions lead to many different income metrics. As such, in comparing different poverty thresholds across countries we have to take care to avoid mixing different income concepts as much as possible.\u00a0",
                                        "spanType": "span-simple-text"
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                                        "text": "One important difference is how incomes are adjusted for the size of the household: whether the total household income is simply divided by the number of people (including children) \u2013 \u2018per capita\u2019 income \u2013 or whether some adjustment is made to account for the fact that larger households, and particularly households with children, face lower costs per person \u2013 known as \u2018equivalised\u2019 income. Whereas EU countries, like other rich countries, use equivalised income to measure poverty, the UN\u2019s measurement of global poverty is based on a global dataset of per capita incomes. This dataset is called ",
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                                    },
                                    {
                                        "url": "http://iresearch.worldbank.org/PovcalNet/povDuplicateWB.aspx",
                                        "children": [
                                            {
                                                "text": "PovcalNet",
                                                "spanType": "span-simple-text"
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                                        "spanType": "span-link"
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                                        "text": ", and it is this that we must use in order to make comparisons of poverty measures in different countries according to the same income concept.",
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                                        "text": "In this dataset we find the median income for countries around the world and we can take that median income and then apply the logic on which the European poverty lines are based. In the extensive footnote here you find more details and the full calculations.{ref}The European reference incomes are national median equivalised disposable income after social transfers.",
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                                        "text": "The disposable household income including all income from work (employee wages and self-employment earnings), private income from investment and property, transfers between households, and all social transfers received in cash including old-age pensions.\u00a0",
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                                        "text": "Eurostat applies an equivalisation factor calculated according to the OECD-modified scale first proposed in 1994. The UN/World Bank is not.",
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                                        "text": "This is according to Eurostat ",
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                                    {
                                        "url": "https://appsso.eurostat.ec.europa.eu/nui/show.do?query=BOOKMARK_DS-050270_QID_6AF25E11_UID_-3F171EB0&layout=TIME,C,X,0;GEO,L,Y,0;QUANTILE,L,Z,0;INDIC_IL,L,Z,1;CURRENCY,L,Z,2;INDICATORS,C,Z,3;&zSelection=DS-050270INDIC_IL,TC;DS-050270CURRENCY,EUR;DS-050270INDICATORS,OBS_FLAG;DS-050270QUANTILE,D1;&rankName1=INDIC-IL_1_2_-1_2&rankName2=CURRENCY_1_2_-1_2&rankName3=INDICATORS_1_2_-1_2&rankName4=QUANTILE_1_2_-1_2&rankName5=TIME_1_0_0_0&rankName6=GEO_1_2_0_1&sortC=ASC_-1_FIRST&rStp=&cStp=&rDCh=&cDCh=&rDM=true&cDM=true&footnes=false&empty=false&wai=false&time_mode=ROLLING&time_most_recent=true&lang=EN&cfo=%23%23%23%2C%23%23%23.%23%23%23",
                                        "children": [
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                                                "text": "here",
                                                "spanType": "span-simple-text"
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                                        ],
                                        "spanType": "span-link"
                                    },
                                    {
                                        "text": ", where you also find the relevant data. (If the link should break, search on Google for \u2018Distribution of income by quantiles - EU-SILC and ECHP surveys\u2019.)",
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                                    }
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                                        "text": "There are various ways of bringing the national poverty lines with reference to the national median equivalised disposable income after social transfers in line with the income/expenditure concept used in PovcalNet.",
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                                    {
                                        "text": "Joliffe and Prydz follow a different approach and their paper is very relevant for anyone interested in this question here. One alternative to the approach I\u2019m following in this article would be to start from the poverty lines they estimated (based on the poverty headcount ratio) and apply the growth rate of the median income since the publication of their study. Yet another possibility would of course be to repeat their analysis with the up-to-date data. I am not following either of these approaches because I believe for a wide audience they are less transparent that the approach here \u2013\u00a0which is simply: I rely on the same dataset so that I rely on the same income concept, then look up the median income and multiply it by 0.6.",
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                                    {
                                        "text": "This is the reference: Jolliffe & Prydz (2016). Estimating international poverty lines from comparable national thresholds. The Journal of Economic Inequality, 14(2), 185-198.",
                                        "spanType": "span-simple-text"
                                    }
                                ],
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                                "value": [
                                    {
                                        "text": "\u2013\u2013\u2013",
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                                        "text": "The following are the relevant calculations. All of them are based on PovcalNet data:",
                                        "spanType": "span-simple-text"
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                                        "children": [
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                                                "text": "Germany\u2019s",
                                                "spanType": "span-simple-text"
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                                        ],
                                        "spanType": "span-bold"
                                    },
                                    {
                                        "text": " median monthly income in 2017 was $1417.29 according to PovcalNet.",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "spanType": "span-newline"
                                    },
                                    {
                                        "text": "60% of the median expressed in daily income/consumption is 0.6*$1417.29=$850.374/30=$28.35 per day",
                                        "spanType": "span-simple-text"
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                                        "children": [
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                                                "text": "Sweden\u2019s",
                                                "spanType": "span-simple-text"
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                                        ],
                                        "spanType": "span-bold"
                                    },
                                    {
                                        "text": " median monthly income in 2017 was $1469 according to PovcalNet.",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "spanType": "span-newline"
                                    },
                                    {
                                        "text": "60% of the median expressed in daily income/consumption is (0.6*1469)/30=$29.38 per day",
                                        "spanType": "span-simple-text"
                                    }
                                ],
                                "parseErrors": []
                            },
                            {
                                "type": "text",
                                "value": [
                                    {
                                        "children": [
                                            {
                                                "text": "Norway\u2019s",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-bold"
                                    },
                                    {
                                        "text": " median monthly income in 2017 was $1890 according to PovcalNet.",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "spanType": "span-newline"
                                    },
                                    {
                                        "text": "60% of the median expressed in daily income/consumption is (0.6*1890)/30=$37.8 per day",
                                        "spanType": "span-simple-text"
                                    }
                                ],
                                "parseErrors": []
                            },
                            {
                                "type": "text",
                                "value": [
                                    {
                                        "children": [
                                            {
                                                "text": "Austria\u2019s",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-bold"
                                    },
                                    {
                                        "text": " median monthly income in 2017 was $1534 according to PovcalNet.",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "spanType": "span-newline"
                                    },
                                    {
                                        "text": "60% of the median expressed in daily income/consumption is (0.6*1534)/30=$30.68 per day",
                                        "spanType": "span-simple-text"
                                    }
                                ],
                                "parseErrors": []
                            },
                            {
                                "type": "text",
                                "value": [
                                    {
                                        "text": "In the ",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "children": [
                                            {
                                                "text": "UK",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-bold"
                                    },
                                    {
                                        "text": " the median monthly income in 2017 was $1252 according to PovcalNet.",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "spanType": "span-newline"
                                    },
                                    {
                                        "text": "60% of the median expressed in daily income/consumption is (0.6*1252)/30=$25.04 per day",
                                        "spanType": "span-simple-text"
                                    }
                                ],
                                "parseErrors": []
                            },
                            {
                                "type": "text",
                                "value": [
                                    {
                                        "children": [
                                            {
                                                "text": "France\u2019s",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-bold"
                                    },
                                    {
                                        "text": " median monthly income in 2017 was $1364 according to PovcalNet.",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "spanType": "span-newline"
                                    },
                                    {
                                        "text": "60% of the median expressed in daily income/consumption is (0.6*1364)/30=$27.28 per day",
                                        "spanType": "span-simple-text"
                                    }
                                ],
                                "parseErrors": []
                            },
                            {
                                "type": "text",
                                "value": [
                                    {
                                        "children": [
                                            {
                                                "text": "Switzerland\u2019s",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-bold"
                                    },
                                    {
                                        "text": " median monthly income in 2017 was $1791 according to PovcalNet.",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "spanType": "span-newline"
                                    },
                                    {
                                        "text": "60% of the median expressed in daily income/consumption is (0.6*1791)/30=$35.82 per day",
                                        "spanType": "span-simple-text"
                                    }
                                ],
                                "parseErrors": []
                            },
                            {
                                "type": "text",
                                "value": [
                                    {
                                        "children": [
                                            {
                                                "text": "Spain\u2019s",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-bold"
                                    },
                                    {
                                        "text": " median monthly income in 2017 was $982 according to PovcalNet.",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "spanType": "span-newline"
                                    },
                                    {
                                        "text": "60% of the median expressed in daily income/consumption is (0.6*982)/30=$19.64 per day",
                                        "spanType": "span-simple-text"
                                    }
                                ],
                                "parseErrors": []
                            },
                            {
                                "type": "text",
                                "value": [
                                    {
                                        "children": [
                                            {
                                                "text": "Iceland\u2019s",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-bold"
                                    },
                                    {
                                        "text": " median monthly income in 2017 was $1582 according to PovcalNet.",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "spanType": "span-newline"
                                    },
                                    {
                                        "text": "60% of the median expressed in daily income/consumption is (0.6*1582)/30=$31.64 per day",
                                        "spanType": "span-simple-text"
                                    }
                                ],
                                "parseErrors": []
                            },
                            {
                                "type": "text",
                                "value": [
                                    {
                                        "children": [
                                            {
                                                "text": "Luxembourg\u2019s",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-bold"
                                    },
                                    {
                                        "text": " median monthly income in 2017 was $2193 according to PovcalNet.",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "spanType": "span-newline"
                                    },
                                    {
                                        "text": "60% of the median expressed in daily income/consumption is (0.6*2193)/30=$43.86 per day",
                                        "spanType": "span-simple-text"
                                    }
                                ],
                                "parseErrors": []
                            },
                            {
                                "type": "text",
                                "value": [
                                    {
                                        "children": [
                                            {
                                                "text": "Netherland\u2019s",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-bold"
                                    },
                                    {
                                        "text": " median monthly income in 2017 was $1430 according to PovcalNet.",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "spanType": "span-newline"
                                    },
                                    {
                                        "text": "60% of the median expressed in daily income/consumption is (0.6*1430)/30=$28.6 per day",
                                        "spanType": "span-simple-text"
                                    }
                                ],
                                "parseErrors": []
                            },
                            {
                                "type": "text",
                                "value": [
                                    {
                                        "children": [
                                            {
                                                "text": "Belgium\u2019s",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-bold"
                                    },
                                    {
                                        "text": " median monthly income in 2017 was $1346 according to PovcalNet.",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "spanType": "span-newline"
                                    },
                                    {
                                        "text": "60% of the median expressed in daily income/consumption is (0.6*1346)/30=$26.92 per day",
                                        "spanType": "span-simple-text"
                                    }
                                ],
                                "parseErrors": []
                            },
                            {
                                "type": "text",
                                "value": [
                                    {
                                        "children": [
                                            {
                                                "text": "Denmark\u2019s",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-bold"
                                    },
                                    {
                                        "text": " median monthly income in 2017 was $1453 according to PovcalNet.",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "spanType": "span-newline"
                                    },
                                    {
                                        "text": "60% of the median expressed in daily income/consumption is (0.6*1453)/30=$29.06 per day",
                                        "spanType": "span-simple-text"
                                    }
                                ],
                                "parseErrors": []
                            },
                            {
                                "type": "text",
                                "value": [
                                    {
                                        "children": [
                                            {
                                                "text": "Ireland\u2019s",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-bold"
                                    },
                                    {
                                        "text": " median monthly income in 2017 was $1234 according to PovcalNet.",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "spanType": "span-newline"
                                    },
                                    {
                                        "text": "60% of the median expressed in daily income/consumption is (0.6*1234)/30=$24.68 per day",
                                        "spanType": "span-simple-text"
                                    }
                                ],
                                "parseErrors": []
                            },
                            {
                                "type": "text",
                                "value": [
                                    {
                                        "children": [
                                            {
                                                "text": "Finland\u2019s",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-bold"
                                    },
                                    {
                                        "text": " median monthly income in 2017 was $1361 according to PovcalNet.",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "spanType": "span-newline"
                                    },
                                    {
                                        "text": "60% of the median expressed in daily income/consumption is (0.6*1361)/30=$27.22 per day{/ref}",
                                        "spanType": "span-simple-text"
                                    }
                                ],
                                "parseErrors": []
                            },
                            {
                                "type": "text",
                                "value": [
                                    {
                                        "text": "As high-income European countries I\u2019m referring to those European countries, which ",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "url": "http://appsso.eurostat.ec.europa.eu/nui/submitViewTableAction.do",
                                        "children": [
                                            {
                                                "text": "according to the Eurostat statistics",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-link"
                                    },
                                    {
                                        "text": " had a higher income in 2019 than the European average. These are the following countries: Finland, Netherlands, Belgium, Sweden, Germany, France, Iceland, Switzerland, Norway, Luxembourg, Denmark, Austria, Ireland, and the UK.",
                                        "spanType": "span-simple-text"
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                                "type": "text",
                                "value": [
                                    {
                                        "text": "These are the poverty lines for daily income in a number of high-income European countries (based on 60% of the median incomes from PovcalNet):",
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                                            {
                                                "text": "Sweden: $29.40 per da",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "parseErrors": []
                                    },
                                    {
                                        "type": "text",
                                        "value": [
                                            {
                                                "text": "Norway: $37.80 per day",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "parseErrors": []
                                    },
                                    {
                                        "type": "text",
                                        "value": [
                                            {
                                                "text": "Austria: $31 per day",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "parseErrors": []
                                    },
                                    {
                                        "type": "text",
                                        "value": [
                                            {
                                                "text": "UK: $25.04 per day",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "parseErrors": []
                                    },
                                    {
                                        "type": "text",
                                        "value": [
                                            {
                                                "text": "Switzerland: $35.82 per day",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "parseErrors": []
                                    },
                                    {
                                        "type": "text",
                                        "value": [
                                            {
                                                "text": "Germany: $28.35 per day",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "parseErrors": []
                                    },
                                    {
                                        "type": "text",
                                        "value": [
                                            {
                                                "text": "France: $27.28 per day",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "parseErrors": []
                                    },
                                    {
                                        "type": "text",
                                        "value": [
                                            {
                                                "text": "Luxembourg: $43.86 per day",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "parseErrors": []
                                    },
                                    {
                                        "type": "text",
                                        "value": [
                                            {
                                                "text": "Finland: $27.22 per day",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "parseErrors": []
                                    },
                                    {
                                        "type": "text",
                                        "value": [
                                            {
                                                "text": "Iceland: $31.64 per day",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "parseErrors": []
                                    },
                                    {
                                        "type": "text",
                                        "value": [
                                            {
                                                "text": "Ireland: $24.68 per day",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "parseErrors": []
                                    },
                                    {
                                        "type": "text",
                                        "value": [
                                            {
                                                "text": "Netherlands: $28.6 per day",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "parseErrors": []
                                    },
                                    {
                                        "type": "text",
                                        "value": [
                                            {
                                                "text": "Belgium: $26.92 per day",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "parseErrors": []
                                    },
                                    {
                                        "type": "text",
                                        "value": [
                                            {
                                                "text": "Denmark: $29.06 per day",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "parseErrors": []
                                    }
                                ],
                                "parseErrors": []
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                            {
                                "type": "text",
                                "value": [
                                    {
                                        "text": "The span of poverty lines in these countries ranges from $25 (for the UK and Ireland) up to $38 (for Norway); in the small country of Luxembourg the poverty line is higher.",
                                        "spanType": "span-simple-text"
                                    }
                                ],
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                            },
                            {
                                "text": [
                                    {
                                        "text": "The poverty line in the US",
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                                    }
                                ],
                                "type": "heading",
                                "level": 4,
                                "parseErrors": []
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                                "type": "text",
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                                    {
                                        "text": "Unlike European countries, the US does not set the poverty line in a relative way. Instead the US poverty line dates back to the work of Mollie Orshansky, an economist working for the Social Security Administration in the early 1960s. Since then it has been of course revised for price changes, but otherwise it remained unchanged.",
                                        "spanType": "span-simple-text"
                                    }
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                            {
                                "type": "text",
                                "value": [
                                    {
                                        "text": "The US poverty line is ",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "url": "https://en.wikipedia.org/wiki/Poverty_in_the_United_States#Measuring_poverty",
                                        "children": [
                                            {
                                                "text": "very often",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-link"
                                    },
                                    {
                                        "text": " criticised as being too low. Those that criticize the US poverty line in that way therefore suggest that the severity of poverty in the US is understated in the statistics.\u00a0",
                                        "spanType": "span-simple-text"
                                    }
                                ],
                                "parseErrors": []
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                                "type": "text",
                                "value": [
                                    {
                                        "text": "How high is the poverty line in the US? In 2020 the poverty threshold for a single person under 65 was $30, measured in 2011 international-$ per day to be comparable with the other figures in this article.{ref}According to the \"",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "url": "https://www.govinfo.gov/content/pkg/FR-2020-01-17/pdf/2020-00858.pdf",
                                        "children": [
                                            {
                                                "text": "Annual Update of the HHS Poverty Guidelines",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-link"
                                    },
                                    {
                                        "text": "\" the poverty line in the US is an annual income of US$12,760. That is in 2020 price. According to the ",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "url": "https://data.worldbank.org/indicator/FP.CPI.TOTL?locations=US",
                                        "children": [
                                            {
                                                "text": "World Bank",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-link"
                                    },
                                    {
                                        "text": ", the Consumer Price Index in the US in 2020 was 118.7 and in 2011 it was 103.2. So prices between the years rose by 118.7/103.2 - 1 =\u00a0",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "children": [
                                            {
                                                "text": "15%",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-bold"
                                    },
                                    {
                                        "text": ".",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "spanType": "span-newline"
                                    },
                                    {
                                        "spanType": "span-newline"
                                    },
                                    {
                                        "text": "Deflating the poverty line in to 2011 prices we get 12,760/1.15 = $11,096. And expressing that as a per day figure that is $11,096/365 = $30.40{/ref}",
                                        "spanType": "span-simple-text"
                                    }
                                ],
                                "parseErrors": []
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                            {
                                "type": "text",
                                "value": [
                                    {
                                        "text": "Now the problem with comparing this poverty line with the global statistics is again that the income concept is different. The US crucially relies on an equivalence scale for adjusting the income cutoff depending on the household size.",
                                        "spanType": "span-simple-text"
                                    }
                                ],
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                                "type": "text",
                                "value": [
                                    {
                                        "text": "One alternative is to use the World Bank's poverty and inequality data \u2013 which expresses incomes in per capita terms \u2013 to find a 'harmonized' poverty line: the line that yields the same poverty rate in the World Bank data as the official poverty rate.{ref}This method was introduced by Jolliffe and Prydz (2016) and used by Jolliffe et al. (2022) as an ingredient of their method for setting the World Bank's international poverty lines.",
                                        "spanType": "span-simple-text"
                                    }
                                ],
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                            {
                                "type": "text",
                                "value": [
                                    {
                                        "text": "Jolliffe, Dean, and Espen Beer Prydz. 2016. ",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "children": [
                                            {
                                                "text": "Estimating International Poverty Lines from Comparable National Thresholds",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-italic"
                                    },
                                    {
                                        "text": ". Washington, DC.",
                                        "spanType": "span-simple-text"
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                                ],
                                "parseErrors": []
                            },
                            {
                                "type": "text",
                                "value": [
                                    {
                                        "children": [
                                            {
                                                "text": "Jolliffe, Dean Mitchell, Daniel Gerszon Mahler, Christoph Lakner, Aziz Atamanov, and Samuel Kofi Tetteh Baah. 2022. Assessing the Impact of the 2017 PPPs on the International Poverty Line and Global Poverty. The World Bank. Available to read at the\u00a0",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-italic"
                                    },
                                    {
                                        "url": "https://documents1.worldbank.org/curated/en/353811645450974574/pdf/Assessing-the-Impact-of-the-2017-PPPs-on-the-International-Poverty-Line-and-Global-Poverty.pdf",
                                        "children": [
                                            {
                                                "children": [
                                                    {
                                                        "text": "World Bank here",
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                                                    }
                                                ],
                                                "spanType": "span-italic"
                                            }
                                        ],
                                        "spanType": "span-link"
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                                    {
                                        "children": [
                                            {
                                                "text": ".",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-italic"
                                    },
                                    {
                                        "text": "{/ref}",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "spanType": "span-newline"
                                    },
                                    {
                                        "spanType": "span-newline"
                                    },
                                    {
                                        "text": "The official poverty rate in the US in 2019 was\u00a0",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "children": [
                                            {
                                                "text": "10.5%",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-bold"
                                    },
                                    {
                                        "text": ",\u00a0",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "url": "https://www.census.gov/content/dam/Census/library/publications/2020/demo/p60-270.pdf",
                                        "children": [
                                            {
                                                "text": "as reported",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-link"
                                    },
                                    {
                                        "text": "\u00a0by the U.S. Census Bureau. The poverty line that yields this rate in the World Bank's data is $22.53 (measured in 2011 international-$).{ref}You can see our detailed calculations in this ",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "url": "https://colab.research.google.com/drive/1IzHT9NikKHrY9uGWKzDzaZ4VVpdc9m5E#scrollTo=qF_GSK2FX7tU&line=1&uniqifier=1",
                                        "children": [
                                            {
                                                "text": "Google Colabs document",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-link"
                                    },
                                    {
                                        "text": ".{/ref}",
                                        "spanType": "span-simple-text"
                                    }
                                ],
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                            {
                                "type": "text",
                                "value": [
                                    {
                                        "text": "An alternative is to apply the same concept that the Europeans are using for their poverty line determination. If the US would use the 60% of median income definition of poverty their poverty line would be int.-$32.8 per day{ref}The ",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "children": [
                                            {
                                                "text": "US",
                                                "spanType": "span-simple-text"
                                            }
                                        ],
                                        "spanType": "span-bold"
                                    },
                                    {
                                        "text": " median monthly income in 2017 was $1640 according to PovcalNet.",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "spanType": "span-newline"
                                    },
                                    {
                                        "text": "60% of the median expressed in daily income/consumption is (0.6*1640)/30=$32.8 per day{/ref} Very close to the one-person poverty line based on Orshansky\u2019s work.",
                                        "spanType": "span-simple-text"
                                    }
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                                "type": "text",
                                "value": [
                                    {
                                        "text": "A somewhat comparable poverty line based on these three approaches therefore falls into the range of around $23 to $35 per day. Within the range of poverty lines in European countries.",
                                        "spanType": "span-simple-text"
                                    }
                                ],
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                            {
                                "text": [
                                    {
                                        "text": "Survey results \u2013 Below which income do you consider a person poor?\u00a0",
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                                ],
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                                "level": 4,
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                                        "text": "The UN and Pritchett rely on the existing poverty lines in low-income and high-income countries respectively to derive their poverty lines. We can follow other approaches too.\u00a0",
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                                    }
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                                "type": "text",
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                                    {
                                        "text": "An obvious one is to ask what people out there believe: Who is considered poor in a high-income country by people in high-income countries?",
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                                    }
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                                    {
                                        "text": "For the regular poverty report of the German government, a survey is conducted that asks Germans below which income level they consider someone as poor. The latest data is from the year 2015.{ref}These reports are called \u2018Armuts- und Reichtumsbericht der Bundesregierung\u2019 online at ",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "url": "https://www.armuts-und-reichtumsbericht.de/DE/Startseite/start.html",
                                        "children": [
                                            {
                                                "text": "armuts-und-reichtumsbericht.de",
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                                "type": "text",
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                                    {
                                        "text": "The latest survey was produced by aproxima and published in 2016. It is published as ",
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                                    },
                                    {
                                        "url": "https://www.armuts-und-reichtumsbericht.de/SharedDocs/Downloads/Service/Studien/forschungsprojekt-wahrnehmung-armut-reichtum.pdf?__blob=publicationFile&v=5",
                                        "children": [
                                            {
                                                "text": "Wahrnehmung von Armut und Reichtum in Deutschland, Ergebnisse der repr\u00e4sentativen Bev\u00f6lkerungsbefragung \u201eARB-Survey 2015\u201c",
                                                "spanType": "span-simple-text"
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                                        "spanType": "span-link"
                                    },
                                    {
                                        "text": ", Berlin: Bundesministerium f\u00fcr Arbeit und Soziales (Hrsg.).{/ref}",
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                                        "text": "The mean answer given by the German population for a cutoff below which a person is considered poor was 947\u20ac per month. In international dollars per day this corresponds to an income of ",
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                                    },
                                    {
                                        "children": [
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                                                "text": "int.-$37.58",
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                                    {
                                        "text": ".{ref}The 2011 PPP conversion factor for private consumption (LCU per international $) for Germany in 2015 is 0.84 according to the World Bank ",
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                                    },
                                    {
                                        "url": "https://ourworldindata.org/grapher/ppp-conversion-factor-for-private-consumption",
                                        "children": [
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                                                "text": "here",
                                                "spanType": "span-simple-text"
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                                        "text": ".",
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                                        "text": "This means the perceived poverty threshold corresponds to \u20ac947/0.84=int.-$1,127.38 per month or int.-$37.58.{/ref}",
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                            {
                                "text": [
                                    {
                                        "text": "Universal Basic Income",
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                                "type": "heading",
                                "level": 4,
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                                        "url": "https://en.wikipedia.org/wiki/Universal_basic_income",
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                                                "text": "Universal Basic Income",
                                                "spanType": "span-simple-text"
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                                        "spanType": "span-link"
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                                    {
                                        "text": " (UBI) is a political idea that is becoming rapidly more popular.",
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                                        "text": "A large UBI study in Germany \u2013 called ",
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                                    },
                                    {
                                        "url": "https://de.wikipedia.org/wiki/Mein_Grundeinkommen",
                                        "children": [
                                            {
                                                "text": "\u2018Mein Grundeinkommen\u2019",
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                                    {
                                        "text": " \u2013 sets this income at \u20ac1200. In international-$ this corresponds to an income of ",
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                                    },
                                    {
                                        "children": [
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                                                "text": "int.-$48.19 per day",
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                                    {
                                        "text": ".{ref}The 2011 PPP conversion factor for private consumption (LCU per international $) for Germany in 2017 is 0.83 according to the World Bank ",
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                                    {
                                        "url": "https://ourworldindata.org/grapher/ppp-conversion-factor-for-private-consumption",
                                        "children": [
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                                                "text": "here",
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                                        "text": ".",
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                                    {
                                        "text": "This means the UBI corresponds to 1200/0.83=int.-$1,445.78 per month or int.-$48.19.{/ref}",
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                                "text": [
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                                        "text": "Social security in Germany",
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                                        "text": "Germany pays basic social care for its citizens. This social security payment is referred to as \u2018Hartz-IV\u2019.\u00a0",
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                                        "text": "How much a person receives depends on the particular circumstances of the individual, but we can look at the average payment. In 2018 a single person ",
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                                    },
                                    {
                                        "url": "https://www.sueddeutsche.de/wirtschaft/wie-viel-geld-bekommt-ein-hartz-iv-empfaenger-1.3905657",
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                                                "text": "received on average",
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                                        "text": " 783 Euro per month. That corresponds to ",
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                                                "text": "int.-$30.78 per day",
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                                        "text": ".{ref}That\u2019s \u20ac783/0.834=int.-$938.85 per month. Or int.-$938.85/30.5=int.-",
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                                                "text": "$30.78 per day.",
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                                        "text": "{/ref}",
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                                "text": [
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                                        "text": "The Roslings\u2019 suggest a cutoff of $32 per day",
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                                "type": "text",
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                                    {
                                        "text": "Anna Rosling-R\u00f6nnlund, Ola Rosling and Hans Rosling challenged the old dichotomy between developed and developing countries in their bestselling book \u2018",
                                        "spanType": "span-simple-text"
                                    },
                                    {
                                        "url": "https://en.wikipedia.org/wiki/Factfulness:_Ten_Reasons_We%27re_Wrong_About_the_World_%E2%80%93_and_Why_Things_Are_Better_Than_You_Think",
                                        "children": [
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                                                "text": "Factfulness",
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                                        "text": "\u2019. They argue that the old dichotomy corresponds to a view of the world that was accurate half a century ago when a few countries were relatively well-off, but most countries were living in very ",
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                                    },
                                    {
                                        "url": "https://ourworldindata.org/life-expectancy-globally",
                                        "children": [
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                                                "text": "poor conditions",
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                                    {
                                        "text": ".Today, they say, people around the world live on a large spectrum. To reflect this spectrum they proposed 4 income levels.",
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                                        "text": "The first cut-off corresponds to the international poverty line (rounded to int.-$2 per day). The next income cutoff they set at $8 per day, the following one at $16 and the highest one at ",
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                                                "text": "int.-$32 per day",
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                                        "text": ".",
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                                "text": [
                                    {
                                        "text": "Kahneman's and Deaton's study of income and emotional well-being",
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                                        "text": "Nobel laureates Daniel Kahneman and Angus Deaton published a famous study on the link between life satisfaction and income.{ref}Kahneman and Deaton (2010) \u2013 High income improves evaluation of life but not emotional well-being. Published in the Proceedings of the National Academy of Sciences. https://www.pnas.org/content/107/38/16489 {/ref}",
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                                        "text": "The authors find that higher incomes go together with higher self-reported life satisfaction, but for people\u2019s self-reported emotional well-being this is only true up to a certain point: the study finds that above $75,000 further increases in income do not correspond with improvements in people\u2019s emotional well-being \u2013 a finding that is often cited to argue that additional economic growth does not improve people\u2019s lives in high-income countries.{ref}Kahneman and Deaton analyze two different concepts self-reported satisfaction:",
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                                        "text": "\u2013 Emotional well-being refers to the \u201cemotional quality of an individual's everyday experience \u2013 the frequency and intensity of experiences of joy, stress, sadness, anger, and affection that make one's life pleasant or unpleasant.\u201d",
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                                        "text": "\u2013 Life evaluation refers to the thoughts that people have about their life when they think about it.\u00a0",
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                                        "text": "The authors find that higher incomes go together with higher self-reported life satisfaction in both metrics. What they emphasize is that at very high incomes this is not true anymore \u2013 emotional well-being does not increase over around $75,000. Evaluation of life however continues to increase even at incomes over $75,000.{/ref}\u00a0",
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                                        "text": "Again, the income concept is not the same as that in PovcalNet, and so comparisons with the global data are not directly possible. But we can ask what the daily income at which emotional well-being supposedly levels off corresponds to: $75,000 per year are ",
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                                        "children": [
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                                                "text": "int.-$205 per day",
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                                        "text": ".",
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                                        "text": "It is certainly worth considering whether an income up to which emotional well-being increases could be taken as the basis for a definition of poverty. A US company reacted to the research finding of Kahneman and Deaton by using it to set the minimum wage in their company: everyone in that company ",
                                        "spanType": "span-simple-text"
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                                    {
                                        "url": "https://www.nytimes.com/2015/04/14/business/owner-of-gravity-payments-a-credit-card-processor-is-setting-a-new-minimum-wage-70000-a-year.html",
                                        "children": [
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                                                "text": "gets paid",
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                                        "text": " that salary.\u00a0",
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                                        "text": "For the discussion of global poverty however it might be considered as an even higher poverty line, but for any practical purpose in the world today the income cutoff would be too high as only a very small fraction of the world lives on more than $75,000 per year.",
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                "text": [
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                        "text": "How many people in the world live in poverty?",
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                        "text": "We have seen that 10% of the world live in extreme poverty",
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                                "text": " ",
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                        "text": "as defined by the UN. How large is the share of the world that lives in moderate poverty?",
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                        "text": "The latest global data tells us that ",
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                                "text": "85% of the world population live on less than $30 per day",
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                        "text": ". These are 6.5 billion people.",
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                        "text": "Relying on a higher poverty line of $45 per day you find that 92% live in poverty, and using a lower poverty line of $20 per day you find that 78% live in poverty. No matter which of these poverty lines you might want to choose, at least three-quarters of the world live in poverty.",
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                        "text": "All of this data refers to pre-pandemic times. The global recession has certainly increased the share below any of these cutoff points. As soon as the new data is available you will find it on Our World in Data.",
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                        "text": "The chart shows where in the world people are poor. If we would only rely on the UN\u2019s extreme poverty line we would conclude that barely anyone lives in poverty in high-income countries. Relying on higher poverty lines, this data here shows that even in high-income countries there is a significant share of the population that lives in poverty. No country, not even the high-income countries, has eliminated poverty. There are no \u2018developed countries\u2019 \u2014 there is work to do for all.\u00a0",
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                        "text": "But just as clear from this data is the fact that in many world regions the large majority of people are very poor. In Sub-Saharan Africa about 40% of the population lives on less than $1.90 per day as the chart shows. In all regions outside of high-income countries more than 85% of all people live in moderate poverty.",
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                "alt": "",
                "size": "wide",
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                        "text": "Countries in which the majority do not live in poverty have only left poverty behind in recent history",
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                        "text": "Two centuries ago the global income distribution was very different. Back then ",
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                        "url": "https://ourworldindata.org/extreme-history-methods",
                        "children": [
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                                "text": "almost everyone in the world",
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                    {
                        "text": " was living in extreme poverty. Those places in which few people live in moderate poverty today only left poverty behind in the very recent past.\u00a0",
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                        "text": "Denmark is one of those places. The reason why the majority of people in Denmark is not living in poverty is that the economic inequality is low and the average income high.",
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                        "text": "The fact that the inequality is low you can see on the map. It shows an inequality measure called the Gini coefficient (explained ",
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                    {
                        "url": "https://ourworldindata.org/income-inequality#the-gini-coefficient",
                        "children": [
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                                "text": "here",
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                        "text": ") which makes clear that Denmark is among the least unequal countries in the world.",
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                        "text": "The reason that the average income in Denmark is high is due to the fact that average incomes have increased steadily for the last two centuries; this long-term development is called economic growth. As the historical data shows the average incomes in Denmark are today more than 20-times higher than in the past.",
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                        "text": "You can add any other country to this chart. By adding one of those countries in which the majority lives in poverty \u2013 like Ethiopia \u2013\u00a0you see just how large the differences in average incomes are.",
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                        "text": "GDP per capita is by far the most widely used measure of average income and is yet another income concept from the two I mentioned so far.{ref}The two previous ones were income/expenditure as determined in household surveys and equivalized disposable income after social transfers.{/ref} It is a more comprehensive measure of incomes and crucially takes into account government expenditures. For these and other reasons (mentioned in the long footnote) you will find that dividing GDP per capita by 365 days will let you arrive at a higher value than the income that is determined in household income surveys.{ref}There is generally a gap between GDP per capita and the averages found in both income surveys and expenditure surveys. But the reasons for the gap are different depending on which we are comparing.",
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                        "text": "GDP includes many items that are typically not measured in household income surveys, such as an imputed rental value of owner-occupied housing, the retained earnings of firms and taxes on production such as VAT. The gap is even larger when GDP is compared to surveys of household consumption \u2013 the latter concept excluding both investment expenditure and government expenditure on public services such as education and health.",
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                        "text": "Other aggregates beyond GDP are available in the national accounts that are more comparable to the concepts applied in household income and consumption surveys. However, important differences still remain even here. For example, in addition to imputed rents, imputations for the value of certain financial services, such as bank accounts, are included in aggregate household consumption measured in national accounts, with no equivalent for these items recorded in the survey data. In many countries the consumption of \u2018nonprofit institutions serving households\u2019 (NPISH) is included as part of household consumption within national accounts, but not within household surveys.",
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                        "text": "On top of these conceptual differences are a range of mismeasurement problems that affect both sets of data. On this topic see Deaton (2005), and Pinkovskiy and Sala-i-Martin (2016).",
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                        "text": "Deaton, Angus. 2005. \u201cMeasuring Poverty in a Growing World (or Measuring Growth in a Poor World).\u201d The Review of Economics and Statistics 87 (1): 1\u20131. ",
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                        "text": "Billions of people live in countries where average incomes are very low",
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                        "text": "The income of every person depends on two factors, the average income in the country they live in and the position that particular person has in that country\u2019s income distribution. This chart here shows the average income in countries around the world. The height of each bar represents the average daily income in a country, the width of each country corresponds to the country\u2019s population size. I have ordered the countries by income: from the poorest country on the very left (South Sudan where the average person lives on $1.12 per day) to the richest country on the very right (Luxembourg with an average of $86 per day).",
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                        "text": "After two centuries of economic growth the average income in Denmark is now $57 per day today. You find the country far to the right in this chart, which tells you that only very few countries in the world have such high average incomes. The fact that the average income is far higher than the poverty line tells us that the existing poverty in Denmark discussed at the beginning of this post is to a large extent the consequence of inequality.",
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                        "text": "What this chart makes very clear is how low the average incomes in many countries in the world are. The huge majority of the world live in countries where the ",
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                        "text": "income is much lower than the poverty threshold in rich countries. 82% of the world population live in countries where the mean income is less than $20 per day. ",
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                        "text": "And where incomes are low, living standards generally ",
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                                "text": "are poor",
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                        "text": ". As the last chart below shows, a child that is born into a poorer country must not just expect to live on a very low income, but also faces a much higher risk of not staying alive at all.",
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                        "text": "As I have ",
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                                "text": "said before",
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                        "text": ", people are not poor because of who they are, but because of ",
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                        "text": " they are. This is why economic growth is so important to leave poverty behind. By far the most important difference between those people who are not living in poverty and those who do is the average income in the country that they live in \u2013 this single factor matters more for a person\u2019s income ",
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                        "url": "https://ourworldindata.org/poverty-growth-needed",
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                                "text": "than all other factors taken together",
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                        "text": ". The increase of average income in a country is called economic growth and for global poverty to decrease substantially economic growth for the poorest billions of people is necessary.",
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                        "text": "\u2192 See my previous article: ",
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                                "text": "The economies that are home to the poorest billions of people need to grow if we want global poverty to decline",
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                        "text": "The future of global poverty",
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                        "text": " poverty definition. After two centuries of ",
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                                "text": "unprecedented progress",
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                        "text": " against the very worst poverty it is still the case that every tenth person lives on less than ",
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                                "text": "$1.90 per day",
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                        "text": "As the world has not even ended extreme poverty it is therefore right to focus much of our attention on this very low poverty cutoff; ending extreme poverty surely is a global goal of great importance.\u00a0",
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                        "text": "Yet at the same time we should consider what our aspirations for the future are. In the past our ancestors ",
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                                "text": "did not know",
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                        "text": " that it was possible for a society to leave widespread poverty behind. Today we are in a different situation. We know from the reality of today\u2019s rich countries that widespread poverty is not inevitable. Because we know that poverty relative to such higher cutoffs is not inevitable I believe it would be wrong to limit our ambitions to eradicating poverty based on the definition of poverty in the very poorest countries.",
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                        "text": "What I take away from this discussion are three insights: First, we have seen from countries like Denmark that it is ",
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                        "text": " to reduce poverty for an entire population relative to a poverty line of about $30 per day. Second, we have seen that these countries were extremely poor in the past and were able to reduce poverty over the course of the last few generations. And third we have seen that the huge majority of the world is still living in great poverty, by any standard. What this suggests to me is that the history of global poverty reduction has only just begun.",
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                        "children": [
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                                "text": "Continue reading Our World in Data:",
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                            }
                        ],
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                    },
                    {
                        "text": " My colleague Hannah Ritchie has just published a series of posts on the drivers of deforestation and how to bring humanity's long history of deforestation to an end. You find her work ",
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                    {
                        "url": "https://ourworldindata.org/blog",
                        "children": [
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                                "text": "here",
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                        "children": [
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                                "text": "Acknowledgement:",
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                        "text": " I would like to thank Joe Hasell for his thoughtful comments on draft versions of this article.",
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        "type": "article",
        "title": "Global poverty in an unequal world: Who is considered poor in a rich country? And what does this mean for our understanding of global poverty?",
        "authors": [
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        "excerpt": "What does global poverty look like if we rely on the notions of poverty in countries like Denmark, the US, or Germany? And how should this perspective inform our aspirations for the future of global poverty?",
        "dateline": "March 5, 2021",
        "subtitle": "What does global poverty look like if we rely on the notions of poverty in countries like Denmark, the US, or Germany? And how should this perspective inform our aspirations for the future of global poverty?",
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2021-03-05 11:02:06

2024-02-16 14:22:51

1-kIEUSceYmhNRmjOjQ0zc1MgXRX4jd4jjqhPypanPVc

[
    "Max Roser"
]

What does global poverty look like if we rely on the notions of poverty in countries like Denmark, the US, or Germany? And how should this perspective inform our aspirations for the future of global poverty?

2021-03-05 11:20:42

2023-04-06 17:29:55

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{}

Our World in Data presents the data and research to make progress against the world’s largest problems. This post draws on data and research discussed in our entries on **[Income Inequality](https://ourworldindata.org/income-inequality)**, **[Poverty](https://ourworldindata.org/poverty)** and **[Economic Growth](https://ourworldindata.org/economic-growth)**. **_Abstract:_**_ The extremely low poverty line that the UN relies on has the advantage that it draws the attention to the very poorest people in the world. It has the disadvantage that it ignores what is happening to the incomes of the 90% of the world population who live above the extreme poverty threshold. The global poverty line that the UN relies on is based on the national poverty lines in the world’s poorest countries. In this article I ask what global poverty looks like if we rely on the notions of poverty that are common in the world’s rich countries – like Denmark, the US, or Germany. Based on the evidence I ask what our aspirations for the future of global poverty reduction might be._ ### The World Bank has updated its poverty and inequality data The data in this article uses a previous release of the World Bank's poverty and inequality data in which incomes are expressed in 2011 international-$. The World Bank has since updated its methods, and now measures incomes in 2017 international-$. As part of this change, the International Poverty Line used to measure extreme poverty has also been updated: from $1.90 (in 2011 prices) to $2.15 (in 2017 prices). This has had little effect on our overall understanding of poverty and inequality around the world. But because of the change of units, many of the figures mentioned in this article will differ from the latest World Bank figures. ### Read more about the World Bank's updated methodology https://ourworldindata.org/from-1-90-to-2-15-a-day-the-updated-international-poverty-line ### Explore the latest World Bank data on poverty and inequality https://ourworldindata.org/explorers/poverty-explorer In every country of the world there are people living in poverty. Even in the world’s richest countries the poorest people often live in poor housing and struggle to afford basic goods and services like heating, transport, and healthy food for themselves and their family. Those who are in monetary poverty also have much poorer living conditions more broadly. Even in a rich and relatively equal country like Denmark middle-aged men who are among the poorest 20% of the population die on average _9 years_ earlier than those among the richest 20%.{ref}Brønnum-Hansen H, Foverskov E, Andersen I. Income inequality in life expectancy and disability-free life expectancy in Denmark. J Epidemiol Community Health 2021;75:145-150. [https://jech.bmj.com/content/75/2/145](https://jech.bmj.com/content/75/2/145) {/ref} In Denmark a person who lives on less than $30 per day is considered poor, and it is the declared goal of the country to reduce poverty relative to this threshold.{ref} For the moment it is important to note that this $30 per day poverty line is defined in international-$ and therefore comparable with the ‘International Poverty Line’ discussed in the following section. Much more details about how to compare incomes across countries, the income concept here, and the definition of this poverty line follows further below in this text.{/ref} Countries that are much poorer than Denmark also have the goal to reduce poverty. The United Nations declared the objective of [ending ‘extreme poverty’](https://sdg-tracker.org/) to be the number 1 goal of the global _Sustainable Development Goals_. [According](https://www.un.org/en/global-issues/ending-poverty) to the UN a person is considered to live in extreme poverty when he or she is living on less than $1.90 per day, this is called the _International Poverty Line_. According to the latest global statistics almost _[one in ten](https://ourworldindata.org/poverty?insight=the-pandemic-pushed-millions-into-extreme-poverty#key-insights-on-poverty)_ people live in extreme poverty globally. If we know that poverty is a large problem even in high income countries like Denmark where the poverty line is set at around $30 a day, why should we use an International Poverty Line that is so extremely low to measure poverty globally? It is the reality of our extremely unequal world – in which every tenth person lives in extreme poverty – that makes such an extremely low poverty line necessary. Without having an _extremely_ low poverty line we would not be aware of the fact that a large share of the world lives in such extreme poverty. The UN’s global poverty line is valuable because it draws attention to the reality of extreme poverty in our world. In a world where the majority still lives on very low incomes it would be wrong if the UN decided to measure global poverty solely by a poverty line as high as the poverty line of Denmark. It would mean that the global statistics gloss over the extremely large and important income differences among the poorest billions in the world. It would mean that the difference between those who live on only $1 per day and those who have an income that is more than 20-times higher would be entirely disregarded. They would all be considered poor, and the reality that some of them are much poorer than others would be hidden. Slightly higher global poverty lines – such as the poverty line of $3.10 per day that Kate Raworth relies on in her ‘Doughnut’ framework, or the poverty line of $7.40 per day that anthropologist Jason Hickel uses in his work, or Bob Allen’s absolute poverty line based on minimal nutritional requirements – all have the same value.{ref}Kate Raworth (2017) – A Doughnut for the Anthropocene: humanity's compass in the 21st century. In The Lancet Planetary Health. Volume 1, Issue 2, E48-E49, May 01, 2017. Open Access DOI: [https://doi.org/10.1016/S2542-5196(17)30028-1](https://doi.org/10.1016/S2542-5196(17)30028-1) You find the metrics that the Doughnut relies on [in the Appendix here](https://www.thelancet.com/cms/10.1016/S2542-5196(17)30028-1/attachment/2d58fdae-741c-4016-84cd-2fc0b1e94f49/mmc1.pdf). Jason Hickel – [Could you live on $1.90 a day? That's the international poverty line](https://www.theguardian.com/global-development-professionals-network/2015/nov/01/global-poverty-is-worse-than-you-think-could-you-live-on-190-a-day) and [here](https://twitter.com/jasonhickel/status/1012339440113594368). Allen, Robert C.(201). – _Absolute Poverty: When Necessity Displaces Desire_. American Economic Review, 107 (12): 3690-3721.DOI: 10.1257/aer.20161080{/ref} These low poverty lines allow us to understand the material living conditions of the poorest people in the world and have been successful in drawing attention to the terrible depths of poverty experienced by a large share of the world's population. The only way to achieve these goals is to rely on extremely low poverty lines. Indeed, there is an argument for using an even lower poverty line. To understand what is happening to the _very_ poorest in the world, we need to look even lower than $1.90. This is because one of the biggest failures of development is that over the last decades the incomes of [the very poorest](https://ourworldindata.org/poverty?insight=hundreds-of-millions-will-remain-in-extreme-poverty-on-current-trends#key-insights-on-poverty) people have not risen. A big part of the reason for why this issue doesn’t get discussed enough is that the International Poverty Line we rely on is too high to see this fact. ### Why not both? Yet, _only _measuring global poverty relative to such extremely low poverty lines has its own large downside. By focusing on an income threshold that is lower than the incomes of 90% of the global population we are ignoring what is happening to the majority of the world’s population. This matters. The majority of the world do not live in extreme poverty [anymore](https://ourworldindata.org/extreme-history-methods), but billions are nevertheless living in great poverty still. The obvious solution to the problem that the majority of the world is not considered by the International Poverty Line is to use an _additional_ poverty line. This is not a new idea. One poverty researcher who has made the argument for an additional higher global poverty line based on the notions of poverty in rich countries is Lant Pritchett – you find it in his short, yet widely-cited essay _‘The case for a high global poverty line’ _from eight years ago.{ref}Lant Pritchett (2013) – Monitoring progress on poverty: the case for a high global poverty line. Online here [https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/8440.pdf](https://web.archive.org/web/20150608125138/http://www.odi.org:80/sites/odi.org.uk/files/odi-assets/publications-opinion-files/8440.pdf){/ref} ### Defining global poverty lines The definition of poverty differs between countries. Poorer countries set much lower poverty lines than richer countries.{ref}Jolliffe and Prydz (2016){/ref} This means that if we were to simply rely on national poverty definitions for a global measure of poverty we would end up with a measurement framework in which _where_ a person happens to live would determine whether they are poor or not: If we would count as poor those who are defined nationally as poor we would end up counting a person who lives on $20 per day as poor in a rich country, while at the same time counting a person who lives on $2 as not-poor when they happen to live in a very poor country. One way out of this problem is to set global poverty lines based on the national definitions, but to apply them globally. This is how the UN decided to define the International Poverty Line. In order to ground this global poverty line on something more than the views of global poverty researchers, it is based on the existing definitions of poverty adopted in countries around the world at the national level, but to avoid the problem outlined above they apply the national poverty lines globally. As we explain [here](https://ourworldindata.org/extreme-poverty#setting-the-international-poverty-line) in some detail, the $1.90 per day poverty line is set to reflect the national poverty lines adopted in the world’s _poorest_ countries.{ref}Specifically, the line is set at the average national poverty line amongst 15 particular low-income countries. As Jolliffe and Prydz (2016) demonstrate however, this is also the average poverty line found among the poorest quarter of countries with available data, and also among countries falling into the World Bank’s low-income category.{/ref} Applying this poverty line globally means that a person who lives on less than $1.90 per day is considered extremely poor no matter where they live. In recent years the World Bank has applied this same methodology to countries in the middle-income bracket, those countries with a GNI per capita between $1000 and $12,500. Based on the poverty lines in these countries they have set additional global poverty lines at $3.20 and $5.50 per day, which are now [directly](https://data.worldbank.org/indicator/SI.POV.LMIC)[available](https://data.worldbank.org/indicator/SI.POV.UMIC) via the World Bank statistics.{ref}The study on which these thresholds rely is Jolliffe, D., Prydz, E.B. Estimating international poverty lines from comparable national thresholds. J Econ Inequal 14, 185–198 (2016). [https://doi.org/10.1007/s10888-016-9327-5](https://doi.org/10.1007/s10888-016-9327-5) The researchers also report an average high-income country poverty line of $21.70 per day. High income countries in the World Bank framework are however relatively poor compared to the countries that I’m focusing on here – the cutoff for a high-income country according to the World Bank is $12,536, about a quarter of the GNI of Germany and only a fifth of the US. Accordingly, the poverty cutoff is much lower than in those countries. [Here you find the World Bank income classification cutoffs](https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups).{/ref} What I want to do here is to see what a global poverty line would be if we rely on the notion of poverty in rich countries — countries like Denmark, the US, or Germany.{ref}The range of incomes considered ‘middle’ and ‘high’ income countries according to the World Bank are very low relative to rich countries. High-income economies are those with a GNI per capita of $12,536 or more. The range of middle-income economies begins at a GNI per capita of $1,036. In this post I want to rely on countries like Denmark; higher income countries by any standard.{/ref} That is what Pritchett suggested eight years ago: “Since the origin of the [International Poverty Line] was just to adopt as a global lower bound the poverty lines used by the poorest countries, it symmetrically makes sense to say that the global upper bound poverty line is based on the poverty line used in rich countries.” The definition of poverty is certainly not an easy ethical question and thoughtful people disagree about it in ways that have meaningful consequences for our understanding of the world. There are also interesting proposals for hybrid poverty lines that combine absolute and weakly-relative measures; see Ravallion (2019) for a recent proposal.{ref}Martin Ravallion (2019) – [On Measuring Global Poverty](https://www.nber.org/papers/w26211). NBER Working Paper 26211. DOI 10.3386/w26211{/ref} And I would also recommend Tony Atkinson’s last book ‘[Measuring Poverty around the World](https://www.tony-atkinson.com/book-measuring-poverty-around-the-world/)’ for an excellent recent overview of the topic. → To understand how it is possible to compare poverty levels and living standards across countries you need to know the basics of global poverty measurement. You find a summary of the basics in the following fold-out box. ## Additional information Throughout this article – and in global income and expenditure data generally – the statisticians who produce these figures are careful to make these numbers as comparable as possible. First, many poorer people rely on subsistence farming and do not have a monetary income. To take this into account and make a fair comparison of their living standards, the statisticians that produce these figures estimate the monetary value of their home production and add it to their income/expenditure. Second, price changes over time (inflation) and price differences across countries are both taken into account: all measures are adjusted for differences in purchasing power.{ref}This is possible by relying on the work of the [International Comparison Project](https://www.worldbank.org/en/programs/icp), which monitors the prices of goods and services around the world.{/ref} To this end incomes and expenditures are expressed in so-called _international dollars_. This is a hypothetical currency that results from the price adjustments across time and place. An international dollar is defined as having the same purchasing power as one US-$ _in the US_. This means no matter where in the world a person is living on int.-$30, they can buy the goods and services that cost $30 in the US. None of these adjustments are ever going to be perfect, but in a world where price differences are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do.{ref}Angus Deaton and Alan Heston (2010) discuss the methods behind such price adjustments and many of the difficulties and limitations involved. Deaton, A., and Heston, A. 2010. “Understanding PPPs and PPP-Based National Accounts.” _American Economic Journal: Macroeconomics_ 2 (4): 1–35. A working paper version is available online [here](https://www.nber.org/papers/w14499).{/ref} Throughout this text I’m always adjusting incomes for price changes over time and price differences between countries in this way. All dollar values discussed here are presented in int.-$; the UN does the same for the $1.90 poverty line. Sometimes I leave out ‘international’ as it is awkward to repeat it all the time; but every time I mention any $ amount in this text I’m referring to international-$ and not US-$.{ref}Keep in mind that in the special case of the US the US-$ equals the international-$.{/ref} ## An additional higher poverty line of $30 per day Pritchett made his proposal based on data and prices a decade ago and so it is necessary to update his calculations. But I want to go beyond Pritchett’s approach and additionally provide a number of other relevant comparisons to inform our understanding of who is considered poor in a rich country. By following this idea I find that a poverty of 30 international-$ per day corresponds to the notion of poverty in a rich country. In the following section I consider a long number of benchmarks that made me arrive at this poverty line. Here is the short summary of these comparisons: * **European countries: **The span of poverty lines in high-income countries in Europe ranges from **int.-$25 to int.-$38 per day**. * **The US: **A comparison with the poverty line in the US is not straightforward, as explained in some detail below; two different approaches arrive at poverty lines of **int.-$23 and int.-$35 per day** respectively. * **Survey result: **A study surveyed people in a high-income country to ask at what income a person is considered poor. The study found that the mean income threshold suggested by the surveyed population corresponds to an income of **int.-$37.58 per day** * **Proposal to replace the categorization into developing and developed countries: **In the book ‘Factfulness’ the authors recommend replacing the simplistic categorization of countries into developing and developed countries with a finer grained structure. The high-income cutoff the authors suggest is **int.-$32 per day**. * **UBI: **The daily income paid as ‘Universal Basic Income’ in a pilot study in Germany corresponds to an income of **int.-$48.19 per day**. * **Social care: **The average basic social care payout in Germany (‘Hartz-IV’) corresponds to **int.-$30.78 per day** The range of possible higher poverty lines based on richer countries is wide, as the list of benchmarks suggests. At the lower end I believe that it might be as low as $25 per day, and on the higher end it might be as high as $40 or $50 per day. Just as someone who lives on less than $1.90 per day is defined as _extremely _poor, a person who lives on less than $30 a day could be considered _moderately _poor. A reality check for any poverty line you might want to consider is to ask yourself what you think about living on less than that poverty line yourself. I lived on less than $30 per day before and would consider myself poor if I’d fall back on that income level again. In the following box you find the sources and calculations of the benchmarks that led me to my $30 per poverty line proposal. ## Additional information #### Poverty lines in European countries As mentioned before most European countries set their poverty line at 60% of the median income in the country. In his original proposal Pritchett was relying on this 60% of median cut-off. Calculating the poverty line for European countries therefore means that we look up their median income and then multiply it by 0.6. This is less straightforward than it might first appear. The reason for that is that there are many different income concepts. You quickly realize that it is not easy to define a person’s income if you ask yourself what your own income is. Do you take government transfers into account or not? Do you take your partner’s income into account and divide it by two? How do you take into account that you have a child for which you need to pay? It is possible to take these and many other aspects into account and arrive at useful statistics, but various sensible ways of addressing such questions lead to many different income metrics. As such, in comparing different poverty thresholds across countries we have to take care to avoid mixing different income concepts as much as possible. One important difference is how incomes are adjusted for the size of the household: whether the total household income is simply divided by the number of people (including children) – ‘per capita’ income – or whether some adjustment is made to account for the fact that larger households, and particularly households with children, face lower costs per person – known as ‘equivalised’ income. Whereas EU countries, like other rich countries, use equivalised income to measure poverty, the UN’s measurement of global poverty is based on a global dataset of per capita incomes. This dataset is called [PovcalNet](http://iresearch.worldbank.org/PovcalNet/povDuplicateWB.aspx), and it is this that we must use in order to make comparisons of poverty measures in different countries according to the same income concept. In this dataset we find the median income for countries around the world and we can take that median income and then apply the logic on which the European poverty lines are based. In the extensive footnote here you find more details and the full calculations.{ref}The European reference incomes are national median equivalised disposable income after social transfers. The disposable household income including all income from work (employee wages and self-employment earnings), private income from investment and property, transfers between households, and all social transfers received in cash including old-age pensions. Eurostat applies an equivalisation factor calculated according to the OECD-modified scale first proposed in 1994. The UN/World Bank is not. This is according to Eurostat [here](https://appsso.eurostat.ec.europa.eu/nui/show.do?query=BOOKMARK_DS-050270_QID_6AF25E11_UID_-3F171EB0&layout=TIME,C,X,0;GEO,L,Y,0;QUANTILE,L,Z,0;INDIC_IL,L,Z,1;CURRENCY,L,Z,2;INDICATORS,C,Z,3;&zSelection=DS-050270INDIC_IL,TC;DS-050270CURRENCY,EUR;DS-050270INDICATORS,OBS_FLAG;DS-050270QUANTILE,D1;&rankName1=INDIC-IL_1_2_-1_2&rankName2=CURRENCY_1_2_-1_2&rankName3=INDICATORS_1_2_-1_2&rankName4=QUANTILE_1_2_-1_2&rankName5=TIME_1_0_0_0&rankName6=GEO_1_2_0_1&sortC=ASC_-1_FIRST&rStp=&cStp=&rDCh=&cDCh=&rDM=true&cDM=true&footnes=false&empty=false&wai=false&time_mode=ROLLING&time_most_recent=true&lang=EN&cfo=%23%23%23%2C%23%23%23.%23%23%23), where you also find the relevant data. (If the link should break, search on Google for ‘Distribution of income by quantiles - EU-SILC and ECHP surveys’.) There are various ways of bringing the national poverty lines with reference to the national median equivalised disposable income after social transfers in line with the income/expenditure concept used in PovcalNet. Joliffe and Prydz follow a different approach and their paper is very relevant for anyone interested in this question here. One alternative to the approach I’m following in this article would be to start from the poverty lines they estimated (based on the poverty headcount ratio) and apply the growth rate of the median income since the publication of their study. Yet another possibility would of course be to repeat their analysis with the up-to-date data. I am not following either of these approaches because I believe for a wide audience they are less transparent that the approach here – which is simply: I rely on the same dataset so that I rely on the same income concept, then look up the median income and multiply it by 0.6. This is the reference: Jolliffe & Prydz (2016). Estimating international poverty lines from comparable national thresholds. The Journal of Economic Inequality, 14(2), 185-198. ––– The following are the relevant calculations. All of them are based on PovcalNet data: **Germany’s** median monthly income in 2017 was $1417.29 according to PovcalNet. 60% of the median expressed in daily income/consumption is 0.6*$1417.29=$850.374/30=$28.35 per day **Sweden’s** median monthly income in 2017 was $1469 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1469)/30=$29.38 per day **Norway’s** median monthly income in 2017 was $1890 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1890)/30=$37.8 per day **Austria’s** median monthly income in 2017 was $1534 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1534)/30=$30.68 per day In the **UK** the median monthly income in 2017 was $1252 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1252)/30=$25.04 per day **France’s** median monthly income in 2017 was $1364 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1364)/30=$27.28 per day **Switzerland’s** median monthly income in 2017 was $1791 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1791)/30=$35.82 per day **Spain’s** median monthly income in 2017 was $982 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*982)/30=$19.64 per day **Iceland’s** median monthly income in 2017 was $1582 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1582)/30=$31.64 per day **Luxembourg’s** median monthly income in 2017 was $2193 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*2193)/30=$43.86 per day **Netherland’s** median monthly income in 2017 was $1430 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1430)/30=$28.6 per day **Belgium’s** median monthly income in 2017 was $1346 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1346)/30=$26.92 per day **Denmark’s** median monthly income in 2017 was $1453 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1453)/30=$29.06 per day **Ireland’s** median monthly income in 2017 was $1234 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1234)/30=$24.68 per day **Finland’s** median monthly income in 2017 was $1361 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1361)/30=$27.22 per day{/ref} As high-income European countries I’m referring to those European countries, which [according to the Eurostat statistics](http://appsso.eurostat.ec.europa.eu/nui/submitViewTableAction.do) had a higher income in 2019 than the European average. These are the following countries: Finland, Netherlands, Belgium, Sweden, Germany, France, Iceland, Switzerland, Norway, Luxembourg, Denmark, Austria, Ireland, and the UK. These are the poverty lines for daily income in a number of high-income European countries (based on 60% of the median incomes from PovcalNet): * Sweden: $29.40 per da * Norway: $37.80 per day * Austria: $31 per day * UK: $25.04 per day * Switzerland: $35.82 per day * Germany: $28.35 per day * France: $27.28 per day * Luxembourg: $43.86 per day * Finland: $27.22 per day * Iceland: $31.64 per day * Ireland: $24.68 per day * Netherlands: $28.6 per day * Belgium: $26.92 per day * Denmark: $29.06 per day The span of poverty lines in these countries ranges from $25 (for the UK and Ireland) up to $38 (for Norway); in the small country of Luxembourg the poverty line is higher. #### The poverty line in the US Unlike European countries, the US does not set the poverty line in a relative way. Instead the US poverty line dates back to the work of Mollie Orshansky, an economist working for the Social Security Administration in the early 1960s. Since then it has been of course revised for price changes, but otherwise it remained unchanged. The US poverty line is [very often](https://en.wikipedia.org/wiki/Poverty_in_the_United_States#Measuring_poverty) criticised as being too low. Those that criticize the US poverty line in that way therefore suggest that the severity of poverty in the US is understated in the statistics. How high is the poverty line in the US? In 2020 the poverty threshold for a single person under 65 was $30, measured in 2011 international-$ per day to be comparable with the other figures in this article.{ref}According to the "[Annual Update of the HHS Poverty Guidelines](https://www.govinfo.gov/content/pkg/FR-2020-01-17/pdf/2020-00858.pdf)" the poverty line in the US is an annual income of US$12,760. That is in 2020 price. According to the [World Bank](https://data.worldbank.org/indicator/FP.CPI.TOTL?locations=US), the Consumer Price Index in the US in 2020 was 118.7 and in 2011 it was 103.2. So prices between the years rose by 118.7/103.2 - 1 = **15%**. Deflating the poverty line in to 2011 prices we get 12,760/1.15 = $11,096. And expressing that as a per day figure that is $11,096/365 = $30.40{/ref} Now the problem with comparing this poverty line with the global statistics is again that the income concept is different. The US crucially relies on an equivalence scale for adjusting the income cutoff depending on the household size. One alternative is to use the World Bank's poverty and inequality data – which expresses incomes in per capita terms – to find a 'harmonized' poverty line: the line that yields the same poverty rate in the World Bank data as the official poverty rate.{ref}This method was introduced by Jolliffe and Prydz (2016) and used by Jolliffe et al. (2022) as an ingredient of their method for setting the World Bank's international poverty lines. Jolliffe, Dean, and Espen Beer Prydz. 2016. _Estimating International Poverty Lines from Comparable National Thresholds_. Washington, DC. _Jolliffe, Dean Mitchell, Daniel Gerszon Mahler, Christoph Lakner, Aziz Atamanov, and Samuel Kofi Tetteh Baah. 2022. Assessing the Impact of the 2017 PPPs on the International Poverty Line and Global Poverty. The World Bank. Available to read at the _[_World Bank here_](https://documents1.worldbank.org/curated/en/353811645450974574/pdf/Assessing-the-Impact-of-the-2017-PPPs-on-the-International-Poverty-Line-and-Global-Poverty.pdf)_._{/ref} The official poverty rate in the US in 2019 was **10.5%**, [as reported](https://www.census.gov/content/dam/Census/library/publications/2020/demo/p60-270.pdf) by the U.S. Census Bureau. The poverty line that yields this rate in the World Bank's data is $22.53 (measured in 2011 international-$).{ref}You can see our detailed calculations in this [Google Colabs document](https://colab.research.google.com/drive/1IzHT9NikKHrY9uGWKzDzaZ4VVpdc9m5E#scrollTo=qF_GSK2FX7tU&line=1&uniqifier=1).{/ref} An alternative is to apply the same concept that the Europeans are using for their poverty line determination. If the US would use the 60% of median income definition of poverty their poverty line would be int.-$32.8 per day{ref}The **US** median monthly income in 2017 was $1640 according to PovcalNet. 60% of the median expressed in daily income/consumption is (0.6*1640)/30=$32.8 per day{/ref} Very close to the one-person poverty line based on Orshansky’s work. A somewhat comparable poverty line based on these three approaches therefore falls into the range of around $23 to $35 per day. Within the range of poverty lines in European countries. #### Survey results – Below which income do you consider a person poor? The UN and Pritchett rely on the existing poverty lines in low-income and high-income countries respectively to derive their poverty lines. We can follow other approaches too. An obvious one is to ask what people out there believe: Who is considered poor in a high-income country by people in high-income countries? For the regular poverty report of the German government, a survey is conducted that asks Germans below which income level they consider someone as poor. The latest data is from the year 2015.{ref}These reports are called ‘Armuts- und Reichtumsbericht der Bundesregierung’ online at [armuts-und-reichtumsbericht.de](https://www.armuts-und-reichtumsbericht.de/DE/Startseite/start.html) The latest survey was produced by aproxima and published in 2016. It is published as [Wahrnehmung von Armut und Reichtum in Deutschland, Ergebnisse der repräsentativen Bevölkerungsbefragung „ARB-Survey 2015“](https://www.armuts-und-reichtumsbericht.de/SharedDocs/Downloads/Service/Studien/forschungsprojekt-wahrnehmung-armut-reichtum.pdf?__blob=publicationFile&v=5), Berlin: Bundesministerium für Arbeit und Soziales (Hrsg.).{/ref} The mean answer given by the German population for a cutoff below which a person is considered poor was 947€ per month. In international dollars per day this corresponds to an income of **int.-$37.58**.{ref}The 2011 PPP conversion factor for private consumption (LCU per international $) for Germany in 2015 is 0.84 according to the World Bank [here](https://ourworldindata.org/grapher/ppp-conversion-factor-for-private-consumption). This means the perceived poverty threshold corresponds to €947/0.84=int.-$1,127.38 per month or int.-$37.58.{/ref} #### Universal Basic Income [Universal Basic Income](https://en.wikipedia.org/wiki/Universal_basic_income) (UBI) is a political idea that is becoming rapidly more popular. A large UBI study in Germany – called [‘Mein Grundeinkommen’](https://de.wikipedia.org/wiki/Mein_Grundeinkommen) – sets this income at €1200. In international-$ this corresponds to an income of **int.-$48.19 per day**.{ref}The 2011 PPP conversion factor for private consumption (LCU per international $) for Germany in 2017 is 0.83 according to the World Bank [here](https://ourworldindata.org/grapher/ppp-conversion-factor-for-private-consumption). This means the UBI corresponds to 1200/0.83=int.-$1,445.78 per month or int.-$48.19.{/ref} #### Social security in Germany Germany pays basic social care for its citizens. This social security payment is referred to as ‘Hartz-IV’. How much a person receives depends on the particular circumstances of the individual, but we can look at the average payment. In 2018 a single person [received on average](https://www.sueddeutsche.de/wirtschaft/wie-viel-geld-bekommt-ein-hartz-iv-empfaenger-1.3905657) 783 Euro per month. That corresponds to **int.-$30.78 per day**.{ref}That’s €783/0.834=int.-$938.85 per month. Or int.-$938.85/30.5=int.-**$30.78 per day.**{/ref} #### The Roslings’ suggest a cutoff of $32 per day Anna Rosling-Rönnlund, Ola Rosling and Hans Rosling challenged the old dichotomy between developed and developing countries in their bestselling book ‘[Factfulness](https://en.wikipedia.org/wiki/Factfulness:_Ten_Reasons_We%27re_Wrong_About_the_World_%E2%80%93_and_Why_Things_Are_Better_Than_You_Think)’. They argue that the old dichotomy corresponds to a view of the world that was accurate half a century ago when a few countries were relatively well-off, but most countries were living in very [poor conditions](https://ourworldindata.org/life-expectancy-globally).Today, they say, people around the world live on a large spectrum. To reflect this spectrum they proposed 4 income levels. The first cut-off corresponds to the international poverty line (rounded to int.-$2 per day). The next income cutoff they set at $8 per day, the following one at $16 and the highest one at **int.-$32 per day**. #### Kahneman's and Deaton's study of income and emotional well-being Nobel laureates Daniel Kahneman and Angus Deaton published a famous study on the link between life satisfaction and income.{ref}Kahneman and Deaton (2010) – High income improves evaluation of life but not emotional well-being. Published in the Proceedings of the National Academy of Sciences. https://www.pnas.org/content/107/38/16489 {/ref} The authors find that higher incomes go together with higher self-reported life satisfaction, but for people’s self-reported emotional well-being this is only true up to a certain point: the study finds that above $75,000 further increases in income do not correspond with improvements in people’s emotional well-being – a finding that is often cited to argue that additional economic growth does not improve people’s lives in high-income countries.{ref}Kahneman and Deaton analyze two different concepts self-reported satisfaction: – Emotional well-being refers to the “emotional quality of an individual's everyday experience – the frequency and intensity of experiences of joy, stress, sadness, anger, and affection that make one's life pleasant or unpleasant.” – Life evaluation refers to the thoughts that people have about their life when they think about it. The authors find that higher incomes go together with higher self-reported life satisfaction in both metrics. What they emphasize is that at very high incomes this is not true anymore – emotional well-being does not increase over around $75,000. Evaluation of life however continues to increase even at incomes over $75,000.{/ref} Again, the income concept is not the same as that in PovcalNet, and so comparisons with the global data are not directly possible. But we can ask what the daily income at which emotional well-being supposedly levels off corresponds to: $75,000 per year are **int.-$205 per day**. It is certainly worth considering whether an income up to which emotional well-being increases could be taken as the basis for a definition of poverty. A US company reacted to the research finding of Kahneman and Deaton by using it to set the minimum wage in their company: everyone in that company [gets paid](https://www.nytimes.com/2015/04/14/business/owner-of-gravity-payments-a-credit-card-processor-is-setting-a-new-minimum-wage-70000-a-year.html) that salary. For the discussion of global poverty however it might be considered as an even higher poverty line, but for any practical purpose in the world today the income cutoff would be too high as only a very small fraction of the world lives on more than $75,000 per year. ### How many people in the world live in poverty? We have seen that 10% of the world live in extreme poverty_ _as defined by the UN. How large is the share of the world that lives in moderate poverty? The latest global data tells us that **85% of the world population live on less than $30 per day**. These are 6.5 billion people. Relying on a higher poverty line of $45 per day you find that 92% live in poverty, and using a lower poverty line of $20 per day you find that 78% live in poverty. No matter which of these poverty lines you might want to choose, at least three-quarters of the world live in poverty. All of this data refers to pre-pandemic times. The global recession has certainly increased the share below any of these cutoff points. As soon as the new data is available you will find it on Our World in Data. The chart shows where in the world people are poor. If we would only rely on the UN’s extreme poverty line we would conclude that barely anyone lives in poverty in high-income countries. Relying on higher poverty lines, this data here shows that even in high-income countries there is a significant share of the population that lives in poverty. No country, not even the high-income countries, has eliminated poverty. There are no ‘developed countries’ — there is work to do for all. But just as clear from this data is the fact that in many world regions the large majority of people are very poor. In Sub-Saharan Africa about 40% of the population lives on less than $1.90 per day as the chart shows. In all regions outside of high-income countries more than 85% of all people live in moderate poverty. <Image filename="The-global-inc-distribution-190-10-30.png" alt=""/> ### Countries in which the majority do not live in poverty have only left poverty behind in recent history Two centuries ago the global income distribution was very different. Back then [almost everyone in the world](https://ourworldindata.org/extreme-history-methods) was living in extreme poverty. Those places in which few people live in moderate poverty today only left poverty behind in the very recent past. Denmark is one of those places. The reason why the majority of people in Denmark is not living in poverty is that the economic inequality is low and the average income high. The fact that the inequality is low you can see on the map. It shows an inequality measure called the Gini coefficient (explained [here](https://ourworldindata.org/income-inequality#the-gini-coefficient)) which makes clear that Denmark is among the least unequal countries in the world. The reason that the average income in Denmark is high is due to the fact that average incomes have increased steadily for the last two centuries; this long-term development is called economic growth. As the historical data shows the average incomes in Denmark are today more than 20-times higher than in the past. You can add any other country to this chart. By adding one of those countries in which the majority lives in poverty – like Ethiopia – you see just how large the differences in average incomes are. GDP per capita is by far the most widely used measure of average income and is yet another income concept from the two I mentioned so far.{ref}The two previous ones were income/expenditure as determined in household surveys and equivalized disposable income after social transfers.{/ref} It is a more comprehensive measure of incomes and crucially takes into account government expenditures. For these and other reasons (mentioned in the long footnote) you will find that dividing GDP per capita by 365 days will let you arrive at a higher value than the income that is determined in household income surveys.{ref}There is generally a gap between GDP per capita and the averages found in both income surveys and expenditure surveys. But the reasons for the gap are different depending on which we are comparing. GDP includes many items that are typically not measured in household income surveys, such as an imputed rental value of owner-occupied housing, the retained earnings of firms and taxes on production such as VAT. The gap is even larger when GDP is compared to surveys of household consumption – the latter concept excluding both investment expenditure and government expenditure on public services such as education and health. Other aggregates beyond GDP are available in the national accounts that are more comparable to the concepts applied in household income and consumption surveys. However, important differences still remain even here. For example, in addition to imputed rents, imputations for the value of certain financial services, such as bank accounts, are included in aggregate household consumption measured in national accounts, with no equivalent for these items recorded in the survey data. In many countries the consumption of ‘nonprofit institutions serving households’ (NPISH) is included as part of household consumption within national accounts, but not within household surveys. On top of these conceptual differences are a range of mismeasurement problems that affect both sets of data. On this topic see Deaton (2005), and Pinkovskiy and Sala-i-Martin (2016). Deaton, Angus. 2005. “Measuring Poverty in a Growing World (or Measuring Growth in a Poor World).” The Review of Economics and Statistics 87 (1): 1–1. Pinkovskiy, Maxim, and Xavier Sala-i-Martin. 2016. “Lights, Camera… Income! Illuminating the Nation"{/ref} <Chart url="https://ourworldindata.org/grapher/economic-inequality-gini-index?time=earliest..latest&tab=chart&country=USA~FRA~JPN~BRA~ZAF~DNK"/> <Chart url="https://ourworldindata.org/grapher/average-real-gdp-per-capita-across-countries-and-regions?time=earliest..latest&country=~DNK&tab=chart"/> ### Billions of people live in countries where average incomes are very low The income of every person depends on two factors, the average income in the country they live in and the position that particular person has in that country’s income distribution. This chart here shows the average income in countries around the world. The height of each bar represents the average daily income in a country, the width of each country corresponds to the country’s population size. I have ordered the countries by income: from the poorest country on the very left (South Sudan where the average person lives on $1.12 per day) to the richest country on the very right (Luxembourg with an average of $86 per day). After two centuries of economic growth the average income in Denmark is now $57 per day today. You find the country far to the right in this chart, which tells you that only very few countries in the world have such high average incomes. The fact that the average income is far higher than the poverty line tells us that the existing poverty in Denmark discussed at the beginning of this post is to a large extent the consequence of inequality. What this chart makes very clear is how low the average incomes in many countries in the world are. The huge majority of the world live in countries where the _average _income is much lower than the poverty threshold in rich countries. 82% of the world population live in countries where the mean income is less than $20 per day. And where incomes are low, living standards generally [are poor](https://owid.cloud/app/uploads/2021/03/Correlates-of-GDP-–-How-is-life-at-different-levels-of-income.png). As the last chart below shows, a child that is born into a poorer country must not just expect to live on a very low income, but also faces a much higher risk of not staying alive at all. As I have [said before](https://ourworldindata.org/global-inequality-of-opportunity), people are not poor because of who they are, but because of _where_ they are. This is why economic growth is so important to leave poverty behind. By far the most important difference between those people who are not living in poverty and those who do is the average income in the country that they live in – this single factor matters more for a person’s income [than all other factors taken together](https://ourworldindata.org/poverty-growth-needed). The increase of average income in a country is called economic growth and for global poverty to decrease substantially economic growth for the poorest billions of people is necessary. → See my previous article: [The economies that are home to the poorest billions of people need to grow if we want global poverty to decline](https://ourworldindata.org/poverty-growth-needed). <Image filename="mean-income-by-country.png" alt=""/> ### The future of global poverty The world today is far from the ‘end of poverty’ relative to _any_ poverty definition. After two centuries of [unprecedented progress](https://ourworldindata.org/extreme-history-methods) against the very worst poverty it is still the case that every tenth person lives on less than _$1.90 per day_. As the world has not even ended extreme poverty it is therefore right to focus much of our attention on this very low poverty cutoff; ending extreme poverty surely is a global goal of great importance. Yet at the same time we should consider what our aspirations for the future are. In the past our ancestors [did not know](https://ourworldindata.org/breaking-the-malthusian-trap) that it was possible for a society to leave widespread poverty behind. Today we are in a different situation. We know from the reality of today’s rich countries that widespread poverty is not inevitable. Because we know that poverty relative to such higher cutoffs is not inevitable I believe it would be wrong to limit our ambitions to eradicating poverty based on the definition of poverty in the very poorest countries. What I take away from this discussion are three insights: First, we have seen from countries like Denmark that it is _possible_ to reduce poverty for an entire population relative to a poverty line of about $30 per day. Second, we have seen that these countries were extremely poor in the past and were able to reduce poverty over the course of the last few generations. And third we have seen that the huge majority of the world is still living in great poverty, by any standard. What this suggests to me is that the history of global poverty reduction has only just begun. <Chart url="https://ourworldindata.org/grapher/child-mortality-gdp-per-capita?time=latest"/> _Continue reading Our World in Data:_ My colleague Hannah Ritchie has just published a series of posts on the drivers of deforestation and how to bring humanity's long history of deforestation to an end. You find her work [here](https://ourworldindata.org/blog). **Acknowledgement:** I would like to thank Joe Hasell for his thoughtful comments on draft versions of this article.

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        "rendered": "\n<div class=\"blog-info\">\n<p>Our World in Data presents the data and research to make progress against the world\u2019s largest problems.<br>This post draws on data and research discussed in our entries on <strong><a href=\"https://ourworldindata.org/income-inequality\" target=\"_blank\" rel=\"noopener\">Income Inequality</a></strong>, <strong><a href=\"https://ourworldindata.org/poverty\" target=\"_blank\" rel=\"noopener\">Poverty</a></strong> and <strong><a href=\"https://ourworldindata.org/economic-growth\" target=\"_blank\" rel=\"noopener\">Economic Growth</a></strong>.</p>\n</div>\n\n\n\n<p><strong><em>Abstract:</em></strong><em> The extremely low poverty line that the UN relies on has the advantage that it draws the attention to the very poorest people in the world. It has the disadvantage that it ignores what is happening to the incomes of the 90% of the world population who live above the extreme poverty threshold.<br>The global poverty line that the UN relies on is based on the national poverty lines in the world\u2019s poorest countries. In this article I ask what global poverty looks like if we rely on the notions of poverty that are common in the world\u2019s rich countries \u2013 like Denmark, the US, or Germany. Based on the evidence I ask what our aspirations for the future of global poverty reduction might be.</em></p>\n\n\n\n<hr class=\"wp-block-separator\"/>\n\n\n\t<block type=\"help\">\n\t\t<content>\n\n<h4>The World Bank has updated its poverty and inequality data</h4>\n\n\n\n<p>The data in this article uses a previous release of the World Bank&#8217;s poverty and inequality data in which incomes are expressed in 2011 international-$.</p>\n\n\n\n<p>The World Bank has since updated its methods, and now measures incomes in 2017 international-$. As part of this change, the International Poverty Line used to measure extreme poverty has also been updated: from $1.90 (in 2011 prices) to $2.15 (in 2017 prices).</p>\n\n\n\n<p>This has had little effect on our overall understanding of poverty and inequality around the world. But because of the change of units, many of the figures mentioned in this article will differ from the latest World Bank figures.</p>\n\n\n    <block type=\"prominent-link\" style=\"is-style-thin\">\n        <link-url>https://ourworldindata.org/from-1-90-to-2-15-a-day-the-updated-international-poverty-line</link-url>\n        <title></title>\n        <content>\n\n<p>Read more about the World Bank&#8217;s updated methodology</p>\n\n</content>\n        <figure></figure>\n    </block>\n\n    <block type=\"prominent-link\" style=\"is-style-thin\">\n        <link-url>https://ourworldindata.org/explorers/poverty-explorer</link-url>\n        <title>Explore the latest World Bank data on poverty and inequality</title>\n        <content>\n\n<p></p>\n\n</content>\n        <figure></figure>\n    </block>\n</content>\n\t</block>\n\n\n<p>In every country of the world there are people living in poverty. Even in the world\u2019s richest countries the poorest people often live in poor housing and struggle to afford basic goods and services like heating, transport, and healthy food for themselves and their family.</p>\n\n\n\n<p>Those who are in monetary poverty also have much poorer living conditions more broadly. Even in a rich and relatively equal country like Denmark middle-aged men who are among the poorest 20% of the population die on average <em>9 years</em> earlier than those among the richest 20%.{ref}Br\u00f8nnum-Hansen H, Foverskov E, Andersen I. Income inequality in life expectancy and disability-free life expectancy in Denmark. J Epidemiol Community Health 2021;75:145-150. <a href=\"https://jech.bmj.com/content/75/2/145\">https://jech.bmj.com/content/75/2/145</a> {/ref} In Denmark a person who lives on less than $30 per day is considered poor, and it is the declared goal of the country to reduce poverty relative to this threshold.{ref} For the moment it is important to note that this $30 per day poverty line is defined in international-$ and therefore comparable with the \u2018International Poverty Line\u2019 discussed in the following section. Much more details about how to compare incomes across countries, the income concept here, and the definition of this poverty line follows further below in this text.{/ref}&nbsp;</p>\n\n\n\n<p>Countries that are much poorer than Denmark also have the goal to reduce poverty. The United Nations declared the objective of <a href=\"https://sdg-tracker.org/\">ending \u2018extreme poverty\u2019</a> to be the number 1 goal of the global <em>Sustainable Development Goals</em>. <a href=\"https://www.un.org/en/global-issues/ending-poverty\">According</a> to the UN a person is considered to live in extreme poverty when he or she is living on less than $1.90 per day, this is called the <em>International Poverty Line</em>. According to the latest global statistics almost <em><a href=\"https://ourworldindata.org/poverty?insight=the-pandemic-pushed-millions-into-extreme-poverty#key-insights-on-poverty\">one in ten</a></em> people live in extreme poverty globally.</p>\n\n\n\n<p>If we know that poverty is a large problem even in high income countries like Denmark where the poverty line is set at around $30 a day, why should we use an International Poverty Line that is so extremely low to measure poverty globally?</p>\n\n\n\n<p>It is the reality of our extremely unequal world \u2013 in which every tenth person lives in extreme poverty \u2013 that makes such an extremely low poverty line necessary. Without having an <em>extremely</em> low poverty line we would not be aware of the fact that a large share of the world lives in such extreme poverty. The UN\u2019s global poverty line is valuable because it draws attention to the reality of extreme poverty in our world.</p>\n\n\n\n<p>In a world where the majority still lives on very low incomes it would be wrong if the UN decided to measure global poverty solely by a poverty line as high as the poverty line of Denmark. It would mean that the global statistics gloss over the extremely large and important income differences among the poorest billions in the world. It would mean that the difference between those who live on only $1 per day and those who have an income that is more than 20-times higher would be entirely disregarded. They would all be considered poor, and the reality that some of them are much poorer than others would be hidden.</p>\n\n\n\n<p>Slightly higher global poverty lines \u2013 such as the poverty line of $3.10 per day that Kate Raworth relies on in her \u2018Doughnut\u2019 framework, or the poverty line of $7.40 per day that anthropologist Jason Hickel uses in his work, or Bob Allen\u2019s absolute poverty line based on minimal nutritional requirements \u2013 all have the same value.{ref}Kate Raworth (2017) \u2013 A Doughnut for the Anthropocene: humanity&#8217;s compass in the 21st century. In The Lancet Planetary Health. Volume 1, Issue 2, E48-E49, May 01, 2017. Open Access DOI: <a href=\"https://doi.org/10.1016/S2542-5196(17)30028-1\">https://doi.org/10.1016/S2542-5196(17)30028-1</a> You find the metrics that the Doughnut relies on <a href=\"https://www.thelancet.com/cms/10.1016/S2542-5196(17)30028-1/attachment/2d58fdae-741c-4016-84cd-2fc0b1e94f49/mmc1.pdf\">in the Appendix here</a>.<br>Jason Hickel \u2013 <a href=\"https://www.theguardian.com/global-development-professionals-network/2015/nov/01/global-poverty-is-worse-than-you-think-could-you-live-on-190-a-day\">Could you live on $1.90 a day? That&#8217;s the international poverty line</a> and <a href=\"https://twitter.com/jasonhickel/status/1012339440113594368\">here</a>.<br>Allen, Robert C.(201). \u2013 <em>Absolute Poverty: When Necessity Displaces Desire</em>. American Economic Review, 107 (12): 3690-3721.DOI: 10.1257/aer.20161080{/ref}&nbsp;These low poverty lines allow us to understand the material living conditions of the poorest people in the world and have been successful in drawing attention to the terrible depths of poverty experienced by a large share of the world&#8217;s population. The only way to achieve these goals is to rely on extremely low poverty lines.</p>\n\n\n\n<p>Indeed, there is an argument for using an even lower poverty line. To understand what is happening to the <em>very</em> poorest in the world, we need to look even lower than $1.90. This is because one of the biggest failures of development is that over the last decades the incomes of <a href=\"https://ourworldindata.org/poverty?insight=hundreds-of-millions-will-remain-in-extreme-poverty-on-current-trends#key-insights-on-poverty\">the very poorest</a> people have not risen. A big part of the reason for why this issue doesn\u2019t get discussed enough is that the International Poverty Line we rely on is too high to see this fact.</p>\n\n\n\n<h4>Why not both?</h4>\n\n\n\n<p>Yet, <em>only </em>measuring global poverty relative to such extremely low poverty lines has its own large downside.&nbsp;</p>\n\n\n\n<p>By focusing on an income threshold that is lower than the incomes of 90% of the global population we are ignoring what is happening to the majority of the world\u2019s population. This matters. The majority of the world do not live in extreme poverty <a href=\"https://ourworldindata.org/extreme-history-methods\">anymore</a>, but billions are nevertheless living in great poverty still.</p>\n\n\n\n<p>The obvious solution to the problem that the majority of the world is not considered by the International Poverty Line is to use an <em>additional</em> poverty line. This is not a new idea. One poverty researcher who has made the argument for an additional higher global poverty line based on the notions of poverty in rich countries is Lant Pritchett \u2013 you find it in his short, yet widely-cited essay <em>\u2018The case for a high global poverty line\u2019 </em>from eight years ago.{ref}Lant Pritchett (2013) \u2013 Monitoring progress on poverty: the case for a high global poverty line. Online here <a href=\"https://web.archive.org/web/20150608125138/http://www.odi.org:80/sites/odi.org.uk/files/odi-assets/publications-opinion-files/8440.pdf\">https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/8440.pdf</a>{/ref}</p>\n\n\n\n<h4>Defining global poverty lines</h4>\n\n\n\n<p>The definition of poverty differs between countries. Poorer countries set much lower poverty lines than richer countries.{ref}Jolliffe and Prydz (2016){/ref} This means that if we were to simply rely on national poverty definitions for a global measure of poverty we would end up with a measurement framework in which <em>where</em> a person happens to live would determine whether they are poor or not: If we would count as poor those who are defined nationally as poor we would end up counting a person who lives on $20 per day as poor in a rich country, while at the same time counting a person who lives on $2 as not-poor when they happen to live in a very poor country.</p>\n\n\n\n<p>One way out of this problem is to set global poverty lines based on the national definitions, but to apply them globally. This is how the UN decided to define the International Poverty Line. In order to ground this global poverty line on something more than the views of global poverty researchers, it is based on the existing definitions of poverty adopted in countries around the world at the national level, but to avoid the problem outlined above they apply the national poverty lines globally. As we explain <a href=\"https://ourworldindata.org/extreme-poverty#setting-the-international-poverty-line\">here</a> in some detail, the $1.90 per day poverty line is set to reflect the national poverty lines adopted in the world\u2019s <em>poorest</em> countries.{ref}Specifically, the line is set at the average national poverty line amongst 15 particular low-income countries. As Jolliffe and Prydz (2016) demonstrate however, this is also the average poverty line found among the poorest quarter of countries with available data, and also among countries falling into the World Bank\u2019s low-income category.{/ref} Applying this poverty line globally means that a person who lives on less than $1.90 per day is considered extremely poor no matter where they live.</p>\n\n\n\n<p>In recent years the World Bank has applied this same methodology to countries in the middle-income bracket, those countries with a GNI per capita between $1000 and $12,500. Based on the poverty lines in these countries they have set additional global poverty lines at $3.20 and $5.50 per day, which are now <a href=\"https://data.worldbank.org/indicator/SI.POV.LMIC\">directly</a> <a href=\"https://data.worldbank.org/indicator/SI.POV.UMIC\">available</a> via the World Bank statistics.{ref}The study on which these thresholds rely is Jolliffe, D., Prydz, E.B. Estimating international poverty lines from comparable national thresholds. J Econ Inequal 14, 185\u2013198 (2016). <a href=\"https://doi.org/10.1007/s10888-016-9327-5\">https://doi.org/10.1007/s10888-016-9327-5</a> The researchers also report an average high-income country poverty line of $21.70 per day.<br>High income countries in the World Bank framework are however relatively poor compared to the countries that I\u2019m focusing on here \u2013 the cutoff for a high-income country according to the World Bank is $12,536, about a quarter of the GNI of Germany and only a fifth of the US. Accordingly, the poverty cutoff is much lower than in those countries. <a href=\"https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups\">Here you find the World Bank income classification cutoffs</a>.{/ref}</p>\n\n\n\n<p>What I want to do here is to see what a global poverty line would be if we rely on the notion of poverty in rich countries \u2014 countries like Denmark, the US, or Germany.{ref}The range of incomes considered \u2018middle\u2019 and \u2018high\u2019 income countries according to the World Bank are very low relative to rich countries. High-income economies are those with a GNI per capita of $12,536 or more. The range of middle-income economies begins at a GNI per capita of $1,036. In this post I want to rely on countries like Denmark; higher income countries by any standard.{/ref} That is what Pritchett suggested eight years ago: \u201cSince the origin of the [International Poverty Line] was just to adopt as a global lower bound the poverty lines used by the poorest countries, it symmetrically makes sense to say that the global upper bound poverty line is based on the poverty line used in rich countries.\u201d&nbsp;</p>\n\n\n\n<p>The definition of poverty is certainly not an easy ethical question and thoughtful people disagree about it in ways that have meaningful consequences for our understanding of the world. There are also interesting proposals for hybrid poverty lines that combine absolute and weakly-relative measures; see Ravallion (2019) for a recent proposal.{ref}Martin Ravallion (2019) \u2013 <a href=\"https://www.nber.org/papers/w26211\">On Measuring Global Poverty</a>. NBER Working Paper 26211. DOI 10.3386/w26211{/ref} And I would also recommend Tony Atkinson\u2019s last book \u2018<a href=\"https://www.tony-atkinson.com/book-measuring-poverty-around-the-world/\">Measuring Poverty around the World</a>\u2019 for an excellent recent overview of the topic.</p>\n\n\n\n<p>\u2192 To understand how it is possible to compare poverty levels and living standards across countries you need to know the basics of global poverty measurement. You find a summary of the basics in the following fold-out box.</p>\n\n\n\t<block type=\"additional-information\" default-open=\"false\">\n\t\t<content>\n\n<h3>The basics of global poverty measurement</h3>\n\n\n\n<div class=\"wp-block-columns is-style-sticky-right\">\n<div class=\"wp-block-column\">\n<p>Throughout this article \u2013 and in global income and expenditure data generally \u2013 the statisticians who produce these figures are careful to make these numbers as comparable as possible.&nbsp;</p>\n\n\n\n<p>First, many poorer people rely on subsistence farming and do not have a monetary income. To take this into account and make a fair comparison of their living standards, the statisticians that produce these figures estimate the monetary value of their home production and add it to their income/expenditure.</p>\n\n\n\n<p>Second, price changes over time (inflation) and price differences across countries are both taken into account: all measures are adjusted for differences in purchasing power.{ref}This is possible by relying on the work of the <a href=\"https://www.worldbank.org/en/programs/icp\">International Comparison Project</a>, which monitors the prices of goods and services around the world.{/ref} To this end incomes and expenditures are expressed in so-called <em>international dollars</em>. This is a hypothetical currency that results from the price adjustments across time and place. An international dollar is defined as having the same purchasing power as one US-$ <em>in the US</em>. This means no matter where in the world a person is living on int.-$30, they can buy the goods and services that cost $30 in the US. None of these adjustments are ever going to be perfect, but in a world where price differences are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do.{ref}Angus Deaton and Alan Heston (2010) discuss the methods behind such price adjustments and many of the difficulties and limitations involved.</p>\n\n\n\n<p>Deaton, A., and Heston, A. 2010. \u201cUnderstanding PPPs and PPP-Based National Accounts.\u201d <em>American Economic Journal: Macroeconomics</em> 2 (4): 1\u201335. A working paper version is available online <a href=\"https://www.nber.org/papers/w14499\">here</a>.{/ref}</p>\n\n\n\n<p>Throughout this text I\u2019m always adjusting incomes for price changes over time and price differences between countries in this way. All dollar values discussed here are presented in int.-$; the UN does the same for the $1.90 poverty line. Sometimes I leave out \u2018international\u2019 as it is awkward to repeat it all the time; but every time I mention any $ amount in this text I\u2019m referring to international-$ and not US-$.{ref}Keep in mind that in the special case of the US the US-$ equals the international-$.{/ref}</p>\n</div>\n\n\n\n<div class=\"wp-block-column\"></div>\n</div>\n\n</content>\n\t</block>\n\n\n<h3>An additional higher poverty line of $30 per day</h3>\n\n\n\n<p>Pritchett made his proposal based on data and prices a decade ago and so it is necessary to update his calculations. But I want to go beyond Pritchett\u2019s approach and additionally provide a number of other relevant comparisons to inform our understanding of who is considered poor in a rich country.</p>\n\n\n\n<p>By following this idea I find that a poverty of 30 international-$ per day corresponds to the notion of poverty in a rich country. In the following section I consider a long number of benchmarks that made me arrive at this poverty line. Here is the short summary of these comparisons:</p>\n\n\n\n<ul><li><strong>European countries: </strong>The span of poverty lines in high-income countries in Europe ranges from <strong>int.-$25 to int.-$38 per day</strong>.</li></ul>\n\n\n\n<ul><li><strong>The US: </strong>A comparison with the poverty line in the US is not straightforward, as explained in some detail below; two different approaches arrive at poverty lines of <strong>int.-$23 and int.-$35 per day</strong> respectively.</li></ul>\n\n\n\n<ul><li><strong>Survey result: </strong>A study surveyed people in a high-income country to ask at what income a person is considered poor. The study found that the mean income threshold suggested by the surveyed population corresponds to an income of <strong>int.-$37.58 per day</strong></li></ul>\n\n\n\n<ul><li><strong>Proposal to replace the categorization into developing and developed countries: </strong>In the book \u2018Factfulness\u2019 the authors recommend replacing the simplistic categorization of countries into developing and developed countries with a finer grained structure. The high-income cutoff the authors suggest is <strong>int.-$32 per day</strong>.</li></ul>\n\n\n\n<ul><li><strong>UBI: </strong>The daily income paid as \u2018Universal Basic Income\u2019 in a pilot study in Germany corresponds to an income of <strong>int.-$48.19 per day</strong>.</li></ul>\n\n\n\n<ul><li><strong>Social care: </strong>The average basic social care payout in Germany (\u2018Hartz-IV\u2019) corresponds to <strong>int.-$30.78 per day</strong></li></ul>\n\n\n\n<p>The range of possible higher poverty lines based on richer countries is wide, as the list of benchmarks suggests. At the lower end I believe that it might be as low as $25 per day, and on the higher end it might be as high as $40 or $50 per day.&nbsp;</p>\n\n\n\n<p>Just as someone who lives on less than $1.90 per day is defined as <em>extremely </em>poor, a person who lives on less than $30 a day could be considered <em>moderately </em>poor.</p>\n\n\n\n<p>A reality check for any poverty line you might want to consider is to ask yourself what you think about living on less than that poverty line yourself. I lived on less than $30 per day before and would consider myself poor if I\u2019d fall back on that income level again.</p>\n\n\n\n<p>In the following box you find the sources and calculations of the benchmarks that led me to my $30 per poverty line proposal.</p>\n\n\n\t<block type=\"additional-information\" default-open=\"false\">\n\t\t<content>\n\n<h3>Who is considered poor in rich countries? Poverty lines and other relevant benchmarks</h3>\n\n\n\n<div class=\"wp-block-columns is-style-sticky-right\">\n<div class=\"wp-block-column\">\n<h4>Poverty lines in European countries</h4>\n\n\n\n<p>As mentioned before most European countries set their poverty line at 60% of the median income in the country. In his original proposal Pritchett was relying on this 60% of median cut-off.</p>\n\n\n\n<p>Calculating the poverty line for European countries therefore means that we look up their median income and then multiply it by 0.6. This is less straightforward than it might first appear. The reason for that is that there are many different income concepts. You quickly realize that it is not easy to define a person\u2019s income if you ask yourself what your own income is. Do you take government transfers into account or not? Do you take your partner\u2019s income into account and divide it by two? How do you take into account that you have a child for which you need to pay? It is possible to take these and many other aspects into account and arrive at useful statistics, but various sensible ways of addressing such questions lead to many different income metrics. As such, in comparing different poverty thresholds across countries we have to take care to avoid mixing different income concepts as much as possible.&nbsp;</p>\n\n\n\n<p>One important difference is how incomes are adjusted for the size of the household: whether the total household income is simply divided by the number of people (including children) \u2013 \u2018per capita\u2019 income \u2013 or whether some adjustment is made to account for the fact that larger households, and particularly households with children, face lower costs per person \u2013 known as \u2018equivalised\u2019 income. Whereas EU countries, like other rich countries, use equivalised income to measure poverty, the UN\u2019s measurement of global poverty is based on a global dataset of per capita incomes. This dataset is called <a href=\"http://iresearch.worldbank.org/PovcalNet/povDuplicateWB.aspx\">PovcalNet</a>, and it is this that we must use in order to make comparisons of poverty measures in different countries according to the same income concept.</p>\n\n\n\n<p>In this dataset we find the median income for countries around the world and we can take that median income and then apply the logic on which the European poverty lines are based. In the extensive footnote here you find more details and the full calculations.{ref}The European reference incomes are national median equivalised disposable income after social transfers.</p>\n\n\n\n<p>The disposable household income including all income from work (employee wages and self-employment earnings), private income from investment and property, transfers between households, and all social transfers received in cash including old-age pensions.&nbsp;</p>\n\n\n\n<p>Eurostat applies an equivalisation factor calculated according to the OECD-modified scale first proposed in 1994. The UN/World Bank is not.</p>\n\n\n\n<p>This is according to Eurostat <a href=\"https://appsso.eurostat.ec.europa.eu/nui/show.do?query=BOOKMARK_DS-050270_QID_6AF25E11_UID_-3F171EB0&amp;layout=TIME,C,X,0;GEO,L,Y,0;QUANTILE,L,Z,0;INDIC_IL,L,Z,1;CURRENCY,L,Z,2;INDICATORS,C,Z,3;&amp;zSelection=DS-050270INDIC_IL,TC;DS-050270CURRENCY,EUR;DS-050270INDICATORS,OBS_FLAG;DS-050270QUANTILE,D1;&amp;rankName1=INDIC-IL_1_2_-1_2&amp;rankName2=CURRENCY_1_2_-1_2&amp;rankName3=INDICATORS_1_2_-1_2&amp;rankName4=QUANTILE_1_2_-1_2&amp;rankName5=TIME_1_0_0_0&amp;rankName6=GEO_1_2_0_1&amp;sortC=ASC_-1_FIRST&amp;rStp=&amp;cStp=&amp;rDCh=&amp;cDCh=&amp;rDM=true&amp;cDM=true&amp;footnes=false&amp;empty=false&amp;wai=false&amp;time_mode=ROLLING&amp;time_most_recent=true&amp;lang=EN&amp;cfo=%23%23%23%2C%23%23%23.%23%23%23\">here</a>, where you also find the relevant data. (If the link should break, search on Google for \u2018Distribution of income by quantiles &#8211; EU-SILC and ECHP surveys\u2019.)</p>\n\n\n\n<p>There are various ways of bringing the national poverty lines with reference to the national median equivalised disposable income after social transfers in line with the income/expenditure concept used in PovcalNet.</p>\n\n\n\n<p>Joliffe and Prydz follow a different approach and their paper is very relevant for anyone interested in this question here. One alternative to the approach I\u2019m following in this article would be to start from the poverty lines they estimated (based on the poverty headcount ratio) and apply the growth rate of the median income since the publication of their study. Yet another possibility would of course be to repeat their analysis with the up-to-date data. I am not following either of these approaches because I believe for a wide audience they are less transparent that the approach here \u2013&nbsp;which is simply: I rely on the same dataset so that I rely on the same income concept, then look up the median income and multiply it by 0.6.</p>\n\n\n\n<p>This is the reference: Jolliffe &amp; Prydz (2016). Estimating international poverty lines from comparable national thresholds. The Journal of Economic Inequality, 14(2), 185-198.</p>\n\n\n\n<p>\u2013\u2013\u2013</p>\n\n\n\n<p>The following are the relevant calculations. All of them are based on PovcalNet data:</p>\n\n\n\n<p><strong>Germany\u2019s</strong> median monthly income in 2017 was $1417.29 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is 0.6*$1417.29=$850.374/30=$28.35 per day</p>\n\n\n\n<p><strong>Sweden\u2019s</strong> median monthly income in 2017 was $1469 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.6*1469)/30=$29.38 per day</p>\n\n\n\n<p><strong>Norway\u2019s</strong> median monthly income in 2017 was $1890 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.6*1890)/30=$37.8 per day</p>\n\n\n\n<p><strong>Austria\u2019s</strong> median monthly income in 2017 was $1534 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.6*1534)/30=$30.68 per day</p>\n\n\n\n<p>In the <strong>UK</strong> the median monthly income in 2017 was $1252 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.6*1252)/30=$25.04 per day</p>\n\n\n\n<p><strong>France\u2019s</strong> median monthly income in 2017 was $1364 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.6*1364)/30=$27.28 per day</p>\n\n\n\n<p><strong>Switzerland\u2019s</strong> median monthly income in 2017 was $1791 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.6*1791)/30=$35.82 per day</p>\n\n\n\n<p><strong>Spain\u2019s</strong> median monthly income in 2017 was $982 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.6*982)/30=$19.64 per day</p>\n\n\n\n<p><strong>Iceland\u2019s</strong> median monthly income in 2017 was $1582 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.6*1582)/30=$31.64 per day</p>\n\n\n\n<p><strong>Luxembourg\u2019s</strong> median monthly income in 2017 was $2193 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.6*2193)/30=$43.86 per day</p>\n\n\n\n<p><strong>Netherland\u2019s</strong> median monthly income in 2017 was $1430 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.6*1430)/30=$28.6 per day</p>\n\n\n\n<p><strong>Belgium\u2019s</strong> median monthly income in 2017 was $1346 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.6*1346)/30=$26.92 per day</p>\n\n\n\n<p><strong>Denmark\u2019s</strong> median monthly income in 2017 was $1453 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.6*1453)/30=$29.06 per day</p>\n\n\n\n<p><strong>Ireland\u2019s</strong> median monthly income in 2017 was $1234 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.6*1234)/30=$24.68 per day</p>\n\n\n\n<p><strong>Finland\u2019s</strong> median monthly income in 2017 was $1361 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.6*1361)/30=$27.22 per day{/ref}</p>\n\n\n\n<p>As high-income European countries I\u2019m referring to those European countries, which <a href=\"http://appsso.eurostat.ec.europa.eu/nui/submitViewTableAction.do\">according to the Eurostat statistics</a> had a higher income in 2019 than the European average. These are the following countries: Finland, Netherlands, Belgium, Sweden, Germany, France, Iceland, Switzerland, Norway, Luxembourg, Denmark, Austria, Ireland, and the UK.</p>\n\n\n\n<p>These are the poverty lines for daily income in a number of high-income European countries (based on 60% of the median incomes from PovcalNet):</p>\n\n\n\n<ul><li>Sweden: $29.40 per da</li><li>Norway: $37.80 per day</li><li>Austria: $31 per day</li><li>UK: $25.04 per day</li><li>Switzerland: $35.82 per day</li><li>Germany: $28.35 per day</li><li>France: $27.28 per day</li><li>Luxembourg: $43.86 per day</li><li>Finland: $27.22 per day</li><li>Iceland: $31.64 per day</li><li>Ireland: $24.68 per day</li><li>Netherlands: $28.6 per day</li><li>Belgium: $26.92 per day</li><li>Denmark: $29.06 per day</li></ul>\n\n\n\n<p>The span of poverty lines in these countries ranges from $25 (for the UK and Ireland) up to $38 (for Norway); in the small country of Luxembourg the poverty line is higher.</p>\n\n\n\n<h4>The poverty line in the US</h4>\n\n\n\n<p>Unlike European countries, the US does not set the poverty line in a relative way. Instead the US poverty line dates back to the work of Mollie Orshansky, an economist working for the Social Security Administration in the early 1960s. Since then it has been of course revised for price changes, but otherwise it remained unchanged.</p>\n\n\n\n<p>The US poverty line is <a href=\"https://en.wikipedia.org/wiki/Poverty_in_the_United_States#Measuring_poverty\">very often</a> criticised as being too low. Those that criticize the US poverty line in that way therefore suggest that the severity of poverty in the US is understated in the statistics.&nbsp;</p>\n\n\n\n<p>How high is the poverty line in the US? In 2020 the poverty threshold for a single person under 65 was $30, measured in 2011 international-$ per day to be comparable with the other figures in this article.{ref}According to the &#8220;<a href=\"https://www.govinfo.gov/content/pkg/FR-2020-01-17/pdf/2020-00858.pdf\">Annual Update of the HHS Poverty Guidelines</a>&#8221; the poverty line in the US is an annual income of US$12,760. That is in 2020 price. According to the <a href=\"https://data.worldbank.org/indicator/FP.CPI.TOTL?locations=US\">World Bank</a>, the Consumer Price Index in the US in 2020 was 118.7 and in 2011 it was 103.2. So prices between the years rose by 118.7/103.2 &#8211; 1 =&nbsp;<strong>15%</strong>.<br><br>Deflating the poverty line in to 2011 prices we get 12,760/1.15 = $11,096. And expressing that as a per day figure that is $11,096/365 = $30.40{/ref}</p>\n\n\n\n<p>Now the problem with comparing this poverty line with the global statistics is again that the income concept is different. The US crucially relies on an equivalence scale for adjusting the income cutoff depending on the household size.</p>\n\n\n\n<p>One alternative is to use the World Bank&#8217;s poverty and inequality data \u2013 which expresses incomes in per capita terms \u2013 to find a &#8216;harmonized&#8217; poverty line: the line that yields the same poverty rate in the World Bank data as the official poverty rate.{ref}This method was introduced by Jolliffe and Prydz (2016) and used by Jolliffe et al. (2022) as an ingredient of their method for setting the World Bank&#8217;s international poverty lines.</p>\n\n\n\n<p>Jolliffe, Dean, and Espen Beer Prydz. 2016. <em>Estimating International Poverty Lines from Comparable National Thresholds</em>. Washington, DC.</p>\n\n\n\n<p><em>Jolliffe, Dean Mitchell, Daniel Gerszon Mahler, Christoph Lakner, Aziz Atamanov, and Samuel Kofi Tetteh Baah. 2022. Assessing the Impact of the 2017 PPPs on the International Poverty Line and Global Poverty. The World Bank. Available to read at the&nbsp;</em><a href=\"https://documents1.worldbank.org/curated/en/353811645450974574/pdf/Assessing-the-Impact-of-the-2017-PPPs-on-the-International-Poverty-Line-and-Global-Poverty.pdf\"><em>World Bank here</em></a><em>.</em>{/ref}<br><br>The official poverty rate in the US in 2019 was&nbsp;<strong>10.5%</strong>,&nbsp;<a rel=\"noreferrer noopener\" href=\"https://www.census.gov/content/dam/Census/library/publications/2020/demo/p60-270.pdf\" target=\"_blank\">as reported</a>&nbsp;by the U.S. Census Bureau. The poverty line that yields this rate in the World Bank&#8217;s data is $22.53 (measured in 2011 international-$).{ref}You can see our detailed calculations in this <a href=\"https://colab.research.google.com/drive/1IzHT9NikKHrY9uGWKzDzaZ4VVpdc9m5E#scrollTo=qF_GSK2FX7tU&amp;line=1&amp;uniqifier=1\">Google Colabs document</a>.{/ref}</p>\n\n\n\n<p>An alternative is to apply the same concept that the Europeans are using for their poverty line determination. If the US would use the 60% of median income definition of poverty their poverty line would be int.-$32.8 per day{ref}The <strong>US</strong> median monthly income in 2017 was $1640 according to PovcalNet.<br>60% of the median expressed in daily income/consumption is (0.6*1640)/30=$32.8 per day{/ref} Very close to the one-person poverty line based on Orshansky\u2019s work.</p>\n\n\n\n<p>A somewhat comparable poverty line based on these three approaches therefore falls into the range of around $23 to $35 per day. Within the range of poverty lines in European countries.</p>\n\n\n\n<h4>Survey results \u2013 Below which income do you consider a person poor?&nbsp;</h4>\n\n\n\n<p>The UN and Pritchett rely on the existing poverty lines in low-income and high-income countries respectively to derive their poverty lines. We can follow other approaches too.&nbsp;</p>\n\n\n\n<p>An obvious one is to ask what people out there believe: Who is considered poor in a high-income country by people in high-income countries?</p>\n\n\n\n<p>For the regular poverty report of the German government, a survey is conducted that asks Germans below which income level they consider someone as poor. The latest data is from the year 2015.{ref}These reports are called \u2018Armuts- und Reichtumsbericht der Bundesregierung\u2019 online at <a href=\"https://www.armuts-und-reichtumsbericht.de/DE/Startseite/start.html\">armuts-und-reichtumsbericht.de</a></p>\n\n\n\n<p>The latest survey was produced by aproxima and published in 2016. It is published as <a href=\"https://www.armuts-und-reichtumsbericht.de/SharedDocs/Downloads/Service/Studien/forschungsprojekt-wahrnehmung-armut-reichtum.pdf?__blob=publicationFile&amp;v=5\">Wahrnehmung von Armut und Reichtum in Deutschland, Ergebnisse der repr\u00e4sentativen Bev\u00f6lkerungsbefragung \u201eARB-Survey 2015\u201c</a>, Berlin: Bundesministerium f\u00fcr Arbeit und Soziales (Hrsg.).{/ref}</p>\n\n\n\n<p>The mean answer given by the German population for a cutoff below which a person is considered poor was 947\u20ac per month. In international dollars per day this corresponds to an income of <strong>int.-$37.58</strong>.{ref}The 2011 PPP conversion factor for private consumption (LCU per international $) for Germany in 2015 is 0.84 according to the World Bank <a href=\"https://ourworldindata.org/grapher/ppp-conversion-factor-for-private-consumption\">here</a>.</p>\n\n\n\n<p>This means the perceived poverty threshold corresponds to \u20ac947/0.84=int.-$1,127.38 per month or int.-$37.58.{/ref}</p>\n\n\n\n<h4>Universal Basic Income</h4>\n\n\n\n<p><a href=\"https://en.wikipedia.org/wiki/Universal_basic_income\">Universal Basic Income</a> (UBI) is a political idea that is becoming rapidly more popular.</p>\n\n\n\n<p>A large UBI study in Germany \u2013 called <a href=\"https://de.wikipedia.org/wiki/Mein_Grundeinkommen\">\u2018Mein Grundeinkommen\u2019</a> \u2013 sets this income at \u20ac1200. In international-$ this corresponds to an income of <strong>int.-$48.19 per day</strong>.{ref}The 2011 PPP conversion factor for private consumption (LCU per international $) for Germany in 2017 is 0.83 according to the World Bank <a href=\"https://ourworldindata.org/grapher/ppp-conversion-factor-for-private-consumption\">here</a>.</p>\n\n\n\n<p>This means the UBI corresponds to 1200/0.83=int.-$1,445.78 per month or int.-$48.19.{/ref}</p>\n\n\n\n<h4>Social security in Germany</h4>\n\n\n\n<p>Germany pays basic social care for its citizens. This social security payment is referred to as \u2018Hartz-IV\u2019.&nbsp;</p>\n\n\n\n<p>How much a person receives depends on the particular circumstances of the individual, but we can look at the average payment. In 2018 a single person <a href=\"https://www.sueddeutsche.de/wirtschaft/wie-viel-geld-bekommt-ein-hartz-iv-empfaenger-1.3905657\">received on average</a> 783 Euro per month. That corresponds to <strong>int.-$30.78 per day</strong>.{ref}That\u2019s \u20ac783/0.834=int.-$938.85 per month. Or int.-$938.85/30.5=int.-<strong>$30.78 per day.</strong>{/ref}</p>\n\n\n\n<h4>The Roslings\u2019 suggest a cutoff of $32 per day</h4>\n\n\n\n<p>Anna Rosling-R\u00f6nnlund, Ola Rosling and Hans Rosling challenged the old dichotomy between developed and developing countries in their bestselling book \u2018<a href=\"https://en.wikipedia.org/wiki/Factfulness:_Ten_Reasons_We%27re_Wrong_About_the_World_%E2%80%93_and_Why_Things_Are_Better_Than_You_Think\">Factfulness</a>\u2019. They argue that the old dichotomy corresponds to a view of the world that was accurate half a century ago when a few countries were relatively well-off, but most countries were living in very <a href=\"https://ourworldindata.org/life-expectancy-globally\">poor conditions</a>.Today, they say, people around the world live on a large spectrum. To reflect this spectrum they proposed 4 income levels.</p>\n\n\n\n<p>The first cut-off corresponds to the international poverty line (rounded to int.-$2 per day). The next income cutoff they set at $8 per day, the following one at $16 and the highest one at <strong>int.-$32 per day</strong>.</p>\n\n\n\n<h4>Kahneman&#8217;s and Deaton&#8217;s study of income and emotional well-being</h4>\n\n\n\n<p>Nobel laureates Daniel Kahneman and Angus Deaton published a famous study on the link between life satisfaction and income.{ref}Kahneman and Deaton (2010) \u2013 High income improves evaluation of life but not emotional well-being. Published in the Proceedings of the National Academy of Sciences. https://www.pnas.org/content/107/38/16489 {/ref}</p>\n\n\n\n<p>The authors find that higher incomes go together with higher self-reported life satisfaction, but for people\u2019s self-reported emotional well-being this is only true up to a certain point: the study finds that above $75,000 further increases in income do not correspond with improvements in people\u2019s emotional well-being \u2013 a finding that is often cited to argue that additional economic growth does not improve people\u2019s lives in high-income countries.{ref}Kahneman and Deaton analyze two different concepts self-reported satisfaction:</p>\n\n\n\n<p>\u2013 Emotional well-being refers to the \u201cemotional quality of an individual&#8217;s everyday experience \u2013 the frequency and intensity of experiences of joy, stress, sadness, anger, and affection that make one&#8217;s life pleasant or unpleasant.\u201d</p>\n\n\n\n<p>\u2013 Life evaluation refers to the thoughts that people have about their life when they think about it.&nbsp;</p>\n\n\n\n<p>The authors find that higher incomes go together with higher self-reported life satisfaction in both metrics. What they emphasize is that at very high incomes this is not true anymore \u2013 emotional well-being does not increase over around $75,000. Evaluation of life however continues to increase even at incomes over $75,000.{/ref}&nbsp;</p>\n\n\n\n<p>Again, the income concept is not the same as that in PovcalNet, and so comparisons with the global data are not directly possible. But we can ask what the daily income at which emotional well-being supposedly levels off corresponds to: $75,000 per year are <strong>int.-$205 per day</strong>.</p>\n\n\n\n<p>It is certainly worth considering whether an income up to which emotional well-being increases could be taken as the basis for a definition of poverty. A US company reacted to the research finding of Kahneman and Deaton by using it to set the minimum wage in their company: everyone in that company <a href=\"https://www.nytimes.com/2015/04/14/business/owner-of-gravity-payments-a-credit-card-processor-is-setting-a-new-minimum-wage-70000-a-year.html\">gets paid</a> that salary.&nbsp;</p>\n\n\n\n<p>For the discussion of global poverty however it might be considered as an even higher poverty line, but for any practical purpose in the world today the income cutoff would be too high as only a very small fraction of the world lives on more than $75,000 per year.</p>\n</div>\n\n\n\n<div class=\"wp-block-column\"></div>\n</div>\n\n</content>\n\t</block>\n\n\n<h4>How many people in the world live in poverty?</h4>\n\n\n\n<p>We have seen that 10% of the world live in extreme poverty<em> </em>as defined by the UN. How large is the share of the world that lives in moderate poverty?</p>\n\n\n\n<p>The latest global data tells us that <strong>85% of the world population live on less than $30 per day</strong>. These are 6.5 billion people.</p>\n\n\n\n<p>Relying on a higher poverty line of $45 per day you find that 92% live in poverty, and using a lower poverty line of $20 per day you find that 78% live in poverty. No matter which of these poverty lines you might want to choose, at least three-quarters of the world live in poverty.</p>\n\n\n\n<p>All of this data refers to pre-pandemic times. The global recession has certainly increased the share below any of these cutoff points. As soon as the new data is available you will find it on Our World in Data.</p>\n\n\n\n<p>The chart shows where in the world people are poor. If we would only rely on the UN\u2019s extreme poverty line we would conclude that barely anyone lives in poverty in high-income countries. Relying on higher poverty lines, this data here shows that even in high-income countries there is a significant share of the population that lives in poverty. No country, not even the high-income countries, has eliminated poverty. There are no \u2018developed countries\u2019 \u2014 there is work to do for all.&nbsp;</p>\n\n\n\n<p>But just as clear from this data is the fact that in many world regions the large majority of people are very poor. In Sub-Saharan Africa about 40% of the population lives on less than $1.90 per day as the chart shows. In all regions outside of high-income countries more than 85% of all people live in moderate poverty.</p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" width=\"3000\" height=\"1874\" src=\"https://owid.cloud/app/uploads/2021/03/The-global-inc-distribution-190-10-30.png\" alt=\"\" class=\"wp-image-41458\" srcset=\"https://owid.cloud/app/uploads/2021/03/The-global-inc-distribution-190-10-30.png 3000w, https://owid.cloud/app/uploads/2021/03/The-global-inc-distribution-190-10-30-400x250.png 400w, https://owid.cloud/app/uploads/2021/03/The-global-inc-distribution-190-10-30-800x500.png 800w, https://owid.cloud/app/uploads/2021/03/The-global-inc-distribution-190-10-30-150x94.png 150w, https://owid.cloud/app/uploads/2021/03/The-global-inc-distribution-190-10-30-768x480.png 768w, https://owid.cloud/app/uploads/2021/03/The-global-inc-distribution-190-10-30-1536x959.png 1536w, https://owid.cloud/app/uploads/2021/03/The-global-inc-distribution-190-10-30-2048x1279.png 2048w\" sizes=\"(max-width: 3000px) 100vw, 3000px\" /></figure>\n\n\n\n<h4>Countries in which the majority do not live in poverty have only left poverty behind in recent history</h4>\n\n\n\n<p>Two centuries ago the global income distribution was very different. Back then <a href=\"https://ourworldindata.org/extreme-history-methods\">almost everyone in the world</a> was living in extreme poverty. Those places in which few people live in moderate poverty today only left poverty behind in the very recent past.&nbsp;</p>\n\n\n\n<p>Denmark is one of those places. The reason why the majority of people in Denmark is not living in poverty is that the economic inequality is low and the average income high.</p>\n\n\n\n<p>The fact that the inequality is low you can see on the map. It shows an inequality measure called the Gini coefficient (explained <a href=\"https://ourworldindata.org/income-inequality#the-gini-coefficient\">here</a>) which makes clear that Denmark is among the least unequal countries in the world.</p>\n\n\n\n<p>The reason that the average income in Denmark is high is due to the fact that average incomes have increased steadily for the last two centuries; this long-term development is called economic growth. As the historical data shows the average incomes in Denmark are today more than 20-times higher than in the past.</p>\n\n\n\n<p>You can add any other country to this chart. By adding one of those countries in which the majority lives in poverty \u2013 like Ethiopia \u2013&nbsp;you see just how large the differences in average incomes are.</p>\n\n\n\n<p>GDP per capita is by far the most widely used measure of average income and is yet another income concept from the two I mentioned so far.{ref}The two previous ones were income/expenditure as determined in household surveys and equivalized disposable income after social transfers.{/ref} It is a more comprehensive measure of incomes and crucially takes into account government expenditures. For these and other reasons (mentioned in the long footnote) you will find that dividing GDP per capita by 365 days will let you arrive at a higher value than the income that is determined in household income surveys.{ref}There is generally a gap between GDP per capita and the averages found in both income surveys and expenditure surveys. But the reasons for the gap are different depending on which we are comparing.</p>\n\n\n\n<p>GDP includes many items that are typically not measured in household income surveys, such as an imputed rental value of owner-occupied housing, the retained earnings of firms and taxes on production such as VAT. The gap is even larger when GDP is compared to surveys of household consumption \u2013 the latter concept excluding both investment expenditure and government expenditure on public services such as education and health.</p>\n\n\n\n<p>Other aggregates beyond GDP are available in the national accounts that are more comparable to the concepts applied in household income and consumption surveys. However, important differences still remain even here. For example, in addition to imputed rents, imputations for the value of certain financial services, such as bank accounts, are included in aggregate household consumption measured in national accounts, with no equivalent for these items recorded in the survey data. In many countries the consumption of \u2018nonprofit institutions serving households\u2019 (NPISH) is included as part of household consumption within national accounts, but not within household surveys.</p>\n\n\n\n<p>On top of these conceptual differences are a range of mismeasurement problems that affect both sets of data. On this topic see Deaton (2005), and Pinkovskiy and Sala-i-Martin (2016).</p>\n\n\n\n<p>Deaton, Angus. 2005. \u201cMeasuring Poverty in a Growing World (or Measuring Growth in a Poor World).\u201d The Review of Economics and Statistics 87 (1): 1\u20131. </p>\n\n\n\n<p>Pinkovskiy, Maxim, and Xavier Sala-i-Martin. 2016. \u201cLights, Camera\u2026 Income! Illuminating the Nation&#8221;{/ref}</p>\n\n\n\n<div class=\"wp-block-columns is-style-side-by-side\">\n<div class=\"wp-block-column\">\n<iframe src=\"https://ourworldindata.org/grapher/economic-inequality-gini-index?time=earliest..latest&#038;tab=chart&#038;country=USA~FRA~JPN~BRA~ZAF~DNK\" loading=\"lazy\" style=\"width: 100%; height: 600px; border: 0px none;\"></iframe>\n</div>\n\n\n\n<div class=\"wp-block-column\">\n<iframe src=\"https://ourworldindata.org/grapher/average-real-gdp-per-capita-across-countries-and-regions?time=earliest..latest&amp;country=~DNK&#038;tab=chart\" loading=\"lazy\" style=\"width: 100%; height: 600px; border: 0px none;\"></iframe>\n</div>\n</div>\n\n\n\n<h4>Billions of people live in countries where average incomes are very low</h4>\n\n\n\n<p>The income of every person depends on two factors, the average income in the country they live in and the position that particular person has in that country\u2019s income distribution. This chart here shows the average income in countries around the world. The height of each bar represents the average daily income in a country, the width of each country corresponds to the country\u2019s population size. I have ordered the countries by income: from the poorest country on the very left (South Sudan where the average person lives on $1.12 per day) to the richest country on the very right (Luxembourg with an average of $86 per day).</p>\n\n\n\n<p>After two centuries of economic growth the average income in Denmark is now $57 per day today. You find the country far to the right in this chart, which tells you that only very few countries in the world have such high average incomes. The fact that the average income is far higher than the poverty line tells us that the existing poverty in Denmark discussed at the beginning of this post is to a large extent the consequence of inequality.</p>\n\n\n\n<p>What this chart makes very clear is how low the average incomes in many countries in the world are. The huge majority of the world live in countries where the <em>average </em>income is much lower than the poverty threshold in rich countries. 82% of the world population live in countries where the mean income is less than $20 per day. </p>\n\n\n\n<p>And where incomes are low, living standards generally <a href=\"https://owid.cloud/app/uploads/2021/03/Correlates-of-GDP-\u2013-How-is-life-at-different-levels-of-income.png\">are poor</a>. As the last chart below shows, a child that is born into a poorer country must not just expect to live on a very low income, but also faces a much higher risk of not staying alive at all.</p>\n\n\n\n<p>As I have <a href=\"https://ourworldindata.org/global-inequality-of-opportunity\">said before</a>, people are not poor because of who they are, but because of <em>where</em> they are. This is why economic growth is so important to leave poverty behind. By far the most important difference between those people who are not living in poverty and those who do is the average income in the country that they live in \u2013 this single factor matters more for a person\u2019s income <a href=\"https://ourworldindata.org/poverty-growth-needed\">than all other factors taken together</a>. The increase of average income in a country is called economic growth and for global poverty to decrease substantially economic growth for the poorest billions of people is necessary.</p>\n\n\n\n<p>\u2192 See my previous article: <a href=\"https://ourworldindata.org/poverty-growth-needed\">The economies that are home to the poorest billions of people need to grow if we want global poverty to decline</a>.</p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" width=\"2921\" height=\"2474\" src=\"https://owid.cloud/app/uploads/2021/03/mean-income-by-country.png\" alt=\"\" class=\"wp-image-41459\" srcset=\"https://owid.cloud/app/uploads/2021/03/mean-income-by-country.png 2921w, https://owid.cloud/app/uploads/2021/03/mean-income-by-country-400x339.png 400w, https://owid.cloud/app/uploads/2021/03/mean-income-by-country-649x550.png 649w, https://owid.cloud/app/uploads/2021/03/mean-income-by-country-150x127.png 150w, https://owid.cloud/app/uploads/2021/03/mean-income-by-country-768x650.png 768w, https://owid.cloud/app/uploads/2021/03/mean-income-by-country-1536x1301.png 1536w, https://owid.cloud/app/uploads/2021/03/mean-income-by-country-2048x1735.png 2048w\" sizes=\"(max-width: 2921px) 100vw, 2921px\" /></figure>\n\n\n\n<h4>The future of global poverty</h4>\n\n\n\n<p>The world today is far from the \u2018end of poverty\u2019 relative to <em>any</em> poverty definition. After two centuries of <a href=\"https://ourworldindata.org/extreme-history-methods\">unprecedented progress</a> against the very worst poverty it is still the case that every tenth person lives on less than <em>$1.90 per day</em>.</p>\n\n\n\n<p>As the world has not even ended extreme poverty it is therefore right to focus much of our attention on this very low poverty cutoff; ending extreme poverty surely is a global goal of great importance.&nbsp;</p>\n\n\n\n<p>Yet at the same time we should consider what our aspirations for the future are. In the past our ancestors <a href=\"https://ourworldindata.org/breaking-the-malthusian-trap\">did not know</a> that it was possible for a society to leave widespread poverty behind. Today we are in a different situation. We know from the reality of today\u2019s rich countries that widespread poverty is not inevitable. Because we know that poverty relative to such higher cutoffs is not inevitable I believe it would be wrong to limit our ambitions to eradicating poverty based on the definition of poverty in the very poorest countries.</p>\n\n\n\n<p>What I take away from this discussion are three insights: First, we have seen from countries like Denmark that it is <em>possible</em> to reduce poverty for an entire population relative to a poverty line of about $30 per day. Second, we have seen that these countries were extremely poor in the past and were able to reduce poverty over the course of the last few generations. And third we have seen that the huge majority of the world is still living in great poverty, by any standard. What this suggests to me is that the history of global poverty reduction has only just begun.</p>\n\n\n\n<iframe src=\"https://ourworldindata.org/grapher/child-mortality-gdp-per-capita?time=latest\" loading=\"lazy\" style=\"width: 100%; height: 600px; border: 0px none;\"></iframe>\n\n\n\n<hr class=\"wp-block-separator\"/>\n\n\n\n<p><em>Continue reading Our World in Data:</em> My colleague Hannah Ritchie has just published a series of posts on the drivers of deforestation and how to bring humanity&#8217;s long history of deforestation to an end. You find her work <a href=\"https://ourworldindata.org/blog\">here</a>.</p>\n\n\n\n<p><strong>Acknowledgement:</strong> I would like to thank Joe Hasell for his thoughtful comments on draft versions of this article.</p>\n",
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    "excerpt": {
        "rendered": "What does global poverty look like if we rely on the notions of poverty in countries like Denmark, the US, or Germany? And how should this perspective inform our aspirations for the future of global poverty?",
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    "date_gmt": "2021-03-05T11:02:06",
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    "authors_name": [
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