The always enlightening folks at the Center for Global Development, a DC-based think tank that studies the global fight against poverty, have posted a new analysis, Global Absolute Poverty Cut in Half on Tuesday.
The CGD aid and development experts are serious-minded people, but they do like to have some fun at times. And the headline to this report was done with tongue firmly in-cheek.
Kenny and his colleagues Sarah Dykstra and Justin Sandefur were bouncing off a World Bank report from its International Comparison Project that has found the proportion of people in poor countries living on less than $1.25 per day fell by half in 2010 – from about 19.7 percent to 11.2 percent.
“The numbers changed this week but the reality on the ground stayed the same,” said Kenny. “Hundreds of millions of people still live in deplorable and intolerable conditions of extreme poverty.”
But that doesn’t mean these new numbers are not indicative of something real and significant, he said.
The new World Bank-ICP report looks at changes in purchasing power around the world as a way to measure poverty. It compares, the CGD experts explain in their post, what an Indian can buy with an equalized number of rupees as compared to what an American can buy with a dollar.
Many economists have problems with this method of comparison, the think-tankers also note, in part because the very poor ‘consume’ very different things than the rich do.
“So yes, these numbers are not terribly accurate but that doesn’t mean they are totally inaccurate or don’t mean anything,” Kenny said. “What these numbers suggest is that global inequality is not as big today as we thought it was yesterday…. The gap between the poorer countries and richer countries shrank.”
That’s good news on the macro-economic level, but Kenny emphasized that the numbers are inherently squishy and already being challenged (he suggested we read their comments section). Unlike for unemployment numbers in the U.S., he said, there are no actual people you can point to as examples of the beneficiaries of these more positive numbers.
“These numbers are not unimportant, but they don’t change the daily reality for those living in poverty,” Kenny said. Or, as the conclusion of the CGD post notes:
The people who have just been classified as ‘not absolutely poor’ don’t actually have any more money than they did yesterday, and will still struggle in terms of getting a decent job, and many still face grim daily tradeoffs between buying school supplies or ensuring their kids are well nourished. In fact, if the new PPP numbers suggest anything it is that the quality of health or education or access to services associated with a given income has just gone down.
The new numbers are good news for people who care about poverty, but they matter much less for people who are poor.