[lbo-talk] question on poverty and world bank's PPP

[Jeffrey Fisher]

hm. it didn't seem so clear to me from reading that graph when i first read it, but i suppose the emphasis in the final sentence on norms for a particular country make it clearer. still, why couldn't they just say it the way i said it, which seems to me to leave no room at all for confusion. i think most people i talk with assumes it means the purchasing power of US$1 wherever in the world -- which is still horrrible, but then you get that whole "a dollar goes a lot further there" argument that doesn't come up when it's clear what the stats mean.

and i agree the official stats are damning as they are . . .

-----Original Message-----
From: Doug Henwood <dhenwood at panix.com>
Sent: Mar 16, 2004 10:03 AM
To: lbo-talk at lbo-talk.org
Subject: Re: [lbo-talk] question on poverty and world bank's PPP

Jeffrey Fisher wrote:


>ok, stupid question, but when the world bank says that (as of 1999, 
>iirc) 2.1 billion people lived on less than $1/day using the dollar 
>as a marker of "purchasing power parity", does that mean the buying 
>power of US$1 no matter where you are in the world, or does it mean 
>the local equivalent of what US$1 would buy in the states?

The latter. From <http://www.worldbank.org/poverty/mission/up2.htm>:


>When estimating poverty world-wide, the same reference poverty line 
>has to be used, and expressed in a common unit across countries. 
>Therefore, for the purpose of global aggregation and comparison, the 
>World Bank uses reference lines set at $1 and $2 per day in 1993 
>Purchasing Power Parity (PPP) terms (where PPPs measure the relative 
>purchasing power of currencies across countries). It has been 
>estimated that in 1999 1.2 billion people world-wide had consumption 
>levels below $1 a day -- 23 percent of the population of the 
>developing world and 2.8 billion lived on less than $2 a day. These 
>figures are lower than earlier estimates, indicating that some 
>progress has taken place, but they still remain too high in terms of 
>human suffering, and much more remains to be done. And it should be 
>emphasized that for analysis of poverty in a particular country, the 
>World Bank always uses poverty line(s) based on norms for that 
>society.

I know the estimates have been criticized (e.g. by Reddy and Pogge) 
as too low, but the official stats are pretty damning as it is.

Doug
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